United
States Securities and Exchange Commission


Washington,
D.C. 20549





Form
20-F/A


Amendment
No. 1





(Mark
One)


[   ]           Registration
Statement Pursuant to Section 12(b) or (g) of the Securities Exchange Act of
1934





or





[X]           Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934


For
the fiscal year ended December 31, 2006





or





[   ]           Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934


For the
transition period from _________ to _________





or





[   ]          Shell Company Report Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934




Commission
file number: 0-51005




Amera
Resources Corporation


(Exact
name of Registrant as specified in its charter)




Amera
Resources Corporation


(Translation
of Registrant’s name into English)




British
Columbia, Canada


(Jurisdiction
of incorporation or organization)





Suite
709 - 837 West Hastings Street, Vancouver, British Columbia, V6C
3N6


(Address
of principal executive offices)





Securities
registered or to be registered pursuant to Section 12(b) of the
Act.  None





Securities
registered or to be registered pursuant to Section 12(g) of the
Act.




Common
Stock, No Par Value


(Title of
Class)





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




Not
Applicable


(Title of
Class)





Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of December 31, 2006.





21,748,592
Common Shares outstanding as of December 31, 2006





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


Yes _____      No  X








If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.


Yes
____        No  X





Note –
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.





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





Yes X   No





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





Large
accelerated filer                                                        Accelerated
filer                                             Non-accelerated
filer  X





Indicate
by check mark which financial statement item the registrant has elected to
follow.


Item 17
X          Item
18





If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange
Act)   Yes ____     No X
















EXPLANATORY
NOTE











The
registrant is filing this Amendment No. 1 to its annual report on Form 20-F for
the year ended December 31, 2006 (filed with the Securities and Exchange
Commission (the “SEC”) on May 30, 2007 (the “original filing”)) to reflect
amendments to the original filing.  Accordingly, required disclosures
have been amended as follows:





1.
            Pages
      9 and 10 of this filing and Note 11 of the registrant’s 2006 financial
      statements have been revised (DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) to reflect the costs that
      were incurred in the acquisition of the registrant’s Mineral Property
      interests and deferred costs.  For U.S. GAAP purposes, such
      costs are considered to be tangible assets while exploration expenditures
      are not tangible assets.





2.
            Amendments
      have been made in order to clarify the technical disclosures regarding the
      registrant’s mineral properties under “Item 4. Principal Properties” of
      this filing.





3.
            The
      report of the independent auditors has been revised to cover the
      restatements of the registrant's fiscal year ended December 31, 2004. The
      report of the independent auditors for the registrant's fiscal year ended
      December 31, 2004 has been
included.





In
addition, the registrant has attached hereto the exhibits required as a result
of this amendment, as set forth in Item 19 below. The registrant has not made
any modifications or updates to the financial statements for the original
filing. This amendment does not describe other information, events or
development occurring after the original filing, including exhibits, or modify
or update those disclosures affected by any subsequent events. Accordingly, this
amendment should be read in conjunction with the registrant’s fillings made with
the Securities and Exchange Commission subsequent to the original filing, as
information in such reports and documents may update or supersede certain
information contained in this amendment.


-3-


General
Information:





Unless
otherwise indicated, all references herein are to Canadian dollars.





The
Company is required under Canadian law (National Instrument 43-101 Standards Of
Disclosure For Mineral Projects) (“NI 43-101”) to calculate and categorize
“mineral reserve”, “proven mineral reserve”, “probable mineral reserve”,
“mineral resource”, “measured mineral resource”, “indicated mineral resource”
and “inferred mineral resource” under the Canadian Institute of Mining
Metallurgy and Petroleum (“CIM”) Standards on Mineral Resources and Reserves -
Definitions and Guidelines dated December 11, 2005.  These standards
establish definitions and guidelines for the reporting of exploration
information, mineral resources and mineral reserves in Canada.  These
definitions have not been adopted for use in the United States of America by the
Securities and Exchange Commission (the “SEC”).  Under these
guidelines, the CIM definitions of proven and probable mineral reserves do
not equate to the definitions of proven and probable reserves as set out in
Guide 7 of the Securities Act Industry Guides adopted by the SEC (“Guide
7”).  In addition, Canadian law requires disclosure of mineral
resources that equate to measured, indicated and inferred
resources.





GLOSSARY





The
following is a glossary of geological and technical terms used in this annual
report:





Alteration
            Any
      physical or chemical change in a rock or mineral subsequent to its
      formation. Milder and more localized than metamorphism.Breccia
            A
      rock containing generally angular fragments of itself or some other
      rock.Cateo
            In
      Argentina, a cateo is an exploration concession granted for a period of up
      to 1,100 days.  In areas where fieldwork seasons are limited,
      only the available field season will be considered in determining the
      1,100 days.  A cateo gives the holder the exclusive right to
      explore the area, subject to certain pre-existing rights of owners of
      mines within the area and abutting owners of cateos.  Through
      the process of exploration, the owner of the cateo may make and file
      “manifestations” of discovery (see below) and petition the mining
      authority for the granting of mines (see below).  A cateo may be
      up to 10,000 hectares in size.  A single legal person may not
      hold more than 20 cateos or 200,000 hectares of cateos in any one
      province.  When the cateo is officially granted, a one time
      payment of about  US$0.35 (Pesos $0.80) per hectare is
      required.Clastic
            Rock
      components consisting of fragments derived by mechanical erosion of
      pre-existing rocks.Epithermal
            A
      mineral deposit consisting of veins and replacement bodies, usually in
      volcanic or sedimentary rocks, containing precious metals, or, more
      rarely, base metals. Epithermal deposits form in hydrothermal systems
      related to volcanic activity and while active can discharge to the surface
      as hot springs or fumaroles.g/t
            grams
      per tonneHigh
      Sulphidation
            Veins,
      vuggy breccias and sulphide replacements ranging from pods to massive
      lenses occur in volcanic sequences associated with high level hydrothermal
      systems marked by acid-leached, advanced argillic, siliceous
      alteration.Hydrothermal
      Alteration
            Those
      chemical and mineral changes resulting from the interaction of hot water
      solutions with pre-existing solid mineral phases.Intrusive
      Rock
            A
      body of rock, that while fluid, penetrated into or between other rocks,
      but solidified before reaching the surface.km
            kilometreLWA
            length
      weighted averagem
            metre






