UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [ X ]
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedJuly 31, 2006 o
        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from__________to ____________ Commission file number000-49995 Argentex Mining Corporation(Exact name of small business issuer as specified in its charter)  Nevada
        
        71-0867623(State or other jurisdiction of incorporation or organization)
        
        (I.R.S. Employer Identification No.)  Suite 2300, 1066 West Hastings Street, Vancouver, British Columbia  Canada  V6E 3X2(Address of principal executive offices)  604.601.8366(Issuers telephone number)  Not Applicable(Former name, former address and former fiscal year, if changed since last report)  Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      YesxNo o Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YesxNo o       - 2 -   APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 19,432,223 common shares issued and outstanding as at September 1, 2006. Transitional Small Business Disclosure Format (Check one):
        Yes o
        Nox PART I Item 1.  Financial Statements.      - 3 -          ARGENTEX MINING CORPORATION (An Exploration Stage Company)  CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 (Unaudited) (Stated in U.S. Dollars)      - 4 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars)   July 31,
        January 312006
        2005(Unaudited)ASSETSCurrentCash and cash equivalents
        $
        34,560
        $
        62,647Prepaid expenses
        
        1,879
        
        28636,439
        
        62,933Equipment(Note 4)
        
        2,618
        
        2,923$
        39,057
        $
        65,856LIABILITIESCurrentAccounts payable and accrued liabilities
        $
        258,609
        $
        189,918Convertible promissory note (Note 7)
        
        -
        
        500,000Promissory notes (Note 6)
        
        190,410
        
        450,000449,019
        
        1,139,918Convertible promissory note (Note 7)
        
        250,000
        
        -Promissory notes (Note 8)
        
        1,000,000
        
        -1,699,019
        
        1,139,918STOCKHOLDERS DEFICIENCYPreferred stock, 100,000,000 shares authorized with a par value of $0.001 (issued: 2006  Nil:  2005  Nil)
        
        -
        
        -Preferred stock, Series A convertible, 2,000 authorized with a par value of $0.001 (issued: 2006  Nil: 2005  2,000)
        
        -
        
        -Common stock, 100,000,000 shares authorized with a par value of $0.001 (issued: April 30, 2006  19,432,223; January 31, 2006  18,398,890)
        
        19,432
        
        18,399Additional paid-in capital
        
        3,318,765
        
        2,780,515Accumulated deficit during exploration stage
        
        (4,998,159)
        
        (3,872,976)Total stockholders equity
        
        (1,659,962)
        
        (1,074,062)$
        39,057
        $
        65,856     The accompanying notes are an integral part of these financial statements.      - 5 -    ARGENTEX MINING CORPORATION (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Stated in U.S. Dollars)   CumulativePeriod FromInception,Three Months
        Three Months
        Six Months
        Six Months
        December 31,Ended
        Ended
        Ended
        Ended
        2001 toJuly 31, 2006
        July 31, 2005
        July 31, 2006
        July 31, 2005
        July 31, 2006ExpensesConsulting fees (Note 8)
        $
        45,630
        $
        37,447
        $
        86,682
        $
        78,700
        $
        383,210Depreciation
        
        164
        
        -
        
        422
        
        -
        
        938Investor relations and communication
        
        29,689
        
        24,897
        
        41,932
        
        40,859
        
        1,286,234Mineral property interests (Note 5)
        
        285,892
        
        271,915
        
        525,975
        
        441,236
        
        1,821,598Office and sundry
        
        2,261
        
        (2,547)
        
        19,856
        
        7,320
        
        109,056Rent
        
        5,934
        
        2,305
        
        9,508
        
        3,992
        
        30,323Professional fees
        
        58,808
        
        29,519
        
        127,222
        
        50,521
        
        397,260Stock-based compensation
        
        139,150
        
        44,875
        
        239,283
        
        44,875
        
        403,804Transfer agent fees
        
        3,119
        
        1,980
        
        5,421
        
        2,230
        
        56,902Travel
        
        -
        
        -
        
        -
        
        423
        
        42,549570,647
        
        410,391
        
        1,056,301
        
        670,156
        
        4,531,874Interest expense
        
        35,968
        
        12,869
        
        68,882
        
        29,787
        
        466,285Net Loss For The Year
        $
        606,615
        $
        423,260
        $
        1,125,183
        $
        699,943
        $
        4,998,159Net Loss Per Share, basic anddiluted
        $
        0.03
        $
        0.02
        $
        0.06
        $
        0.03Weighted Average Number Of Common Shares Outstanding
        
        19,331,671
        
        22,808,308
        
        19,119,884
        
        21,734,434        The accompanying notes are an integral part of these financial statements.      - 6 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Stated in U.S. Dollars) CumulativePeriod FromInception,Three
Months
        Three Months
        Six
Months
        Six
Months
        December 31,Ended
        Ended
        Ended
        Ended
        2001 toJuly 31, 2006
        July 31, 2005
        July 31, 2006
        July 31, 2005
        July 31, 2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
        $
        (606,615)
        $
        (423,260)
        $
        (1,125,183)
        $
        (699,943)
        $
        (4,998,159)Items not affecting cash:Depreciation
        
        164
        
        -
        
        422
        
        -
        
        938Stock-based compensation
        
        139,150
        
        44,875
        
        239,283
        
        44,875
        
        403,804Shares issued to acquire mineral properties
        
        -
        
        -
        
        -
        
        -
        
        3,500Shares issued in payment of bonus
        
        -
        
        -
        
        -
        
        -
        
        2,660Non-cash interest
        
        -
        
        -
        
        -
        
        -
        
        333,333Changes in assets and liabilities:Receivables
        
        -
        
        (86)
        
        -
        
        (86)
        
        -Prepaid expenses
        
        18,369
        
        (286)
        
        (1,593)
        
        35,605
        
        (1,879)Accounts payable and accrued liabilities
        
        (17,923)
        
        39,086
        
        68,691
        
        37,751
        
        258,609(466,855)
        
        (339,671)
        
        (818,380)
        
        (581,798)
        
        (3,997,194)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of convertible promissory notes
        
        -
        
        -
        
        -
        
        -
        
        500,000Issuance of promissory notes
        
        190,410
        
        100,000
        
        1,190,410
        
        100,000
        
        1,640,410Repayment of promissory notes
        
        -
        
        -
        
        (450,000)
        
        -
        
        (450,000)Proceeds from issuance of capital stock
        
        50,000
        
        200,000
        
        50,000
        
        200,000
        
        2,344,900240,410
        
        300,000
        
        790,410
        
        300,000
        
        4,035,310CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of equipment
        
        (117)
        
        (1,370)
        
        (117)
        
        (1,370)
        
        (3,556)Change In Cash And Cash Equivalents, During The Period
        
        (226,562)
        
        (41,041)
        
        (28,087)
        
        (283,168)
        
        34,560Cash And Cash Equivalents, Beginning Of Period
        
        261,122
        
        62,442
        
        62,647
        
        304,569
        
        -Cash And Cash Equivalents, End Of Period
        $
        34,560
        $
        21,401
        $
        34,560
        $
        21,401
        $
        34,560Cash Paid For Interest During The Period
        $
        -
        $
        -
        $
        -
        $
        -
        $
        -Cash Paid For Income Taxes During The Period
        $
        -
        $
        -
        $
        -
        $
        -
        $
        - The accompanying notes are an integral part of these financial statements.      - 7 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY PERIOD FROM INCEPTION, DECEMBER 31, 2001, TO JULY 31, 2006 (Unaudited) (Stated in U.S. Dollars)   NUMBER OF
        
        
        
        
        ACCUMULATEDPREFERRED
        
        
        
        
        DEFICITSHARES
        
        NUMBER OF
        
        ADDITIONAL
        DURING THE
        TOTALSERIES A
        PAR
        COMMON
        
        PAID-IN
        EXPLORATION
        STOCKHOLDERSCONVERTIBLE
        VALUE
        SHARES
        PAR VALUE
        CAPITAL
        STAGE
        EQUITYBalance, December 21, 2001
        -
        $
        -
        -
        $
        -
        $
        -
        $
        -
        $
        -(Date of Inception)Shares issued:For cash at $0.001
        -
        
        -
        5,000,000
        
        5,000
        
        -
        
        -
        
        5,000For cash at $0.02
        -
        
        -
        4,620,000
        
        4,620
        
        87,780
        
        -
        
        92,400Net loss for the period
        -
        
        -
        -
        
        -
        
        -
        
        (11,327)
        
        (11,327)Balance, January 31, 2002
        -
        
        -
        9,620,000
        
        9,620
        
        87,780
        
        (11,327)
        