-4-




Mafic
            Dark
      colored, generally iron or magnesium rich, rock or
  mineral.Manifestations
            In
      Argentina, manifestations or “manifestaciones” of discovery are official
      notices filed with the mining authority indicating that the person filing
      (who must be the owner of the cateo in an area covered by a cateo) has
      made a discovery.  The filing and acceptance by the mining
      authority of such a notice, constitutes the first step in converting a
      discovery to a mine (see below).  A manifestation of discovery
      may cover one or more claims in the case of either a vein or disseminated
      deposit.  The size of the manifestations and the annual payments
      required of the owner is the same as those for a mine.Mine
            In
      Argentina, a mine or “mina” is a real property interest.  It is
      a right of exploration granted on a permanent basis after the completion
      of an official survey for as long as the right is diligently utilized and
      semi-annual payments of 40 Pesos (approximately  US$17.50) per
      claim are made.  A mine may consist of one or several claims or
      “pertenencias”.  In the case of vein deposits, each claim is a
      maximum of 200 by 300 metres or six hectares; for disseminated deposits,
      each claim is up to one square kilometre or 100
  hectares.Porphyry
            An
      igneous rock containing mineral crystals that are visibly larger than
      other crystals of the same or different composition.Potassic
      Alteration
            Development
      of secondary potassium-dominant minerals such as K-Feldspar or biotite by
      hydrothermal activity.ppm
            parts
      per millionPropylitic
      Alteration
            Hydrothermal
      alteration consisting of the mineral assemblage
      epidote-chlorite-albite-calcite usually found in the outer zones of
      epithermal gold and copper porphyry deposits.Qualified Person
            As
      defined in under Canadian law (National Instrument 43-101 Standards of
      Disclosure for Mineral Projects) (“NI 43-101”) an individual who (a) is an
      engineer or geoscientist with at least five years of experience in mineral
      exploration, mine development or operation or mineral project assessment,
      or any combination of these; (b) has experience relevant to the subject
      matter of the mineral project and the technical report; and (c) is a
      member in good standing of a professional association.Sedimentary
      Rocks
            Descriptive
      term for a rock formed of sediment, namely solid material both mineral and
      organic, deposited from suspension in a liquid.Skarn
            A
      style of alteration characterized by iron and magnesium bearing
      aluminosilicate materials such as garnet and diopside.Stockwork
            A
      mineral deposit or accumulation consisting of a three-dimensional network
      of planar to irregular veinlets spaced closely
together.Stream
      Sediment Sample
            A
      sample of fine sediment derived from the mechanical action of the
      stream.Sulfide
            A
      compound of sulfur combined with one or more metallic or semi-metallic
      elements.Supergene
            A
      mineral deposit or enrichment formed near the surface by descending
      solutions.Talus
            Rock
      fragments lying at the base of a cliff or on a steep slope from which they
      were derived.Veinlet
            A
      small vein.Veins
            An
      occurrence of minerals, having been intruded into another rock, forming
      tabular shaped bodies.Ag
            Silver






-5-




As
            ArsenicAu
            GoldBa
            BariumCo
            CobaltCu
            CopperMo
            MolybdenumPb
            LeadSb
            AntimonyZn
            ZincMinerals:Argentite
            A
      silver sulphide mineral - Ag2SAzurite
            A
      deep blue to violet blue copper carbonate hydroxide mineral commonly found
      in the oxidation zones of porphyry copper deposits - Cu3(CO3)2(OH)2.Biotite
            An
      iron and magnesium bearing mica mineral.Carbonate
            A
      mineral containing the radical CO3.Calcite
            Calcium
      Carbonate (CaCO3)Chalcopyrite
            A
      sulfide mineral containing copper and iron – CuFeS2.Chlorite
            Family
      of sheet silicates of iron, magnesium and aluminum, characteristic of
      low-grade metamorphism or hydrothermal alteration. Green color, with
      cleavage like mica except that chlorite small scales are not
      elastic.Feldspar
            An
      aluminosilicate with variable amounts of potassium, sodium and
      calcium.Hornblende
            A
      complex hydrated aluminosilicate of magnesium, iron and
      sodium.Magnetite
            A
      magnetic iron oxide mineral.Malachite
            A
      bright green copper carbonate hydroxide mineral often found in the
      oxidized zone of porphyry copper deposits - Cu2(CO3)(OH)2.Pyroxene
            An
      aluminosilicate of magnesium and
iron.


-6-





Rock
    Types:Andesite
            A
      volcanic rock with the principal minerals being
    plagioclase.Conglomerate
            A
      clastic sedimentary rock containing rounded fragments of gravel or pebble
      size.Dacite
            A
      volcanic or shallow intrusive rock with the principal minerals being
      plagioclase, quartz and one or more mafic constituents.Diorite
            An
      intrusive rock composed essentially of sodic plagioclase, hornblende,
      biotite, or pyroxene.Limestone
            A
      sedimentary rock consisting chiefly of calcium
  carbonate.Sandstone
            A
      clastic sedimentary rock composed largely of sand-sized grains,
      principally quartz.Shale
            A
      clastic sedimentary rock derived from very fine-grained sediment
      (mud).Tuff
            A
      consolidated rock formed of compacted volcanic fragments and fine ash,
      generally smaller than 4mm in diameter.  If particles are melted
      slightly together from their own heat, it is a “welded
    tuff.”





Forward
Looking Statements





The Company cautions readers regarding forward looking
statements found in the following discussion and elsewhere in this annual report
and in any other statement made by, or on the behalf of the Company, whether or
not in future filings with the Securities Exchange Commission (the
“SEC”).  Forward looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments.  Forward looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company’s control and many of which,
with respect to future business decisions, are subject to change.  See
“Item 3.  Key Information - Risk Factors”.  These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward looking
statements made by or on behalf of the Company.  The Company disclaims
any obligation to update forward looking statements.








-7-


PART
I





Item
1.  Directors, Senior Management and Advisors.





Not
applicable.





Item
2.  Offer Statistics and Expected Timetable.





Not
applicable.





Item
3.  Key Information.





Selected
Financial Data





The
selected financial data of the Company for the years ended December 31, 2006,
2005 and 2004, was derived from the financial statements of the Company which
have been audited by Ernst & Young LLP, independent Chartered Accountants,
as indicated in their report which is included elsewhere in this annual
report.  The selected financial data set forth for the years ended
December 31, 2003 and 2002 are derived from the Company’s audited financial
statements, not included herein.





The
selected financial data for the periods ended December 31, 2006, 2005 and 2004,
have been derived from the audited financial statements of the Company, included
herein and, in the opinion of the Company, also included all adjustments
(consisting of normally recurring adjustments) necessary to present fairly the
information set forth therein.





The
information in the following table was extracted from the more detailed
financial statements and related notes included herein and should be read in
conjunction with such financial statements and with the information appearing
under the heading “Item 5. Operating and Financial Review and
Prospects.”





Reference
is made to Note 11 of the Company’s audited financial statements for the years
ended December 31, 2006 of the Company’s financial statements, which are
included herein, for a discussion of the material differences between Canadian
generally accepted accounting principles (“GAAP”) and US GAAP, and their effect
on the Company’s financial statements.





To date,
the Company has not generated any cashflow from its activities to fund ongoing
activities and cash commitments.  The Company has financed its
operations principally through the sale of its equity securities.  The
Company believes it has adequate resources to maintain its core activities for
the 12 months from January 1, 2007 to December 31, 2007, but may not have
sufficient working capital to fund all its planned exploration
activities.  In the future, the Company may need to raise additional
capital through the sale of its equity securities to fund further exploration
activities.  See “Item 5. Operating and Financial Review and Prospects
- Liquidity and Capital Resources.”  The Company may not be able to
raise the necessary funds, if any, and may not be able to raise such funds at
terms which are acceptable to the Company.  In the event the Company
is unable to raise adequate finances to fund the proposed activities, it will
need to reassess its alternatives and may have to abandon one or more of its
property interests as a result.





-8-





Canadian Generally Accepted
Accounting Principles





(CDN
      $)Year
      Ended December 31,2006
            
            
            2005
            
            
            2004
            
            
            2003
            
            
            2002Revenue
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -General
      Corporate Expenditures
            
            
            (1,125,939
            )
            
            
            (988,664
            )
            
            
            (845,181
            )
            
            
            (408,352
            )
            
            
            (26,614
            )General
      Exploration Expenditures
            
            
            (296,810
            )
            
            
            (199,264
            )
            
            
            (18,318
            )
            
            
            -
            
            
            
            -Foreign
      Exchange Loss
            
            
            (2,910
            )
            
            
            (36,624
            )
            
            
            (25,104
            )
            
            
            (896
            )
            
            
            -Interest
      and Miscellaneous Income
            
            
            30,924
            
            
            
            15,001
            
            
            
            14,271
            
            
            
            3,492
            
            
            
            356Write-off
      of mineral properties
            
            
            (525,514
            )
            
            
            (225,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -Net
      Loss for the year
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )
            
            
            (405,756
            )
            
            
            (26,258
            )Loss
      per Share Basic and Diluted
            
            
            (0.10
            )
            
            
            (0.09
            )
            
            
            (0.07
            )
            
            
            (0.08
            )
            
            
            (1.25
            )Weighted
      Average Number
              of
      Shares Outstanding
            
            
            19,169,121
            
            
            
            15,916,822
            
            
            
            13,192,736
            
            
            
            4,848,716
            
            
            
            20,974Working
      Capital
            
            
            870,731
            
            
            
            516,270
            
            
            
            1,686,120
            
            
            
            1,021,272
            
            
            
            174,042Capital
      Assets
            
            
            -
            
            
            
            -
            
            
            
            2,796
            
            
            
            -
            
            
            
            -Mineral
      Properties
            
            
            3,356,158
            
            
            
            3,184,844
            
            
            
            2,014,978
            
            
            
            684,259
            
            
            
            -Long-Term
      Debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Assets
            
            
            4,343,852
            
            
            
            3,843,389
            
            
            
            3,754,341
            
            
            
            1,820,883
            
            
            
            207,469Net
      Assets - Shareholder’s Equity
            
            
            4,165,095
            
            
            
            3,546,233
            
            
            
            3,604,137
            
            
            
            1,705,531
            
            
            
            184,042





Adjusted to United States
Generally Accepted Accounting Principles





Under
U.S. GAAP the following financial information would be adjusted from Canadian
GAAP (references are made to Note 11 of the accompanying consolidated audited
financial statements):





(CDN
      $)Consolidated
      Statements of Operations2006
            
            
            
            2005
            
            
            
            2004
            
            
            
            2003
            
            
            
            2002Loss
      for the year under Canadian GAAP
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )
            
            
            (405,756
            )
            
            
            (26,258
            )Mineral
      property and deferred exploration
              costs
      for the year, net of reversal of
              future
      income tax
            
            
            (613,907
            )
            
            
            (950,707
            )
            
            
            (665,006
            )
            
            
            (177,217
            )
            
            
            -Mineral
      property and deferred exploration
              costs
      written off during the year which
              would
      have been expensed in the year
              incurred
            
            
            318,703
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Loss
      for the year under US GAAP
            
            
            (2,215,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )
            
            
            (582,973
            )
            
            
            (26,258
            )Unrealized
      gains on available-for-sale
              securities
            
            
            7,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Comprehensive
      loss under US GAAP
            
            
            (2,208,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )
            
            
            (582,973
            )
            
            
            (26,258
            )Basic
      and diluted loss per share
              under
      US GAAP
            
            
            (0.12
            )
            
            
            (0.15
            )
            
            
            (0.12
            )
            
            
            (0.12
            )
            
            
            (1.25
            )


-9-




Consolidated
      balance sheets
            
            (CDN $)2006
            
            
            2005
            
            
            2004
            
            
            2003
            
            
            2002Shareholders’
      EquityBalance
      per Canadian GAAP
            
            
            4,165,095
            
            
            
            3,546,233
            
            
            
            3,604,137
            
            
            
            1,705,531
            
            
            
            184,042Mineral
      property and deferred exploration
              costs
      expensed net of reversal of
              future
      income tax
            
            
            (1,962,047
            )
            
            
            (1,792,930
            )
            
            
            (842,223
            )
            
            
            (177,217
            )
            
            
            -Accumulated
      other comprehensive income
            
            
            7,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      per US GAAP
            
            
            2,210,048
            
            
            
            1,753,303
            
            
            
            2,761,914
            
            
            
            1,528,314
            
            
            
            184,042Mineral
      properties and deferred costsBalance
      per Canadian GAAP
            
            
            3,356,158
            
            
            
            3,184,844
            
            
            
            2,014,978
            
            
            
            684,259
            
            
            
            -Mineral
      properties and deferred costs
              expensed
      under US GAAP
            
            
            (2,023,841
            )
            
            
            (1,947,811
            )
            
            
            (941,980
            )
            
            
            (177,217
            )
            
            
            -Balance
      per US GAAP
            
            
            1,332,317
            
            
            
            1,237,033
            
            
            
            1,072,998
            
            
            
            507,042
            
            
            
            -Future income tax
      liabilitiesBalance
      per Canadian GAAP
            
            
            61,794
            
            
            
            154,881
            
            
            
            99,757
            
            
            
            -
            
            
            
            -Reversal
      of future income tax liability
            
            
            (61,794
            )
            
            
            (154,881
            )
            
            
            (99,757
            )
            
            
            -
            
            
            
            -Balance
      per US GAAP
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -





Consolidated
      statements of cash flows2006
            
            
            2005
            
            
            2004
            
            
            2003
            
            
            2002Operating
      ActivitiesCash
      used per Canadian GAAP
            
            
            (1,350,297
            )
            
            
            (1,131,111
            )
            
            
            (845,988
            )
            
            
            (80,610
            )
            
            
            (4,031
            )Mineral
      properties and deferred costs
            
            
            (540,890
            )
            
            
            (950,707
            )
            
            
            (994,256
            )
            
            
            (177,217
            )
            
            
            -Cash
      used per US GAAP
            
            
            (1,891,187
            )
            
            
            (2,081,818
            )
            
            
            (1,840,244
            )
            
            
            (257,827
            )
            
            
            (4,031
            )Investing
      ActivitiesCash
      used per Canadian GAAP
            
            
            (796,915
            )
            
            
            (196,242
            )
            
            
            (2,233,759
            )
            
            
            (414,259
            )
            
            
            -Mineral
      properties and deferred costs
            
            
            540,890
            
            
            
            950,707
            
            
            
            994,256
            
            
            
            177,217
            
            
            
            -Cash
      provided (used) per US GAAP
            
            
            (256,025
            )
            
            
            754,465
            
            
            
            (1,239,503
            )
            
            
            (237,042
            )
            
            
            -Financing
      activitiesCash
      provided per Canadian
              and
      US GAAP
            
            
            2,156,011
            
            
            
            1,170,448
            
            
            
            2,641,134
            
            
            
            1,415,245
            
            
            
            201,499





See Note
11 of the Company’s consolidated financial statements.