        86,073Net loss for the year
        -
        
        -
        -
        
        -
        
        -
        
        (58,694)
        
        (58,694)Balance, January 31, 2003
        -
        
        -
        9,620,000
        
        9,620
        
        87,780
        
        (70,021)
        
        27,379Net loss for the year
        -
        
        -
        -
        
        -
        
        -
        
        (31,390)
        
        (31,390)Balance, January 31, 2004
        -
        
        -
        9,620,000
        
        9,620
        
        87,780
        
        (101,411)
        
        (4,011)Shares returned to treasury
        
        
        
        (4,600,000)
        
        (4,600)
        
        4,600
        
        -
        
        -Shares issued:For cash at $0.001
        2,000
        
        2
        -
        
        -
        
        1,997,498
        
        -
        
        1,997,500To acquire a wholly-owned corporation
        -
        
        -
        833,333
        
        833
        
        32,500
        
        -
        
        33,333To acquire a mineral property
        -
        
        -
        833,333
        
        834
        
        32,500
        
        -
        
        33,334For stock dividend
        -
        
        -
        13,373,332
        
        13,373
        
        (13,373)
        
        -
        
        -For a consulting agreement
        -
        
        -
        200,000
        
        200
        
        2,460
        
        -
        
        2,660Net loss for the period
        -
        
        -
        -
        
        -
        
        -
        
        (2,293,257)
        
        (2,293,257)Balance, January 31, 2005
        2,000
        $
        2
        20,259,998
        $
        20,260
        $
        2,143,965
        $
        (2,394,668)
        $
        (230,441) (Continued)      - 8 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY PERIOD FROM INCEPTION, DECEMBER 31, 2001, TO JULY 31, 2006 (Unaudited) (Stated in U.S. Dollars)   NUMBER OF
        
        
        
        
        ACCUMULATEDPREFERRED
        
        
        
        
        DEFICITSHARES
        
        NUMBER OF
        
        ADDITIONAL
        DURING THE
        TOTALSERIES A
        PAR
        COMMON
        
        PAID-IN
        EXPLORATION
        STOCKHOLDERSCONVERTIBLE
        VALUE
        SHARES
        PAR VALUE
        CAPITAL
        STAGE
        EQUITYBalance, January 31, 2005  -  Contd)
        2,000
        $
        2
        20,259,998
        $
        20,260
        $
        2,143,965
        $
        (2,394,668)
        $
        (230,441)Conversion of preferred shares
        (2,000)
        
        (2)
        2,222,223
        
        2,222
        
        (2,220)
        
        -
        
        -Shares returned to treasury
        -
        
        -
        (4,749,998)
        
        (4,750)
        
        (58,417)
        
        -
        
        63,167Shares issued for cash
        -
        
        -
        666,667
        
        667
        
        199,333
        
        -
        
        200,000Stock-based compensation
        -
        
        -
        -
        
        -
        
        164,521
        
        -
        
        164,521Non-cash interest
        -
        
        -
        -
        
        -
        
        333,333
        
        -
        
        333,333Net loss
        -
        
        -
        -
        
        -
        
        -
        
        (1,478,308)
        
        (1,478,308)Balance, January 31, 2006
        -
        
        -
        18,398,890
        
        18,399
        
        2,780,515
        
        (3,872,976)
        
        (1,074,062)Conversion of promissory note
        -
        
        -
        833,333
        
        833
        
        249,167
        
        -
        
        250,000Stock-based compensation
        -
        
        -
        -
        
        -
        
        100,133
        
        -
        
        100,133Net loss
        -
        
        -
        -
        
        -
        
        -
        
        518,568
        
        (518,568)Balance, April 30, 2006
        -
        
        -
        19,232,223
        
        19,232
        
        3,129,815
        
        (4,391,544)
        
        (1,242,497)Exercise of stock options
        -
        
        -
        200,000
        
        200
        
        49,800
        
        -
        
        50,000Stock-based compensation
        -
        
        -
        -
        
        -
        
        139,150
        
        -
        
        139,150Net loss
        -
        
        -
        -
        
        -
        
        -
        
        (606,615)
        
        (606,615)Balance, July 31, 2006
        -
        $
        -
        19,432,223
        s
        19,432
        $
        3,318,765
        $
        (4,998,159)
        $
        (1,659,962)     The accompanying notes are an integral part of these financial statements.      - 9 -    ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  1.
        BASIS OF PRESENTATION The interim period financial statements have been prepared by the Company in conformity with generally accepted accounting principles in the United States of America. The preparation of financial data is based on accounting principles and practices consistent with those used in the preparation of annual financial statements, and in the opinion of management these financial statements contain all adjustments necessary (consisting of normally recurring adjustments) to present fairly the financial information contained therein. Certain information and footnote disclosure normally included in the financial statements prepared in conformity with generally accepted accounting principles in the United States of America have been condensed or omitted. These interim period statements should be read together with the most recent audited financial statements and the accompanying notes for the year
ended January 31, 2006. The results of operations for the three and six month periods ended July 31, 2006 are not necessarily indicative of the results to be expected for the year ending January 31, 2007.  2.
        NATURE OF OPERATIONS AND GOING CONCERN Organization The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.  The Companys name was changed to Argentex Mining Corporation on March 15, 2004.  Exploration Stage Activities The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties in Argentina.   Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.  Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  This contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business. As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $4,998,159 for the period from December 21, 2001 (inception) to July 31, 2006, and has no source of revenue.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management has plans to seek additional capital through private placements of its capital stock.  These conditions raise substantial doubt about the Companys ability to continue as a going concern.  Although there are no assurances that managements plans will be realized, management believes that the Company will be able to continue operations in the future.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the
amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.  3.
        SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements follow the same significant accounting policies as those outlined in the notes to the audited consolidated financial statements for the year ended January 31, 2006.      - 10 -    ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  4.
        EQUIPMENT JULY 31, 2006COST
        ACCUMULATED DEPRECIATION
        NET BOOK VALUEComputer equipment
        $
        3,556
        $
        938
        $
        2,618  JANUARY 31, 2006COST
        ACCUMULATED DEPRECIATION
        NET BOOK VALUEComputer equipment
        $
        3,439
        $
        516
        $
        2,923  5.
        MINERAL PROPETY INTERESTS a)
        Pinguino Property Pursuant to the terms of a mineral property option agreement, dated February 24, 2004, between the Company and a director, the Company acquired an option to acquire a 100% interest in and to certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the Pinguino Property totaling 24,710 acres. The agreement requires the following payments in order to acquire the property: CAD$50,000 on or before July 1, 2004 (paid); CAD$75,000 on or before July 1, 2005 (paid); CAD$100,000 on or before July 1, 2006 (paid); CAD$100,000 on or before July 1, 2007; and CAD$125,000 on or before July 1, 2008.  The agreement is subject to a 2% net smelter royalty.  The Company has the right at any time up to 60 days after commencement of commercial production to repurchase either one-half of the royalty for $1,000,000 or all of the royalty for $2,000,000. The Agreement also provides for an area of interest such that, in the event that the optionor records any property claims within five (5) kilometers of the boundaries of the property, such claims will become subject to the mineral property option agreement. b)
        Dyakowski Property i)
        Pursuant to the terms of a Mineral Property Acquisition Agreement, dated February 24, 2004, between the Company and a director of the Company, the Company acquired certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the Dyakowski Property for total consideration of 833,333 common shares of the Company (subsequently increased, as a result of a stock dividend, to 2,499,999).  The shares have been issued and are subject to an Escrow Agreement whereby the shares will be released to the Vendor or returned to treasury as follows:  the Company incurring exploration expenditures of at least $100,000  release of 499,998 common shares; additional expenditures of at least $400,000  release of an additional 500,001 common shares; additional expenditures of at least $500,000  release of an additional
500,001 common shares; Companys geologist recommends further exploration  release of the remaining 333,333 common shares. At the time of each release to the Vendor, if the Companys geologist determines the Property no longer has merit all common shares remaining in escrow shall be returned to the treasury of the Company and title to the Property shall be transferred to the Company.       - 11 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  5.
        MINERAL PROPETY INTERESTS (continued) b)
        Dyakowski Property (continued) ii)
        In addition, pursuant to the terms of a Share Purchase Agreement, dated February 24, 2004, between the Company and a director of the Company, the Company acquired a 100% interest in SCRN Properties Ltd. (SCRN), a Delaware corporation, the sole asset of which consisted of certain mineral claims located in the Rio Negro Province of the Republic of Argentina, known as the SCRN Property, for total consideration of 833,333 common shares of the Company (subsequently increased, as a result of a stock dividend, to 2,499,999).  The shares have been issued and are subject to an Escrow Agreement identical to the terms of the escrow agreement related to the Mineral Property Acquisition Agreement for the Dyakowski Property, disclosed immediately above.  The Dyakowski Property and the SCRN Property total
128,964 acres.  The Mineral Property Acquisition Agreement and the Share Purchase agreement also provide for an area of interest such that, in the event that the Vendor records any property claims within five (5) kilometres of the boundaries of either the Dyakowski Property or the SCRN Property, such claims will become subject to the respective Agreements. During the year ended January 31, 2006, Dyakowski and the Company agreed to the return and cancellation of 4,749,998 of the escrow shares and the immediate release from escrow of the remaining 250,000 shares.  The Company accounted for the return and cancellation as a reduction of the acquisition of the related mineral properties in the current year.  c)
        Condor Property Pursuant to the terms of a mineral property acquisition agreement, dated February 20, 2004, between the Company and an affiliate of a director, the Company acquired 100% interest in and to certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the Condor Property totalling 24,710 acres, subject to a 2% net smelter returns royalty in favour of a director.  As consideration for the Condor Property the Company paid to the vendor CAD$10,000.  The Company has the right to repurchase either one-half of the royalty for CAD$1,000,000 or all of the royalty for CAD$2,000,000.  d)
        Storm Cat Property Pursuant to the terms of a mineral property acquisition agreement, dated February 20, 2004, between the Company and an affiliate of a director, the Company acquired 100% interest in and to certain mineral claims located in the Santa Cruz and Rio Negro Provinces of the Republic of Argentina, known as the Storm Cat Property totalling 32,766 acres.  As consideration for the Storm Cat Property the Company paid to the vendor the CAD$10,000.  e)
        British Columbia Claims In February, 2006, the Company acquired a group of mineral exploration claims located in the Revelstoke area of British Columbia, Canada. The group of claims consists of 5 tenures and the process of transferring title was initiated March 31, 2006.  The total purchase amount was $903. f)
        Nevada Claims The Company entered into a non-binding letter of intent with Staccato Gold Resources Ltd. on April 28, 2006, and delivered back to us on May 1, 2006, pursuant to which The Company has agreed to negotiate the terms of a formal joint venture agreement to explore and, if warranted, develop, a property located in Lander County, Nevada, known as Long Peak.      - 12 -    ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  5.
        MINERAL PROPERTY INTERESTS (continued) Claims acquired have been accounted for on a geographic basis as follows:  CUMULATIVEFROM INCEPTIONThree Months Ended
        Six Months Ended
        DECEMBER 21, 2001July 31,
        July 31,
        TO JULY 31,2006
        2005
        2006
        2005
        2006Pinguino ProjectAcquisition
        $
        90,410
        $
        14,907
        $
        91,463
        $      24,189
        