-10-





Exchange
Rate History





The noon
rate of exchange on April 30, 2007, reported by the United States Federal
Reserve Bank of New York for the conversion of Canadian dollars into United
States dollars was CDN$1.1068 (US$0.9035 = CDN$1.00).





The
following table sets forth the average exchange rate for one Canadian dollar
expressed in terms of one U.S. dollar for the past five fiscal
years.





Period
            AverageJanuary
      1, 2006 – December 31, 2006
            0.8818January
      1, 2005 – December 31, 2005
            0.8254January
      1, 2004 – December 31, 2004
            0.7682January
      1, 2003 – December 31, 2003
            0.7206January
      1, 2002 – December 31, 2002
            0.6368





The
following table sets forth high and low exchange rates for one Canadian dollar
expressed in terms of one U.S. dollar for the past six months:





Month
            High
            LowApril
      2007
            0.9035
            0.8633March
      2007
            0.8673
            0.8467February
      2007
            0.8631
            0.8437January
      2007
            0.8586
            0.8547December
      2006
            0.8760
            0.8582November
      2006
            0.8869
            0.8715





Exchange
rates are based upon the noon buying rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York.





Recent
Accounting Pronouncements





United
States Pronouncements





The
Financial Accounting Standards Board (“FASB”) has issued Statement of Financial
Accounting Standards (“SFAS”) 157, “Fair Value Measurements” (“SFAS 157”), which
defines fair value, establishes a framework for consistently measuring fair
value under GAAP and expands disclosures about fair value
measurements.  SFAS 157 is effective beginning January 1, 2008, and
the provisions of SFAS 157 will be applied prospectively as of that
date.  The adoption of SFAS 157 is not expected to have an effect on
the Company’s financial position.





The FASB
has also issued FAS Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with FAS Interpretation No. 109, “Accounting for Income Taxes”.  FIN
48 prescribes a recognition threshold and measurement attributable for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return.  FIN 48 also provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods, disclosures and transitions.  FIN 48 is effective for fiscal
years beginning after December 15, 2006.  The adoption of FIN 48 is
not expected to have an effect on the Company’s financial position.





Canadian
Pronouncements





The
Company believes that there are no new Canadian pronouncements which will have a
material effect on the Company’s financial position or results of
operations.





-11-


Risk
Factors





Due to
the nature of the Company’s business and the present stage of exploration on its
mineral resource properties, the following risk factors apply to the Company’s
operations (see “Item 4. Information on the Company – History and Development of
the Company”):





Liquidity
and Cash Flow:The Company has limited
financial resources, has a history of losses and has no source of operating cash
flow.  The Company has not generated any revenues from its mineral
claims and does not anticipate any in the foreseeable
future.  Historically, the only source of funds available to the
Company has been through the sale of its common shares.





As of
April 30, 2007, the Company had working capital of approximately
$3,800,000.  The Company believes it has adequate resources to
maintain its core activities for the 12 months from January 1, 2007 to December
31, 2007, but may not have sufficient working capital to fund all its planned
exploration activities.   In the future, the Company may need to
raise additional capital through the sale of its equity securities to fund
further exploration activities.  See “Item 5. Operating and Financial
Review and Prospects - Liquidity and Capital Resources.”  The Company
may not be able to raise the necessary funds, if any, and may not be able to
raise such funds at terms which are acceptable to the Company.  In the
event the Company is unable to raise adequate finances to fund the proposed
activities, it will need to reassess its alternatives and may have to abandon
one or more of its property interests as a result.  Any further
additional equity financing undertaken by the Company may cause dilution to its
shareholders.





Exploration
Stage Company:All of the Company’s
property interests are in the exploration stage and do not contain any
“reserves”, as that term is defined in Guide 7 adopted by the
SEC.  The term “reserves” is defined in Guide 7 as “that part of a
mineral deposit which could be economically and legally extracted or produced at
the time of the reserve determination.”  Guide 7 is available from the
SEC’s website at:


http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7.





Mineral
exploration involves significant risk and few properties that are explored are
ultimately developed into producing mines.  The probability of an
individual prospect ever having reserves that meet the requirements of Industry
Guide 7 is extremely remote.  The Company’s property interests, in all
probability, do not contain any reserves and any funds spent on exploration of
the Company’s property interests will probably be lost.  If any of the
Company's exploration programs are successful, the Company will require
additional funds to advance the property beyond the exploration
stage.  Substantial expenditures are required to establish reserves
through drilling, to develop metallurgical processes to extract the metal from
the ore and, in the case of new properties, to develop the mining and processing
facilities and infrastructure at any site chosen for mining.  If the
Company is unable to secure additional funding, the Company may lose its
interest in one or more of its mineral claims and/or may be required to cease
all activities.





Additional
Financing:In recent years, the
securities markets in Canada have experienced a high level of price and volume
volatility, and the market price of securities of many companies, particularly
junior mineral exploration companies, have experienced wide fluctuations in
price which have not necessarily been related to the operating performance,
underlying asset values or prospects of such companies.  Substantially
all of the Company's financings have been conducted through the sale of its
common stock.  Continued price fluctuations will have a significant
impact on the Company’s ability to complete equity financings.





Exploration
Risks:The
properties in which the Company has an interest are located in Argentina (a
portion of one project extends into Chile), Peru and Nevada, United
States.  Mineral exploration activities may be affected in varying
degrees by political instability and government regulations relating to the
mining industry.  Any changes in regulations or shifts in political
conditions are beyond the control of the Company and may adversely affect its
business.  The Company’s exploration activities may be affected in
varying degrees by government regulations with respect to restrictions on price
controls, export controls, income taxes, expropriations of property,
environmental legislation and mine safety.  The status of Argentina
and Peru as developing countries may make it more difficult for the Company to
obtain any required exploration financing for its projects.  The
effect of all of these factors cannot be accurately predicted.  Both
the Argentinean and Peruvian economies have experienced recessions in recent
years and there can be no assurance that their economies will recover from such
recessions.  If the economies of Argentina and Peru fail to grow




-12-




or suffer
a recession, the Company may not be able to continue its activities in those
countries.  The Company does not maintain and does not intend to
purchase political risk insurance.





Exploration
activities require permits from various federal, provincial or territorial and
local governmental authorities and are subject to national and local laws and
regulations governing prospecting, exports, taxes, labor standards, occupational
health, waste disposal, toxic substances, land use, environmental protection,
mine safety, and others which currently or in the future may have a substantial
adverse impact on the Company.  See “Item 4. Information on the
Company - Business Overview - Government Regulations.”  Exploration
activities are also subject to substantial regulation under these laws by
governmental agencies.  There can be no assurance, however, that all
permits which the Company may require for its exploration activities will be
obtainable on reasonable terms or on a timely basis or such laws and regulations
would not have an adverse effect on any project which the Company might
undertake.





If the
Company is unable to obtain the necessary permits for its exploration
activities, the Company might have to change or abandon its planned exploration
for such non-permitted properties and/or to seek other joint venture
arrangements.  In such event, the Company might be forced to sell or
abandon its property interests.





Failure
to comply with applicable laws, regulations, and permitting requirements may
result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities causing exploration activities to cease or be curtailed,
and may include corrective measures requiring capital expenditures, installation
of additional equipment, or remedial actions.





Any
change in or amendments to current laws, regulations and permits governing
activities of mineral exploration companies, or more stringent implementation
thereof, could require increases in exploration expenditures, or require delays
in exploration or abandonment of new mineral properties.  The cost of
compliance with changes in governmental regulations has a potential to increase
the Company’s expenses.





Project
Delay:If
the Company undertakes new, or significantly expands its existing, exploration
activities the Company may be required to obtain pre-construction environmental
and land use review and comply with permitting, control and mitigation
requirements of the jurisdiction in which such activities are to be
conducted.  Compliance with new requirements could impose costs on the
Company in the future, the materiality of which cannot reasonably be predicted
at this time.  Also, the Company may require additional permits for
its future activities, which may or may not be obtainable on reasonable
terms.





Title to
Properties:The Company owns, leases
or has under option mining claims, mineral claims or concessions which
constitute the Company's property holdings.  The ownership and
validity of mining claims and concessions are often uncertain and may be
contested.





The
Company does not obtain title insurance for its property
interests.  The possibility exists that title to one or more of its
concessions, particularly title to undeveloped claims, might be defective
because of errors or omissions in the chain of title, including defects in
conveyances and defects in locating or maintaining such claims, or
concessions.





The
Company’s mineral property interests may be subject to prior unregistered
agreements or transfers or native land claims and title may be affected by
undetected defects.  Surveys have not been carried out on any of the
Company’s mineral properties, therefore, in accordance with the laws of the
jurisdiction in which such properties are situated; their existence and area
could be in doubt.  Until competing interests in the mineral lands
have been determined, the Company can give no assurance as to the validity of
title of the Company to those lands or the size of such mineral
lands.





If the
Company, or the person or entity from which the Company has obtained an option
for property interests, does not have proper title to its property interests,
the Company may incur significant expenses defending or acquiring proper title
and/or may have to abandon such interests, which may result in significant
losses for the Company and could result in the Company having to cease all of
its activities.





Price
Fluctuations and Share Price Volatility:In recent years the
securities markets in Canada have experienced a high level of price and volume
volatility and the market price of securities of many companies, particularly
junior mineral exploration companies, like the Company, have experienced wide
fluctuations which have not necessarily been related to






-13-




the
operating performance, underlying asset values or prospects of such companies.
In particular, the per share price of the Company’s common shares on the TSX
Venture Exchange (the “TSX-V”) fluctuated from a high of $0.73 to a low of $0.32
during the 12-month period ending December 31, 2006.  There can be no
assurance that continual fluctuations in price will not occur.





Currency
Risk:  Business is transacted by the Company in a number of
currencies.  Fluctuations in exchange rates may have a significant
effect on the cash flows of the Company.  Future changes in exchange
rates could materially affect the Company’s results in either a positive or
negative direction.





Operating
Hazards and Risks:All of the Company’s
mineral claim interests are located outside of Canada.  If the Company
were to become involved in a legal action in Canada relating to its mineral
claim interests, the Company may not be able to enforce any judgment it obtains
in such an action against assets located outside of Canada.





Peru has
been the subject of terrorism.  The Company may not be able to
continue its activities in Peru if the terrorism resumes.  The Company
may not be able to find suitable labor for its Peruvian projects or may have
difficulty in obtaining financing for its Peruvian projects in that
event.





The
Company’s long-term profitability will in part be directly related to the costs
and success of its exploration programs, which may be affected by a number of
factors.  Mineral exploration is a speculative business characterized
by a number of significant risks including, among other things, unprofitable
efforts resulting not only from the failure to discover mineral deposits but
also from finding mineral deposits that, though present, are insufficient in
quantity and quality to return a profit.  The Company may not discover
minerals in sufficient quantities to justify activities beyond the exploration
stage.  In which case, the Company may have to delay or abandon its
mineral property interests.





The
marketability of minerals may be affected by numerous factors which are beyond
the control of the Company and which cannot be accurately predicted, such as
fluctuations in the metals markets, the proximity and capacity of milling
facilities, mineral markets and processing equipment, and such other factors as
government regulations, including regulations relating to royalties, prices,
taxes, land tenure, land use, allowable production, importing and exporting of
minerals, and environmental protection.  The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may
result in the Company not receiving an adequate return on invested capital or
losing its investment capital.





Management:The success of the
activities of the Company is dependent to a significant extent on the efforts
and abilities of its key management, Mr. Nikolaos Cacos, the President, Chief
Executive Officer and a director of the Company, and Mr. Joseph Grosso, the
Chairman of the Board of Directors.  The loss of services of either
Mr. Cacos or Mr. Grosso could have a material adverse effect on the
Company.  With the exception of the service agreement with Mr. Cacos,
the Company has not entered into employment agreements with any of its officers
and is not expected to do so in the foreseeable future.  See “Item 6.
Directors, Senior Management and Employees - Employment
Agreements.”  The Company has not obtained key-man life insurance on
any of its officers or directors. The Company's ability to recruit and retain
highly qualified management personnel is critical to its success; if it is
unable to do so this may materially affect the Company's financial
performance.





Dependence
Upon Others:The success of the Company’s operations will depend upon
numerous factors, many of which are beyond the Company’s control, including (i)
the ability of the Company to enter into strategic alliances through a
combination of one or more joint ventures, mergers or acquisition transactions,
(ii) the ability to discover and produce minerals; (iii) the ability to attract
and retain additional key personnel in investor relations, marketing, technical
support, and finance; and (iv) the ability and the operating resources to
develop and maintain the properties held by the Company. These and other factors
will require the use of outside suppliers as well as the talents and efforts of
the Company.  There can be no assurance of success with any or all of
these factors on which the Company’s operations will depend.