        $
        196,015Assaying, testing and analysis
        
        2,951
        
        22,619
        
        25,895
        36,704
        
        
        135,619Camp and field supplies
        
        51,236
        
        85,522
        
        84,205
        138,776
        
        
        419,082Drilling
        
        81,988
        
        32,833
        
        213,392
        53,227
        
        
        539,342Geological and geophysical
        
        58,427
        
        44,463
        
        85,076
        72,150
        
        
        350,182Travel and accommodation
        
        -
        
        7,204
        
        6,154
        11,690
        
        
        32,834285,847
        
        207,547
        
        506,185
        336,786
        
        
        1,673,074Condor ProjectAcquisition
        
        -
        
        2,746
        
        -
        4,456
        
        
        7,528Camp and field supplies
        
        -
        
        72
        
        -
        117
        
        
        198Geological and geophysical
        
        -
        
        1,527
        
        -
        2,477
        
        
        4,185-
        
        4,345
        
        -
        7,051
        
        
        11,911Santa Cruz PropertiesAcquisition
        
        -
        
        25,596
        
        3,842
        41,534
        
        
        10,837Rio Negro PropertiesCamp and field supplies
        
        -
        
        18,910
        
        -
        30,685
        
        
        51,836Geological and geophysical
        
        -
        
        12,010
        
        -
        19,488
        
        
        32,921Travel and accommodation
        
        -
        
        3,507
        
        -
        5,692
        
        
        9,614-
        
        34,427
        
        -
        55,865
        
        
        94,371British Columbia ClaimsAcquisition
        
        45
        
        -
        
        948
        -
        
        
        948Nevada ClaimsAcquisition
        
        -
        
        -
        
        15,000
        -
        
        
        15,000Cinema ClaimsAcquisition
        
        -
        
        -
        
        -
        -
        
        
        2,300Geological and geophysical
        
        -
        
        -
        
        -
        -
        
        
        13,157-
        
        -
        
        -
        -
        
        
        15,457$
        285,892
        $
        271,915
        $
        525,975
        $    441,236
        
        $
        1,821,598        - 13 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  6.
        PROMISSORY NOTES Promissory notes payable are unsecured and are comprised of the following individual amounts:  DATE
        
        INTERESTISSUED
        MATURITY
        RATE
        AMOUNTJune 28, 2006
        August 28, 2006
        $5,000 flat rate
        $
        100,000July 1, 2006
        On demand *
        6%
        
        90,410$
        190,410*Due from a related party.  7.
        CONVERTIBLE PROMISSORY NOTE The Convertible Promissory Note, issued December 22, 2004, bears interest at 10%, is payable on demand of the issuer or at anytime at the option of the Company, without penalty, and is convertible into common shares, at the note holders option, at a conversion price of $0.90 per share (Conversion Price) or lesser adjusted amount determined as follows: a)
        If the Company issues securities for a per share or conversion or exercise price which is less than the Conversion Price, then the Conversion Price shall be reduced to that lower price, or b)
        If the Company ceases to devote the majority of its resources to the exploration and development of its Argentinean mineral properties or fails to make the required payments with respect to its Pinguino property, then the conversion price shall become the lower of the Conversion Price or 75% of the average trailing five day bid price of the Companys common stock on the Over-The-Counter Bulletin Board. The full principal amount of the note is due on an event of default, as defined in the terms of the note.  Pursuant to the terms of the Note, as a result of a private placement in June 2005, the conversion price was reduced to $0.30.  At the time of the reduction of the conversion price the Companys shares were trading at approximately $0.50 per share resulting in a benefit to the Note Holder, as per Financial Accounting Standards Boards Emerging Issues Task Force Issue Number 00-27 Application of Issue No. 98-5 to Certain Convertible Instruments.  The calculated benefit, in the amount of $333,333 was included in interest expense for the year ended January 31, 2006. In March 2006, $250,000 of the principal amount was converted to 833,333 common shares and the terms of repayment for the balance of the note were amended to be payable on demand but not before August 27, 2007.  8.
        PROMISSORY NOTES Promissory notes payable are unsecured and are comprised of the following individual amounts:  DATE
        
        INTERESTISSUED
        MATURITY
        RATE
        AMOUNTMarch 22, 2006
        On demand after August 27, 2007
        8%
        $
        500,000March 22, 2006
        On demand after August 27, 2007
        8%
        
        500,000$
        1,000,000       - 14 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  9.
        SHARE CAPITAL a)
        In June 2005, 2,000 non-voting Series A convertible preferred shares were converted into 2,222,223 common shares. b)
        During June 2005, the Company issued 666,667 Units at a price of $0.30 per unit for total proceeds of $200,000.  Each Unit was comprised of one common share and the right to purchase one additional common share at $0.40 per share until June 30, 2007. c)
        In August 2005, 4,749,998 escrowed shares were returned to the treasury. d)  In March 2005, the Company issued 833,333 common shares on the conversion $250,000 of a promissory note.  (Note 7)  e)
        In July 2006, the Company issued 200,000 common shares for proceeds of $50,000 on the exercise of stock options.  Share purchase warrants  Share purchase warrant transactions are summarized as follows:  NUMBER OF SHARES
        WEIGHTED
AVERAGE
EXERCISE
PRICEBalance, January 31, 2004 and 2005
        -
        $
        -Issued
        666,667
        
        0.40Exercised
        -
        
        -Expired
        -
        
        -Balance, January 31, 2006 and July 31, 2006
        666,667
        $
        0.40  As at July 31, 2006, the following share purchase warrants were outstanding and exercisable:  Number of Shares
        Exercise Price
        
        ExpiryDate666,667
        $
        0.40
        
        June 24, 2007       - 15 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  9.
        SHARE CAPITAL (Continued) Stock Options On February 16, 2005, the Company adopted its 2005 Incentive Stock Plan (the "2005 Plan") to grant options to directors, officers, employees and consultants.  Under the 2005 Plan, the Company may grant options to acquire up to 2,500,000 common shares of the Company. Stock option transactions are summarized as follows: Number of Shares
        Weighted Average Exercise PriceBalance, January 31, 2004 and 2005
        
        $
        -Issued
        1,420,000
        
        0.25Exercised
        -
        
        -Expired
        -
        
        -Balance, January 31, 2006
        1,420,000
        $
        0.25Issued
        920,000
        
        0.53Exercised
        -
        
        -Expired
        -
        
        -Balance, April 30, 2006
        2,340,000
        $
        0.36Issued
        -
        
        -Exercised
        (200,000)
        
        0.25Expired
        -
        
        -Balance, April 30, 2006
        2,140,000
        $
        0.37  The weighted average fair value per stock option granted during the six months ended July 31, 2006 was $0.53 (2005 - $0.326).  As at July 31, 2006, the following stock options were outstanding and exercisable:  Number of
        Exercise
        ExpiryShares
        Price
        Date270,000
        $
        0.25
        December 13, 200950,000
        $
        0.25
        June 26, 2010600,000
        $
        0.49
        February 7, 2011200,000
        $
        0.58
        February 9, 2011120,000
        $
        0.62
        March 10, 2010900,000
        $
        0.25
        June 26, 20152,140,000        - 16 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  9.
        SHARE CAPITAL (Continued)  Stock-based compensation  The fair value of stock options granted during the six months ended July 31, 2006 was $400,532 (2005 - $257,510) which is being recognized over the options vesting periods.  Total stock-based compensation recognized during the three months ended July 31, 2006 was $139,150 (2005 - $44,875).  Total stock-based compensation recognized during the six months ended July 31, 2006 was $239,283 (2005 - $44,875).  Stock-based compensation has been recorded in the consolidated statements of operations as stock-based compensation expenses with corresponding additional paid-in capital recorded in stockholders' equity:  The following weighted average assumptions were used for the Black-Scholes valuations of stock options granted during the period:  Six months ended
July 31, 2006
        Six months ended
July 31, 2005Risk-free interest rate
        3.98%
        3.85%Expected life of options
        4.9 years
        8.7 yearsAnnualized volatility
        119%
        112%Dividend rate
        0.00%
        0.00%  10.
        RELATED PARTY TRANSACTIONS a)
        Effective February 1, 2004, the Company entered into a management agreement with a director and officer for a period of one year at $7,250 per month.  During the six months ended July 31, 2006 Company paid consulting fees of $56,663 (2005 - $42,475) relating to this management agreement. b)
        Effective November 1, 2005, the Company entered into a management agreement with an officer for a period of 14 months at C$2,500 per month.  During the six months ended July 31, 2006, the company paid consulting fees of $19,350 (2005 - $Nil) relating to this management agreement. c)
        On July 1, 2006, a director and office of the Company advanced $90,410 to the Company.  The advance is dues on demand, bears interest at 6% and is secured by a promissory note.       - 17 -   ARGENTEX MINING CORPORATION (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2006 and 2005 (Unaudited) (Stated in U.S. Dollars)  11.
        SEGMENT INFORMATION As at July 31, 2005, the Company and its subsidiary operate in one reportable segment, being the exploration for and the development of mining properties in Argentina.  Identifiable assets, revenues and net loss in each geographic area are as follows: July 31, 2006
        January 31, 2006Identifiable assetsCanada
        $29,572
        $      65,856Argentina
        9,475
        -$39,047
        $      65,856  Three Months Ended July 31, 2006
        Three Months Ended July 31, 2005
        Six Months Ended July 31, 2006
        Six Months Ended July 31, 2006Loss for the periodCanada
        $84,013
        $     151,345
        $346,450
        $      258,707Argentina
        522,602
        271,915
        778,733
        441,236$606,615
        $     423,260
        $1,125,183
        $      699,943  11.
        SUBSEQUENT EVENT The Company did not repay a promissory note, in the amount of $100,000, that became due on August 28, 2006 (Note 6).  The note does not have provisions for default.       - 18 -   Item2.  Managements Discussion and Analysis and Plan of Operation. FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors, that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.  The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report. In this quarterly report, unless otherwise specified, all references to common shares refer to the common shares in our capital stock and the terms we, us and our mean Argentex Mining Corporation, a Nevada corporation, and our wholly owned subsidiaries SCRN Properties Ltd., a Delaware corporation and Argentex Mining Corporation, a Delaware corporation. Corporate History We were incorporated in the State of Nevada on December 21, 2001 under the name "Delbrook Corporation" with authorized capital of 100,000,000 shares of common stock with a par value of $0.001 and 100,000,000 shares of preferred stock with a par value of $0.001.  On March 15, 2004, we changed our name to "Argentex Mining Corporation".  We effected this name change by merging with our wholly owned subsidiary, named Argentex Mining Corporation, a Nevada corporation that we formed specifically for this purpose.  Our company was the surviving company in the merger. We are considering the advantages of obtaining a listing for our companys common shares on the Canadian TSX Venture Exchange (also known as the TSX-V).  The TSX-V has recently adopted an internal policy whereby they have refused to accept listing applications from companies incorporated in Nevada unless the applicant either (i) amends its articles of incorporation to conform to certain requirements of TSX-V; or (ii) re-domesticates from Nevada to another jurisdiction.  We have commenced informal discussions with TSX-V with respect to this policy, though we have not yet filed a listing application with it.  Depending on the outcome of these discussions, we may ask our shareholders to approve either (a) the re-domestication of our company from Nevada to Delaware or (b) an amendment to our articles of incorporation to include some or all of the clauses requested by TSX-V.  On May 1, 2006, we
formed a new Delaware company under the name Argentex Mining Corporation.  If we decide to re-domesticate our company to Delaware, we will ask our shareholders to approve doing so by way of a merger with this new, wholly-owned Delaware subsidiary.  If we decide to pursue either of these options, we intend to prepare and distribute to our shareholders a form of proxy and proxy solicitation material describing our proposal. OVERVIEW We are in the mineral resource business.  This business generally consists of three stages: exploration, development and production.  Mineral resource companies that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged in exploring land in an effort to discover them.  Mineral     - 19 -  resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage.  Our company is in the exploration stage. Mineral resource exploration can consist of several stages.  The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not they are or have in the past been extracted. After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources.  This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease or concession).  After acquisition, exploration would probably begin with a surface examination by a prospector or professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues through un-exposed portions of the property (i.e., underground), possibly trenching in these covered areas to allow sampling of the underlying rock.  Exploration also commonly includes systematic regularly spaced drilling
in order to determine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock.  Exploration might culminate in a feasibility study to ascertain if the mining of the minerals would be economic.  A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage. Our current mineral properties consist of five groups of mineral exploration claims.  Four of these groups of claims are located in the Rio Negro and Santa Cruz provinces of Argentina.  All of the mineral exploration licenses with respect to these Argentine claims are registered in the name of our Delaware subsidiary, SCRN Properties Ltd.  Our fifth group of mineral exploration claims is located in the Revelstoke area of British Columbia, Canada.  This fifth group of claims has been registered in the name of our company.  In addition, we are party to a letter of intent with Staccato Gold Resources Ltd. pursuant to which we are considering the acquisition of an interest in a sixth group of mineral claims known as the Long Peak property, located in Lander County, Nevada.  For a more detailed description of our mineral resource properties, please refer to the discussion entitled Description of
Property beginning at page 11 of our annual report on Form 10-KSB filed with the Securities and Exchange Commission on May 12, 2006. There is no assurance that a commercially viable mineral deposit exists on any of our properties and further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically and legally feasible to develop or exploit those resources.  Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will constitute a reserve (a reserve is a commercially viable mineral deposit).  Even if we do discover commercially exploitable levels of mineral resources on any of our properties, which is unlikely, there can be no assurance that we will be able to enter into commercial production of our mineral properties.  Our recent activities have focused on our Pinguino (Santa Cruz Province) and