Conflicts
of Interest:Several of the Company’s directors are also directors,
officers or shareholders of other companies.  Some of the directors
and officers are engaged and will continue to be engaged in the search for
additional business opportunities on behalf of other corporations, and
situations may arise where these directors and officers will be in direct
competition with the Company.  Such associations may give rise to
conflicts of interest from time to time.  Such a conflict poses the
risk that the Company may enter into a transaction on terms which could place
the Company in a worse position




-14-




than if no conflict existed.  Conflicts, if
any, will be dealt with in accordance with the relevant provisions of theBusiness Corporations
Act(British Columbia)
(the “BCBCA”).  The directors of the Company are required by law to
act honestly and in good faith with a view to the best interest of the Company
and to disclose any interest which they many have in any project or opportunity
of the Company.  However, each director has a similar obligation to
other companies for which such director serves as an officer or
director.  In order to avoid the possible conflict of interest which
may arise between the directors’ duties to the Company and their duties to the
other companies on whose boards they serve, the directors and officers of the
Company have agreed to the following:





1.
            participation in other business ventures offered
      to the directors will be allocated between the various companies and on
      the basis of prudent business judgment and the relative financial
      abilities and needs of the companies to
  participate;


2.
            no commissions or other extraordinary
      consideration will be paid to such directors and officers;
      and


3.
            business opportunities formulated by or through
      other companies in which the directors and officers are involved will not
      be offered to the Company except on the same or better terms than the
      basis on which they are offered to third party
      participants.





As of the date of this annual report all material
related party transactions which have arisen since January 1, 2004, have been
described in “Item 7.  Major Shareholders and Related Party
Transactions.”





Insurable
Risks and Limitations of Insurance:The Company
maintains certain insurance, however, such insurance is subject to numerous
exclusions and limitations.  The Company maintains a Total Office
Policy in Canadian dollars on its principal offices.  Generally, the
Total Office Policy provides All Risk Replacement Cost Coverage on office
contents, up to $300,000, with a $500 deductible.  In addition, the
policy provides Commercial General Liability coverage of up to $5,000,000 for
Third Party Bodily Injury or Property Damage, per occurrence and $2,000,000 for
Tenants Legal Liability for any one leased premises, with a $500
deductible.  The Company also has insurance coverage of up to
$5,000,000 for non-owned automobile liability.





The
Company maintains a Foreign Commercial General Liability policy in U.S. dollars
which provides  US$5,000,000 coverage for bodily injury or property
damage per occurrence and coverage up to US$5,000,000 per offence for personal
injury or advertising injury (libel, slander, etc.).  The policy has a
general aggregate limit for all claims during each consecutive policy period,
except for those resulting from product hazards or completed operations hazards,
of US$5,000,000.  The policy has a US$5,000,000 aggregate limit for
each consecutive policy period, for bodily injury or property damage liability
arising out of completed operations and products.  In addition, the
Foreign Commercial General Liability policy provides for coverage of up to
US$10,000 in medical expenses, per person, with a US$10,000 limit per accident,
and up to US$100,000 for each occurrence of tenants' fire legal
liability.  The policy does not apply to injury or damages occurring
within Canada, the U.S. (including its territories and possessions), Puerto
Rico, any countries or territories against which the U.S. has an embargo,
sanction or ban in effect, territorial waters of any of the foregoing, the Gulf
of Mexico, or international waters or airspace when an injury or damage occurs
in the course of travel or transportation to any country or place included in
the foregoing.  The policy also does not cover asbestos related claims
or liability for bodily injury or property damages arising out of the discharge,
dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toxic chemicals, liquids or gases, waste materials or other irritants,
contaminants or pollutants into or upon land, the atmosphere, or any
water-course or body of water.  The policy also contains a
professional liability exclusion which applies to bodily injury or property
damage arising out of defects in maps, plans, designs or specifications
prepared, acquired or used by the Company or arising out of any act of
negligence, error, mistake or omission in rendering or failing to render
professional consulting or engineering services, whether performed by the
Company or other for whom the Company is responsible.





The
Company maintains a Foreign Commercial Automobile Liability Insurance policy on
owned, leased, hired and non-owned automobiles with the following liability
limitations:





·  $5,000,000
bodily injury liability for each person.


·  $5,000,000
bodily injury liability for each occurrence.


·  $5,000,000
property damage liability for each occurrence.


·  $10,000
medical expense coverage, per person.






-15-


·  $10,000
medical expense coverage, per accident.





The
foregoing descriptions of the Company’s insurance policies do not purport to be
complete and does not cover all of the exclusions to such policies.





The
Company has an Executive and Organization Liability insurance policy for the
benefit of directors and officers.  The aggregate limit of liability
is $5 million.  The policy is renewable on a yearly
basis.





Foreign
Countries and Regulatory Requirements:The projects in which the Company has an interest are located in
Argentina, Peru and the United States.  Mineral exploration and mining
activities in Argentina and Peru may be affected in varying degrees by political
instability and government regulations relating to the mining
industry.  Any changes in regulations or shifts in political
conditions are beyond the control of the Company and may adversely affect its
business.  The Company does not maintain and does not intend to
purchase political risk insurance.  Operations may be affected in
varying degrees by government regulations with respect to restrictions on
production, price controls, export controls, income taxes, expropriations of
property, environmental legislation and mine safety.  The status of
Argentina and Peru as developing countries may make it more difficult for the
Company to obtain any required exploration financing for its
projects.  The effect of all of these factors cannot be accurately
predicted.  The Argentine and Peruvian economies have experienced
recessions in recent years and there can be no assurance that their economies
will recover from such recessions.





Argentina
has recently experienced some economic and political
instability.  Management believes the new democratic elected
government is making progress in the domestic economy and it is improving the
image of the country internationally.  Additionally, management
believes the economic crisis of December 2001 has been overcome, and although
the country had defaulted on its loans, it has repaid its debt to the
International Monetary Fund in December 2005.  The Company maintains
the majority of its funds in Canada and only forwards sufficient funds to meet
current obligations and overhead in Argentina.  The Company does not
believe that any current currency restrictions which may be imposed in Argentina
will have any immediate impact on the Company’s exploration
activities.





Impact
of Government Regulations on the Company’s Business:The Company’s activities
are subject to various governmental regulations in Argentina, Peru and the
United States.





Argentina





Mining
Industry





Mineral
companies are subject to various federal and provincial laws and regulations
including specific mining and environmental rules.  The Company
believes it is in material compliance with all applicable
legislation.





The right
to explore a property (a “cateo”) and the right to exploit (a “mina”) are
granted by administrative or judicial authorities via
concessions.  Foreign individuals and corporations may apply for and
hold cateos and minas, at the same level as local investors without differences
of any nature.  Cateos and minas are freely transferable upon
registration with the Provincial Mining Registry where title to the cateo or
mina was first registered.  Upon the grant of a legal concession of a
cateo or a mine, parties have the right to explore the land or to own the mine
and the resources extracted therefrom.





Regulatory
Environment





Management
believes the present government is committed to opening up the economy and there
has been progress in reducing import duties and export taxes.  For
decades local industry has been protected and the transition to greater
international competitiveness will take some time.