Pilquin 9 (Rio Negro Province) properties.  Please refer to the section entitled Risk Factors, beginning on page 28 of this quarterly report on Form 10-QSB, for additional information about the risks of mineral exploration. PLAN OF OPERATIONS AND CASH REQUIREMENTS We are a junior exploration stage company that has not yet generated or realized any revenues from our business operations.  We currently hold interests in mineral properties located in the Rio Negro and Santa Cruz provinces of Argentina and the Revelstoke area of British Columbia, Canada.  One of the properties located in the Santa Cruz province consists of a group of claims that we refer to as the Pinguino Property.  We have concentrated our recent exploration efforts on the Pinguino Property and we intend to focus primarily on this property over the twelve month period ending July 31, 2007.      - 20 -   Pinguino Project During 2004 we engaged in preliminary exploration activities at our Pinguino property.  These preliminary exploration activities consisted primarily of prospecting, soil sampling, trenching and trench sampling and IP geophysics.  In early 2005, we initiated a drill program on the best known vein system on the property, known as the Marta vein.  This drill program consisted of 45 short drill holes for a total of 3010 meters, testing the near surface targets that were largely determined by previous trenching results.  In early 2006, we initiated a new drill program which we expect should include up to 10,000 meters overall (approximately 32,800 feet).  The initial 25 drill holes, covering approximately 1,876 meters (approximately 6,150 feet) have focused on a number of different areas of the Marta vein system including the Yvonne vein, Marta Sur, Marta Centro, Marta Este, Marta Noroeste and Marta Norte.
Analyses of the core and core logging have been completed. Drilling results on the Yvonne and Marta Centro segments of the Marta vein showed a new vein-type massive sulphide occurrence with anomalous concentrations of zinc, lead, copper, silver, gold, tin and indium.  The highest grade base metal and indium values occurred in holes P53 and P54, which contained 10.8 meters of 8.1 % Zn and 3.0 % Pb, 138 g/t Ag  and 177 parts per million indium and 8.0 meters of  5 % zinc, 1 % lead, 1.5 % copper and 70 ppm indium, respectively.  The mineralogy of this occurrence suggests a different type of ore deposit model from the other silver-gold structurally controlled mineralization found elsewhere on the property.  This area remains untested along strike and at depth. Additional drilling in the Marta Este, Marta Noroeste and Marta Norte were focused on expanding the positive drill results of the 2005 program.  Significant intersections of silver-gold mineralization were encountered in this portion of the drill program and additional drill targets remain to be tested along strike and at depth. The following table summarizes all of the results from the 2006 drill program:  Hole ID
        From (m)
        To (m)
        Interval Width (m)
        Gold (g/t)
        Silver (g/t)
        Copper (ppm)
        Lead(ppm)
        Zinc(ppm)
        Tin(ppm)
        Indium(ppm)Yvonne (most holes intersected the zonebelowthe level of oxidation)P46
        Zone of zinc enrichment with elevated copper intervals30.10
        71.10
        41.00
        0.21
        4.6
        329
        800
        5832
        79
        naIncluding54.50
        56.07
        1.57
        2.29
        50.9
        5,128
        913
        17,629
        435
        37And66.44
        67.60
        1.16
        0.89
        15.0
        1,414
        942
        15,388
        242
        31P47
        Zone of zinc enrichment with elevated copper and lead intervals29.20
        76.55
        47.35
        0.34
        5.0
        275
        746
        5426
        104
        naIncluding40.20
        41.70
        1.50
        2.55
        22.3
        973
        4,926
        56,511
        548
        152And65.40
        66.95
        1.55
        2.06
        8.3
        382
        365
        4,958
        331
        14And69.00
        71.50
        2.50
        1.40
        47.1
        3,443
        1,037
        11,735
        445
        31P48
        Zone of zinc enrichment with elevated gold, silver, copper, lead and tin intervals19.30
        48.30
        29.00
        1.24
        6.7
        245
        1245
        4176
        177
        naIncluding19.30
        24.24
        4.94
        6.68
        49.9
        372
        1,637
        1,441
        480
        20Which includes22.30
        23.30
        1.00
        30.64
        100.0
        1,054
        5,714
        3,053
        2,000
        73       - 21 -    P49
        Zone of zinc enrichment with elevated copper and lead intervals45.00
        96.92
        51.92
        0.19
        4.1
        237
        832
        2698
        66
        naIncluding82.25
        84.50
        2.25
        3.54
        40.6
        4,386
        1,198
        6,439
        903
        48P50
        37.00
        38.40
        1.40
        5.20
        101.9
        5,616
        2,375
        17,303
        2,000
        80In addition to a large zone of zinc enrichment, increasing toward the end of the hole50.30
        72.48
        22.18
        -
        -
        48
        647
        5518
        44
        naMarta Sur (Both holes intersected zonewithinoxidized zone)P51
        Zinc increasing toward end of hole42.00
        43.20
        1.20
        1.68
        16.0
        28
        104
        402
        <20
        na*And50.90
        51.90
        1.00
        1.55
        33.4
        74
        126
        290
        <20
        na*P52
        66.80
        82.40
        15.60
        0.23
        21.0
        97
        111
        801
        <20
        na  Hole ID
        From (m)
        To (m)
        Interval Width (m)
        Gold (g/t)
        Silver (g/t)
        Copper (ppm)
        Lead(ppm)
        Zinc(ppm)
        Tin(ppm)
        Indium(ppm)Marta Centro (both holes intersected the zonebelowthe level of oxidation)P53
        A large zone of zinc and lead enrichment still in mineralization at hole end40.80
        75.60
        34.80
        0.32
        48.0
        200
        10,619
        28,644
        80
        55Including45.70
        56.50
        10.80
        0.85
        138.7
        574
        30,197
        80,905
        170
        177And50.80
        51.25
        0.45
        1.31
        196.7
        2,115
        52,300
        329,500
        513
        1,184P54
        A large zone of zinc, copper and lead enrichment56.00
        77.90
        21.90
        0.35
        21.7
        5,749
        4,834
        19,143
        59
        25Including56.00
        64.00
        8.00
        0.90
        50.8
        15,657
        10,607
        49,967
        92
        70And59.70
        61.40
        1.70
        1.48
        72.8
        44,883
        22,208
        60,885
        97
        45Anomalous lead and zinc continue to hole endHole ID
        From (m)
        To (m)
        Interval Width (m)
        Gold (g/t)
        Silver (g/t)
        Silver Equivalent (g/t)
60:1 Au:AgMarta EsteP55
        50.30
        55.80
        5.50
        0.43
        80.60
        106.40P56
        35.90
        73.70
        37.80
        0.42
        115.70
        140.90Including61.50
        71.60
        10.10
        1.17
        375.10
        445.30       - 21 -    P57
        34.00
        54.00
        20.00
        0.27
        56.80
        73.00Including36.60
        39.50
        2.90
        0.31
        149.20
        167.80And52.20
        54.00
        1.80
        0.87
        133.40
        185.60Hole ID
        From (m)
        To (m)
        Interval Width (m)
        Gold (g/t)
        Silver (g/t)
        Silver Equivalent (g/t)
60:1 Au:AgP58
        31.10
        50.10
        19.00
        0.64
        110.70
        149.10Including31.10
        43.70
        12.60
        0.78
        108.90
        155.70And47.50
        50.10
        2.60
        0.63
        230.90
        268.70P59
        22.10
        24.40
        2.30
        0.37
        158.20
        180.40And48.00
        62.00
        14.00
        1.74
        235.40
        339.80Marta NoroesteP60
        42.60
        44.60
        2.00
        1.42
        2.60
        87.80P61
        24.60
        25.60
        1.00
        0.06
        107.40
        111.00P62
        47.50
        52.30
        4.80
        0.18
        74.10
        84.90And63.00
        69.30
        6.30
        2.11
        60.30
        186.90Marta NorteP63
        52.00
        63.90
        11.90
        0.08
        106.90
        111.70Including52.00
        54.00
        2.00
        0.28
        466.90
        483.70And58.90
        63.90
        5.00
        0.07
        57.80
        62.00P64
        41.00
        48.00
        7.00
        0.26
        241.20
        256.80P65
        57.40
        59.40
        2.00
        0.04
        67.00
        69.40P66
        31.00
        35.00
        4.00
        0.10
        118.00
        124.00Including34.00
        35.00
        1.00
        0.20
        322.00
        334.00P67
        14.90
        16.20
        1.30
        0.26
        173.60
        189.20P68
        20.90
        22.20
        1.30
        0.18
        224.00
        234.8048.60
        50.50
        1.90
        0.21
        277.00
        289.60P69
        32.70
        45.90
        13.20
        0.14
        58.50
        66.90Including42.70
        45.30
        2.60
        0.18
        191.00
        201.80P70
        30.00
        36.20
        6.20
        0.15
        100.00
        109.00Including35.20
        36.20
        1.00
        0.35
        285.00
        306.00       - 23 -   There can be no assurance that future exploration will reveal any significant amounts of gold or other minerals in quantities sufficient to justify development of a mine or the conduct of mining operations. El Condor Project There are no new developments to report. Santa Cruz Properties There are no new developments to report. Rio Negro Properties There are no new developments to report. British Columbia Properties There are no new developments to report. Long Peak Property There are no new developments to report. During the 12 months ending July 31, 2007, we intend to focus our exploration activities almost entirely on our Pinguino property.  We will require a minimum of approximately $900,000 to proceed with our plan of operation over the next twelve months, exclusive of any acquisition or development costs but including administrative and exploration costs.  As at July 31, 2006, we had cash in the amount of $34,560 and a working capital deficit in the amount of $412,580.  We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.  We plan to complete private placement sales of our common stock in order to raise the funds necessary to pursue our plan of operation, to fund our working capital requirements and to enable us to pay our accounts payable and accrued liabilities. We will incur additional expenses if we are successful in entering into an agreement to acquire an interest in a prospective or existing mineral property.  In addition to the acquisition cost, we will require significant funds to develop the property.  It is not possible to estimate such funding requirements until such time as we enter into a definitive agreement to acquire an interest in a property. LIQUIDITY AND CAPITAL RESOURCES We had cash of $34,560 as of July 31, 2006 compared to cash of $62,647 as of January 31, 2006.  We had a working capital deficit of $412,580 as of July 31, 2006 compared to a working capital deficit of $1,076,985 as of January 31, 2006.  The majority of the deficiency at January 31, 2006 was due to four promissory notes, all with maturity dates within 12 months of January 31, 2006.  During the current quarter, we borrowed an aggregate of $190,410 from two investors.  These loans are each evidenced by a convertible promissory note.  The first promissory note is in the amount of $100,000, bearing a flat interest rate of $5,000 and was due and payable on August 28, 2006.  The second promissory note, payable to our president, Kenneth Hicks, is in the amount of C$100,000 and bears an interest rate of 6% per annum.  This promissory note is payable on demand. We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $500,000 over the next twelve months to pay for our ongoing general and administrative expenses.  These expenses include legal, accounting and other professional fees associated with our being a reporting company under the Securities Exchange Act of 1934.  These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue     - 24 -  operations and to repay our accrued liabilities.  There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities. Product Research and Development We do not anticipate that we will spend any significant sums on research and development over the twelve month period ending July 31, 2007. Purchase of Significant Equipment We do not intend to purchase any significant equipment over the twelve month period ending July, 2007. Compliance with Government Regulation We are committed to complying with and are, to our knowledge, in compliance with, all governmental and environmental regulations applicable to our company and our properties.  Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation.  We do not currently own or operate any mines and are not required to comply with the requirements of these regulatory authorities.  We cannot predict the extent to which these requirements will affect our company or our properties if we identify the existence of minerals in commercially exploitable quantities.  In addition, future legislation and regulation could cause additional expense, capital expenditure, restrictions and delays in the exploration of our properties. In Argentina, minerals are owned by the Provincial government.  Individual Provinces are allowed to impose a maximum 3% mine royalty on mineral production. Exploration rights are acquired by filing a cateo, which gives exclusive prospecting rights for an area for a period of time, generally 3 years with the Provincial mining authorities. The holder of a cateo has exclusive right to establish a Manifestation of Discovery on that cateo.  Manifestations of Discovery can also be set without a cateo on any land not covered by someone elses cateo.  Manifestations of Discovery are filed as either a vein or a disseminated discovery.  A square protection zone can be declared around the discovery of up to 840 hectares for a vein Manifestation of Discovery or 7,000 hectares for a disseminated Manifestation of Discovery.  The protection zone grants the holder exclusive rights for an indefinite period, during which
the holder must provide an annual report presenting a program of exploration work and investments related to the protection zone. The cateo is an exploration concession that confers priority for the owner to apply for a mining concession (pertenencia) later.  Cateos are measured in 500 hectare unit areas and cannot exceed a total of 20 units (10,000 hectares).  The length of the cateo tenure is based on its area and starts on the date of awarding the cateo.  Typically, exploration companies acquire cateos in blocks of 5,000 or 10,000 hectares. After a period of 330 days after receiving the rights to the cateo, 50% of the area over four units (2,000 hectares) must be dropped.  At 730 days, 50% of the area remaining must be dropped.  Time extensions may be granted to allow for bad weather, difficult access, financial issues, etc. Applications for cateos may take up to two years to be approved.  In the event that there are multiple applicants for the same area, the priority is based on the initial dates of applications.  The applicant can explore on the land pending formal award of the cateo with the approval of the surface owner of the land.  The time period for reduction of the cateo area does not start until 30 days after a cateo is formally awarded. The Argentine mining act requires payment of a "canon fee" (tax) of Pesos $400 per unit payable upon the application for the cateo. A Manifestacion de Descubrimiento is a block of land similar to a claim in that when the required work and payments are completed, it can be perfected into a Mina.  A Pertenencia or Mina is required prior to production. We filed a Notice of Work (Muestra de Informe) with the Dirección de Minería in the Province of Santa Cruz in December 2004 outlining our planned exploration program for 2005 on our Pinguino property.  A Notice of Work does not have to be renewed annually so long as the type of work on the property remains the same during the next     - 25 -  year.  As our exploration program for the Pinguino property during 2006 should be substantially similar to our 2005 exploration program, we are not required to renew or re-file a Notice of Work this year.  No other permits were required for exploration, though we did file a preliminary environmental report on the Pinguino property with the Provincial authorities in December, 2004. We have not filed any Notice of Work or other plan for any of our other properties as at the date of filing this quarterly report on Form 10-QSB. In British Columbia, mineral claims are registered using the recently implemented Internet-based Mineral Titles Online system.  This registration system has replaced the previous method, in which free miners acquired title to mineral properties by staking their claims on the ground.  Using the current system, free miners register mineral titles online.  In addition, free miners now use the online system to register work and payments necessary to maintain their claims and leases, transfer their titles to another free miner, change the expiry date (anniversary date) of a claim, amalgamate two or more claims, and make other changes to their registered claims. A registered holder holds a British Columbia mineral claim for one year after it is initially registered.  After the first year, registered holders may hold the claim from year to year by (a) doing exploration and development and registering a statement of the exploration and development online, or making payments instead of exploration and development, and (b) registering a revised expiry date. A person, other than the government, must be a free miner to register a claim or lease or to register exploration and development.  A free miner is a person (including artificial persons such as partnerships and corporations) resident in Canada that holds a free miners certificate.  Our company, which has registered to do business in British Columbia (the corporate equivalent of residency) holds a free miners certificate. Our Revelstoke claims were registered with the Province of British Columbia on March 27, 2006.  Unless we perform exploration or development work or make payments in lieu of such work, these claims will expire March 26, 2007.  We do not currently have any plan to explore these mineral claims. We are prepared to engage professionals, if necessary, to ensure regulatory compliance but in the near term we expect that our activities will require minimal regulatory oversight.  If we expand the scope of our activities in the future it is reasonable to expect that our compliance costs may increase accordingly. Employees As of July 31, 2006, our company did not have any employees, but our subsidiary, SCRN Properties Ltd., employs one person on a full time basis as its legal representative in Argentina.  Our President, our Chief Financial Officer and our part-time bookkeeper all provide services pursuant to consulting contracts.  None of our consultants, including our President and our Chief Financial Officer, are required by the terms of their consulting agreements to spend all of their time on our affairs. We also engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with our exploration programs. We retain consultants on the basis of ability and experience.  Except as set forth above, neither we nor any person acting on our behalf has any preliminary agreement or understanding, nor do we contemplate any such, concerning any aspect of our operations pursuant to which any person would be hired, compensated or paid a finders fee. Going Concern Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual consolidated financial statements for the year ended January 31, 2006, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.      - 26 -   There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon our company locating, acquiring and developing a mineral or oil and gas property, and achieving a profitable level of operation.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current shareholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. APPLICATION OF CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex.  We have identified certain accounting policies, described below, that are the most important to the portrayal of our current financial condition and results of operations. Basis of Presentation These consolidated financial statements include the accounts of our company and our wholly owned Delaware subsidiaries, SCRN Properties Ltd. and Argentex Mining Corporation.  All inter-company transactions have been eliminated. Mineral Claim Payments and Exploration Expenditures We expense all exploration costs incurred on our mineral properties, including acquisition costs, prior to the establishment of proven and probable reserves.  All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable, utilizing established guidelines based upon discounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization.  During the year ended January 31, 2006, we recorded impairments of $Nil on mineral properties. There were no mineral property impairments in the current period. Use of Estimates The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions of future events that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ materially from those reported. Environmental Costs Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or our commitments to a plan of action based on the then known facts. Foreign Currency Translation Our functional currency is the U.S. dollar. Transactions in foreign currency are translated into U.S. dollars as follows:      - 27 -   i)
        monetary items at the rate prevailing at the balance sheet date;ii)
        non-monetary items at the historical exchange rate;iii)
        revenue and expense at the average rate in effect during the applicable accounting period. Exchange gains or losses arising on translation are included in income (loss) for the year. Income Taxes We have adopted Statement of Financial Accounting Standards No. 109  Accounting for Income taxes (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting, and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. Earnings Per Share Basic earnings (loss) per share of common stock is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share of common stock reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. At January 31, 2006 and at July 31, 2006, no common shares in the capital of our company were held by an escrow agent. At July 31, 2006, the following potential common shares were excluded from the computation of diluted loss per share since their effect is anti-dilutive:  Potential dilutive sharesWarrants
        