Importers
and exporters must be registered with Argentinean Customs
office.  Except for a limited list of items requiring the previous
approval of the authorities there are no import restrictions.  Import
of pharmaceuticals, drugs, foodstuffs, defense material and some other items
require the approval of the applicable government authority.  Import
duties are being progressively reduced in accordance with the free enterprise
and free-trade policy being implemented by the




-16-




government
in order to achieve greater international competitiveness.  To
illustrate, duties currently range between zero and 20
percent.  Restrictions on exports are not generally imposed, although
there are export taxes currently in place including mineral
products.





Political Environment and
Economy





In recent
years Argentina has experienced a number of changes to its
government.  The current president, Nestor Kirchner, came to power in
May 2003.  The economic performance of the country has been troubled
and uncertain since the late 1990’s.  Management believes there are
positive indications that the economic situation continues to
improve.





Peru





Mining
Industry





Peru has
a lengthy history of mining activities that predates the Spanish
conquistadors.  Although political unrest and instability have slowed
the development of some of Peru’s ore bodies in recent years, mining continues
to be an important contributor to the national economy and exploration by
foreign companies is accelerating due to the abundance of mineral
sources.  Peru is already a substantial producer of at least six
metals and may have unexplored and unexploited reserves in these and other
metals.  Peru ranks among the top 20 gold producing nations, and the
newly expanded Yanacocha mine is Latin America’s largest single gold producer
and Antamina is the world’s largest zinc and copper mine.





Mineral Concessions in
Peru





Under
Peruvian law the right to explore for and exploit minerals is granted by way of
concessions.  A Peruvian mining concession is a property-related
right, distinct and independent from the ownership of land on which it is
located, even when both belong to the same person.  The rights granted
by a mining concession are defensible against third parties, transferable,
chargeable and in general, may be the subject of any transaction or
contract.  The basic unit for newly claimed mining concessions is 100
hectares and existing concessions of greater than 100 hectares will be reduced
to that amount.  Otherwise, concessions can only be divided by
percentage parts or shares.  Buildings and other permanent structures
used in a mining operation are considered real property and as an accessory to
the concession on which they are situated.





The
concession holder must pay an annual rent of US$3.00 per hectare (except for the
year of acquisition, as this rent is paid as part of the concession application
fee).  The concession holder must sustain a minimum level of annual
commercial production of greater than US$100 per hectare in gross sales within
six years of the grant of the concession or, if the concession has not been put
into production within that period, from the seventh year, a penalty is due of
US$6.00 per hectare per year in addition to the annual rent.  The
concession will terminate if the annual rent is not paid for two consecutive or
alternative years.  The term of a concession is indefinite provided it
is properly maintained by payment of rental duties.





The
Constitution of Peru provides that foreign persons or companies cannot acquire
or own a land title or mining right, directly or indirectly, if such land title
or mining right is located within 50 kilometres of Peru’s
borders.  The government of Peru is permitted to grant an exemption by
publishing an official statement declaring a public necessity, called a Decreto
Supremo.  The Decreto Supremo must be signed by the President of Peru
and the Presidential Cabinet, called the Consejo de Ministros.





None of
the Company’s Peruvian property interests are located within 50 kilometres of
Peru’s borders.





Many
commercial activities performed by private companies are subject to some
government inspection or control, including mining, which requires prior
government permission, licensing or concession, and compliance with special
registration procedures of the Department of Energy and
Mines.  However, the Company’s exploration activities do not require
any licenses or permits from the Department of Energy and Mines.  The
Company has obtained the necessary permits, if any, for its current and planed
work on the Peruvian properties.





-17-


Nevada,
United States





In the
U.S., much of the Company’s exploration activities occur on unpatented lode
mining claims and mill sites that are on federal lands pursuant to federal
mining laws.  There are numerous federal regulatory developments that
could restrict the Company’s activities and significantly increase regulatory
obligations and compliance costs with respect to the Company’s exploration
activities.





The
Company’s exploration programs in Nevada are subject to state and federal
regulations regarding environmental considerations.  All activities
associated with the exploration for minerals are subject to existing laws and
regulations relating to exploration procedures, safety precautions, employee
health and safety, air quality standards, pollution of streams and fresh water
sources, odor, noise, dust and other environmental protection controls adopted
by federal, state and local governmental authorities as well as the rights of
adjoining property owners.  The Company may be required to prepare and
present to federal, state or local authorities data pertaining to the effect or
impact that its activities may have upon the environment.  All
requirements imposed by any such authorities may be costly, time consuming and
may delay commencement or continuation of the Company’s
activities.  Future legislation may significantly emphasize the
protection of the environment, and, as a consequence, the activities of the
Company may be more closely regulated to further the cause of environmental
protection.  Such legislation, as well as further interpretation of
existing laws in the United States, may require substantial increases in
equipment and operating costs to the Company and delays, interruptions, or a
termination of its activities, the extent of which cannot be
predicted.  Environmental problems known to exist at this time in the
United States may not be in compliance with regulations that may come into
existence in the future.  This may have a substantial impact upon the
capital expenditures required of the Company in order to deal with such problem
and could substantially reduce earnings.





At the
present time, the Company’s mineral exploration activities in Nevada are in
compliance with all known environmental requirements.





Additionally,
the National Historic Preservation Act requires that all operators on public
lands conduct an archeological survey of the proposed sites of new
disturbance.  As of the date of this annual report the Company has not
conducted an archeological survey on its Nevada properties.  In the
future the Company may be required to conduct such a survey if its activities
constitute a “disturbance”.  To the best of management’s knowledge,
there are no known environmental or threaten and endangered species issues at
our Nevada properties that would provide grounds for denial of approval of a
plan of operation.





Environmental
Regulations:The
Company’s operations are subject to environmental regulations promulgated by
government agencies from time to time.  Environmental legislation
provides for restrictions and prohibitions on spills, releases or emissions of
various substances produced in association with certain mining industry
operations, such as seepage from tailings disposal areas, which would result in
environmental pollution.  A breach of such legislation may result in
the imposition of fines and penalties.  At present, the Company does
not believe that compliance with environmental legislation and regulations will
have a material affect on the Company’s operations; however, any changes in
environmental legislation or regulations, or in the Company’s business, may
cause compliance with such legislation and/or regulation to have a material
impact on the Company’s operations.  In addition, certain types of
operations require the submission and approval of environmental impact
assessments.  Environmental legislation is evolving in a manner which
means stricter standards, and enforcement, fines and penalties for
non-compliance are more stringent.  Environmental assessments of
proposed projects carry a heightened degree of responsibility for companies and
directors, officers and employees.  The cost of compliance with
changes in governmental regulations has a potential to reduce the profitability
of operations.  The Company intends to ensure that it complies fully
with all environmental regulations relating to its operations.





No
Dividends:The Company has never
declared or paid cash dividends on its common shares and does not anticipate
doing so in the foreseeable future.  Additionally, the determination
as to the declaration of dividends is within the discretion of the Company’s
Board of Directors, which may never declare cash dividends on the Company’s
common stock.  Investors cannot expect to receive a dividend on the
Company’s common shares in the foreseeable future, if at all.