        666,666Convertible promissory notes
        
        3,333,333Stock options
        
        2,140,0006,139,999 Recent Accounting Pronouncements The FASB issued FASB Interpretation No. (FIN) 47  Accounting for Conditional Asset RetirementObligations in March 2005.  FIN 47 clarifies that an entity must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated.  This interpretation also clarifies the circumstances under which an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation.  This Interpretation is effective no later than the end of fiscal years ending after December 15, 2005.  The Company does not expect this guidance to have a material impact on its financial statements. In November 2005, the FASB issued Staff Position No. FAS 115-1  The Meeting of Other-Than-Temporary Impairment and Its Application to Certain Investments (FSP 115-1).  FSP 115-1 provides accounting guidance for identifying and recognizing other-than-temporary impairments of debt and equity securities, as well as cost method investments in addition to disclosure requirements.  FSP 115-1 is effective for reporting periods beginning after December 15, 2005, and earlier application is permitted.  The Company has determined that the adoption of FSP 115-1 does not have an impact on its result of operations or financial position. In March 2005, the Emerging Issue Task Force issued EITF Issue 04-6  Accounting for Stripping Costs in the Mining Industry (EITF Issue 04-6), stating that post-production stripping costs are a component of mineral inventory costs subject to the provisions of the American Institute of Certified Public Accountants Accounting Research Bulletin No. 43  Restatement and Revision of Accounting Research Bulletins, Chapter 4, Inventory     - 28 -  Pricing, (ARB No. 43).  Based upon this statement, post production stripping costs are considered as costs of the extracted minerals under a full absorption costing system and are recognized as a component of inventory to be recognized in costs of coal sales in the same period as the revenue from the sale of the inventory.  In addition, capitalization of such costs would be appropriate only to the extent inventory exists at the end of a reporting period.  The provisions will be effective for financial statements issued for the first reporting period in fiscal years beginning after December 15, 2005, with early adoption permitted.  The Company has determined that the adoption of EITF Issue 04-6 does not have an impact on its results of operations or financial position since the Company is still in the exploration stage and has not yet realized any revenues from its operations. On March 31, 2004, the EITF issued EITF 04-3, Mining Assets Impairment and Business Combinations (EITF 04-3) which concluded that entities should generally include values in mining properties beyond proven and probable reserves and the effects of anticipated fluctuations in the future market price of minerals in determining the fair value of mining assets. In December 2004, FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004) (SFAS 123 (revised 2004)), Share-Based Payment.  This Statement requires that the cost resulting from all share-based transactions be recorded in the financial statements.  The Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees.  The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.  The Statement replaces FASB Statement No. 123 Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 Accounting for Stock Issued to Employees.
The provisions of this Statement will be effective for the Company beginning with its fiscal year ending 2007.  The Company has determined that the adoption of SFAS 123 (revised 2004) does not have an impact on its results of operations or financial position. In November 31, 2004, FASB issued Statement of Financial Accounting Standards No. 151 (SFAS 151), Inventory Costs.  The adoption of SFAS 151 does not have an impact on the Companys results of operations or financial position. In December 2004, FASB issued Statement of Financial Accounting Standards No. 153 (SFAS 153), Exchanges of Non-monetary Assets  an amendment of APB Opinion No. 29. The Company has determined that the adoption of SFAS 153 does not have an impact on the Companys results of operations or financial position. RISK FACTORS Much of the information included in this quarterly 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.  We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements. Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below.  We caution readers of this quarterly report 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.  In evaluating us, our business and any investment in our business, readers should carefully consider the following factors. Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.      - 29 -   Risks Associated With Mining All of our properties are in the exploration stage.  There is no assurance that we can establish the existence of any mineral resource on any of our properties in commercially exploitable quantities.  Until we can do so, we cannot earn any revenues from operations and if we do not do so we will lose all of the funds that we expend on exploration.  If we do not discover any mineral resource in a commercially exploitable quantity, our business will fail. Despite exploration work on our mineral properties, we have not established that any of them contain any mineral reserve, nor can there be any assurance that we will be able to do so.  If we do not, our business will fail. A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet athttp://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.  The probability of an individual prospect ever having a "reserve" that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any 'reserve' and any funds that we spend on exploration will probably be lost. Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources.  Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines. The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices.  Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable. Mineral operations are subject to applicable law and government regulation.  Even if we discover a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral resource.  If we cannot exploit any mineral resource that we might discover on our properties, our business may fail. Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.  There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs.  If we cannot accomplish these objectives, our business could fail. We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to do so.  Current laws and regulations could be amended and we might not be able to comply with them, as amended.  Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms.  To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties. If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to develop the property into a producing mine.  If we cannot raise this additional capital, we will not be able to exploit the resource, and our business could fail. If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it     - 30 -  and develop extraction and processing facilities and infrastructure.  Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis.  If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail. Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks.  In the event of a cave-in or similar occurrence, our liability may exceed our resources, which would have an adverse impact on our company. Mineral exploration, development and production involves many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  Our operations will be subject to all the hazards and risks inherent in the exploration, development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure.  Any such event could result in work stoppages and damage to property, including damage to the environment.  We do not currently maintain any insurance coverage against these operating hazards.  The payment of any liabilities that arise from any such occurrence would have a material, adverse impact on our company. Mineral prices are subject to dramatic and unpredictable fluctuations. We expect to derive revenues, if any, from the extraction and sale of precious and base metals such as gold, silver and copper.  The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods.  The effect of these factors on the price of base and precious metals, and, therefore, the economic viability of any of our exploration projects, cannot accurately be predicted. The mining industry is highly competitive and there is no assurance that we will continue to be successful in acquiring mineral claims. If we cannot continue to acquire properties to explore for mineral resources, we may be required to reduce or cease operations. The mineral exploration, development, and production industry is largely unintegrated.  We compete with other exploration companies looking for mineral resource properties.  While we compete with other exploration companies in the effort to locate and license mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible.  Readily available markets exist worldwide for the sale of gold and other mineral products.  Therefore, we will likely be able to sell any gold or mineral products that we identify and produce. We compete with many companies possessing greater financial resources and technical facilities.  This competition could adversely affect our ability to acquire suitable prospects for exploration in the future.  Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations. Our title to our resource properties may be challenged by third parties or the licenses that permit us to explore our properties may expire if we fail to timely renew them and pay the required fees. We have investigated the status of our title to our mining concessions in Argentina granting us the right to explore our mineral resource properties located in that country.  We are satisfied that the person(s) from whom we purchased these concessions is in the process of completing the transfer of legal title to these concessions into the name of our subsidiary, SCRN Properties Ltd., but the transfer of registered title to these concessions is not yet complete.  If these transfers are not completed, our title to those properties that are not properly transferred could be subject to challenge.      - 31 -   Risks Related To Our Company We have a limited operating history on which to base an evaluation of our business and prospects. Although we have been in the business of exploring mineral resource properties since 2002, we have not yet located any mineral reserve.  As a result, we have never had any revenues from our operations.  In addition, our operating history has been restricted to the acquisition and exploration of our mineral properties and this does not provide a meaningful basis for an evaluation of our prospects if we ever determine that we have a mineral reserve and commence the construction and operation of a mine.  We have no way to evaluate the likelihood of whether our mineral properties contain any mineral reserve or, if they do that we will be able to build or operate a mine successfully.  We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are exploring our properties.  During the twelve months ending July 31, 2007, we expect to spend approximately
$900,000 on the maintenance and exploration of our mineral properties and the operation of our company.  We therefore expect to continue to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate significant revenues from mining operations and any dispositions of our properties, we will not be able to earn profits or continue operations.  At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development.  We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition.  There is no history upon which to base any assumption as to the likelihood that we will prove successful and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable
operations. The fact that we have not earned any operating revenues since our incorporation raises substantial doubt about our ability to continue to explore our mineral properties as a going concern. We have not generated any revenue from operations since our incorporation and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and we build and operate a mine.  We had cash in the amount of $34,560 as of July 31, 2006.  In the current quarter, we raised equity financing of $50,000.  As at July 31, 2006, we had a working capital deficit of $412,580.  We incurred a net loss of  $1,125,183 for the six month period ended July 31, 2006 and $4,998,159 since inception at December 21, 2001.  We estimate our average monthly operating expenses to be approximately $75,000 each month, including exploration, general and administrative expense and investor relations expenses.  As a result, we believe that we will have to raise additional funds to meet
our currently budgeted operating requirements for the next 12 months and to repay promissory notes as they become due.  As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources.  We have traditionally raised our operating capital from sales of equity and debt securities, but there can be no assurance that we will continue to be able to do so.  If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities.  If any of these were to occur, there is a substantial risk that our business would fail. These circumstances lead our independent registered public accounting firm, in their report dated April 28, 2006, to state that the future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management has plans to seek additional capital through a private placement and public offering of its capital stock.  These conditions raise substantial doubt about the Companys ability to continue as a going concern.  Although there are no assurances that managements plans will be realized, management believes that the Company will be able to continue operations in the future.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.  We continue to experience net operating losses.      - 32 -   Although our primary exploration property is titled in our name (or is in the process of being titled in our name), our rights to that property are subject to a written option agreement.  If we materially breach the terms of that option agreement, our rights in the property could be forfeit. We entered into a Mineral Property Acquisition Agreement dated February 24, 2004 with Christopher Dyakowski, an ex-director and officer of our company, whereby we agreed to make periodic option payments in cash in exchange for an option to purchase up to 100% of the mineral rights in the parcel of claims that we refer to as the Pinguino property, located in the Santa Cruz province of Argentina.  If we fail to make these payments timely, our option on the Pinguino property could lapse and our interest in the Pinguino property could be forfeit.  If this were to happen, our business would be harmed. Risks Associated with Our Common Stock Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares. Our common stock is quoted on the OTC Bulletin Board service of the National Association of Securities Dealers.  Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects.  This volatility could depress the market price of our common stock for reasons unrelated to operating performance.  Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex.  Accordingly, shareholders may have difficulty reselling any of the shares. Our stock is a penny stock.  Trading of our stock may be restricted by the SECs penny stock regulations and the NADSDs sales practice requirements, 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 SEC 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. In addition to the penny stock rules promulgated by the Securities and Exchange Commission, the NASD 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, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD requirements make it more difficult for     - 33 -  broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock. Other Risks Because all of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against them for misconduct and you may not be able to enforce judgement and civil liabilities against our officers, directors, experts and agents. All of our directors and officers are nationals and/or residents of countries other than the United States and all or a substantial portion of their assets are located outside the United States.  As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Trends, Risks and Uncertainties We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock. Item 3.  Controls and Procedures. As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our companys disclosure controls and procedures as of the end of the period covered by this quarterly report, being July 31, 2006.  This evaluation was carried out under the supervision and with the participation of our companys management, including our companys president and chief executive officer.  Based upon that evaluation, our companys president and chief executive officer concluded that our companys disclosure controls and procedures are effective as at the end of the period covered by this report.  There have been no changes in our companys internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our companys reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures  designed to ensure that information required to be disclosed in our companys reports filed under the Exchange Act is accumulated and communicated to management, including our companys president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure. PART II - OTHER INFORMATION Item 1.  Legal Proceedings. We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. None.      - 34 -   Item 3.  Defaults Upon Senior Securities. None. Item 4.  Submission of Matters to a Vote of Security Holders. None. Item 5.  Other Information. On June 28, 2006 we issued a promissory note to Providence Securities Ltd. in the amount of $100,000 with flat interest of $5,000.  The promissory note was due and payable on August 28, 2006 and has not been repaid to date. On July 1, 2006 we issued a promissory note to Kenneth Hicks, our president, in the amount of $91,410 at an interest rate of 6% per annum.  All or any portion of the amounts due under the promissory note are payable on demand. On May 5, 2006 we issued 200,000 shares of our common stock to a director and officer upon the exercise of incentive stock options. The options were exercisable at an exercise price of $0.25 per share. The issuance of these securities was in each case pursuant to the exemption from registration requirements of the United States Securities Act of 1933, as amended (the Securities Act) provided by Regulation S promulgated thereunder. None of the recipients was a U.S. person (as that term is defined in Regulation S), and none of the transactions took place in the United States. Item 6.  Exhibits.  Exhibit No.
        Description3.1
        Articles of Incorporation of the Registrant, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on March 12, 2002 and incorporated herein by reference.3.2
        By-laws of the Registrant, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on March 12, 2002 and incorporated herein by reference.3.3
        Certificate of Designation of Series A Convertible Preferred Stock, filed as an exhibit to the annual report on Form 10-KSB filed with the Commission on April 30, 2004 and incorporated herein by reference.4.1
        10% Convertible Promissory Note, dated December 22, 2004, issued to Chaudion Holdings Ltd., filed as an exhibit to the current report on Form 8-K filed with the Commission on January 13, 2005 and incorporated herein by reference.10.1
        Mineral Property Option Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.10.2
        Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.10.3
        Share Purchase Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.       - 35 -    10.4
        Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and San Telmo Energy Ltd., filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.10.5
        Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and Storm Cat Energy Corp., filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.10.6
        Consulting Agreement dated February 12, 2005 between the Registrant and Kenneth Hicks, filed as an exhibit to the annual report on Form 10-KSB, filed with the Commission on May 13, 2005 and incorporated herein by reference.10.7
        Consulting Agreement dated February 25, 2005 between the Registrant and Chris Dyakowski, and Consulting Agreement dated February 12, 2005 between the Registrant and Kenneth Hicks, filed as an exhibit to the annual report on Form 10-KSB, filed with the Commission on May 13, 2005 and incorporated herein by reference.10.8
        Diamond Core Drilling (Surface) Agreement, dated as of January 18, 2005, between the Registrant and Connors Argentina S.A., filed as an exhibit to the current report on Form 8-K filed with the Commission on January 24, 2005 and incorporated herein by reference.10.9
        Amendment to Mineral Property Acquisition Agreement dated June 30, 2005, filed as an exhibit to the current report on Form 8-K filed with the Commission on July 5, 2005 and incorporated herein by reference.10.10
        Restated Amendment to Mineral Property Acquisition Agreement dated August 8, 2005, filed as an exhibit to the current report on Form 8-K, filed with the Commission on August 9, 2005 and incorporated herein by reference.10.11
        Promissory Note dated August 31, 2005 issued to Chaudion Holdings Ltd. filed as an exhibit to the current report of Form 8-K filed with the Commission on May 11, 2006 and incorporated herein by reference.10.12
        Promissory Note dated November 1, 2005 issued to Chaudion Holdings Ltd. filed as an exhibit to the current report of Form 8-K filed with the Commission on May 11, 2006 and incorporated herein by reference.10.13
        Amended 10% Convertible Note dated April 18, 2006 issued by our company to Chaudion Holdings Ltd., filed as an exhibit to our current report on Form 8-K, filed with the Commission on May 11, 2006 and incorporated herein by reference.10.14
        Promissory Note dated June 28, 2006 issued to Providence Securities Ltd. filed as an exhibit to the current report of Form 8-K filed with the Commission on July 27, 2006 and incorporated herein by reference.10.15
        Promissory Note dated July 1, 2006 issued to Kenneth Hicks filed as an exhibit to the current report of Form 8-K filed with the Commission on July 27, 2006 and incorporated herein by reference.14.1
        Code of Ethics and Business Conduct of Officers, Directors and Employees, filed as an exhibit to the annual report on Form 10-KSB filed with the Commission on April 30, 2004 and incorporated herein by reference.31.1*
        Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended (Chief Executive Officer).31.2*
        Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended (Chief Financial Officer).32.1*
        Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).       - 36 -    32.2*
        Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). *Filed herewith     37   SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By:/s/ Kenneth Hicks Kenneth Hicks President and Director (Principal Executive Officer) Date:  September 13, 2006. By:/s/ Hamish Malkin Hamish Malkin Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date:  September 13, 2006.