-18-


Penny
Stock Regulation:The SEC has adopted
rules that regulate broker-dealer practices in connection with transactions in
“penny stocks”.  Generally, penny stocks are equity securities with a
price of less than US$5.00 (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system).  Since the
Company’s shares are traded for less than US$5.00 per share, the shares are
subject to the SEC’s penny stock rules until such time as (1) the Company’s net
tangible assets exceed US$5,000,000 during the Company’s first three years of
continuous operations or US$2,000,000 after the Company’s first three years of
continuous operations; or (2) the Company has had average revenue of at least
US$6,000,000 for three years.  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 prescribed by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market.  The broker-dealer must obtain a
written acknowledgement from the purchaser that the purchaser has received the
disclosure document.  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.  In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from those 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 requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules.  Such rules and
regulations may make it difficult for holders to sell the common stock of the
Company, and they may be forced to hold it indefinitely.





Exchange
Approvals:Pursuant to the policies
of the TSX-V, the Company is required to provide certain information about
proposed acquisitions to the TSX-V and the Company must obtain approval from the
TSX-V prior to completing any proposed acquisition.  In addition, the
Company must obtain approval from the TSX-V prior to issuing any shares in
connection with an acquisition of, or the exercise of an option on, a property
interest.  There is no assurance that the TSX-V will approve the
acquisition of any additional properties by the Company, whether by way of
option or otherwise, or the subsequent issuance of any shares in connection with
any property which the Company acquires.





United States
Market:


The
Company’s common stock is illiquid and its shareholders may be unable to sell
their shares.  The Company’s common shares are currently quoted on the
Over-the-Counter Bulletin Board (OTC Bulletin Board) and are thinly traded. In
the past, the Company’s share trading prices have fluctuated widely, depending
on many factors that may have little to do with the Company’s operations or
business prospects. There is currently a limited market for the Company’s common
shares and the Company can provide no assurance to investors that a market will
develop. Consequently, the Company’s shareholders in the United States may not
be able to use their shares for collateral or loans and may not be able to
liquidate at a suitable price in the event of an emergency.  If a
market for the Company’s common shares does not develop, the Company’s
shareholders may not be able to re-sell the Company’s common shares that they
have purchased and they may lose all of their investment.  In
addition, the OTC Bulletin Board is not an exchange and, because trading of
securities on the OTC Bulletin Board is often more sporadic than the trading of
securities listed on an exchange of the NASDAQ Stock Market, Inc., and the
Company’s shareholders may have difficulty reselling any shares
purchased.





Enforcement
of Legal Process:It may be difficult to
bring and enforce suits against the Company.  The Company is a
corporation incorporated in British Columbia.  None of the Company’s
directors are residents of the United States, and all or a substantial portion
of their assets are located outside of the United States.  As a
result, it may be difficult for U.S. holders of the Company’s common shares to
effect service of process on these persons within the United States or to
enforce judgments obtained in the U.S. based on the civil liability provisions
of the U.S. federal securities laws against the Company or its officers and
directors. In addition, a shareholder should not assume that the courts of
Canada (i) would enforce judgments of U.S. courts obtained in actions against
the Company, its officers or directors predicated upon the civil liability
provisions of the U.S. federal securities laws or other laws of the United
States, or (ii) would enforce, in original actions, liabilities against the
Company, its officers or directors predicated upon the U.S. federal securities
laws or other laws of the United States.





U.S. laws
may not be enforced by a Canadian court if those laws are contrary to Canadian
public policy, are foreign penal laws or laws that deal with taxation or the
taking of property by a foreign government or they are not in compliance with
applicable Canadian legislation regarding the limitation of
actions.  Also, a judgment obtained in a U.S. court may not be
recognized by a Canadian court:





-19-


a)
            where
      the U.S. court where the judgment was rendered had no jurisdiction
      according to applicable Canadian
law;


b)
            the
      judgment was subject to ordinary remedy (appeal, judicial review and any
      other judicial proceeding which renders the judgment not final, conclusive
      or enforceable under the laws of the applicable state) or not final,
      conclusive or enforceable under the laws of the applicable
      state;


c)
            the
      judgment was obtained by fraud or in any manner contrary to natural
      justice or rendered in contravention of fundamental principles of
      procedure;d)
            a
      dispute between the same parties, based on the same subject matter has
      given rise to a judgment rendered in a Canadian court or has been decided
      in a third country and the judgment meets the necessary conditions for
      recognition in a Canadian court;




e)
            the
      outcome of the judgment of the U.S. court was inconsistent with Canadian
      public policy;


f)
            the
      judgment enforces obligations arising from foreign penal laws or laws that
      deal with taxation or the taking of property by a foreign government;
      org)
            there
      has not been compliance with applicable Canadian law dealing with the
      limitation of actions.










Competition:The mineral industry is
intensely competitive in all its phases.  The Company competes with
many companies possessing greater financial resources and technical facilities
than itself for the acquisition of mineral concessions, claims, leases and other
mineral interests as well as for the recruitment and retention of qualified
employees. If the Company is unable to effectively compete against the other
companies engaged in the mineral exploration industry, the Company may be forced
to cease all of its activities.  Specifically, if the Company is
unable to recruit and retain qualified officers, consultants and others to
provide the Company with the expertise necessary to plan and implement its
exploration programs, the Company may be required to delay or abandon its
exploration programs or cease its activities entirely.





Outside
Scrutiny:Some mining companies
have experienced issues and problems from local communities relating to their
exploration activities.  These local communities have restricted
access to the companies’ properties.  If the Company’s activities are
not acceptable to communities where work is being undertaken the Company may
have to abandon its investment in the property.





Dilution:The Company may in the
future grant to some or all of its directors, officers, insiders and key
employees options to purchase the Company’s common shares as non-cash incentives
to those employees.  Such options may be granted at exercise prices
equal to market prices, or at prices as allowable under the policies of the
TSX-V, when the public market is depressed.  To the extent that
significant numbers of such options may be granted and exercised, the interests
of then existing shareholders of the Company may be subject to additional
dilution.





Metals
Price Fluctuations:Factors beyond the
control of the Company may affect the marketability of any substances
discovered.  The prices of various metals have experienced significant
movement over short periods of time, and are affected by numerous factors beyond
the control of the Company, including international economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates and global or regional consumption patterns, speculative activities and
increased production of such metals.  The supply of and demand for
metals are affected by various factors, including political events, economic
conditions and production costs in major mineral producing regions. Variations
in the market prices of metals may impact on the Company's ability to raise
funding to continue exploration of its projects.  In addition, any
significant fluctuations in metal prices will impact on the Company's decision
to accelerate or reduce its exploration activities.





U.S. Tax
Liability:The Company may be
deemed to be a “Passive Foreign Investment Company” (“PFIC”).  See
“Item 10.  Additional Information - Taxation.”  If the
Company is deemed to be a PFIC, a United States holder of the Company’s common
shares would be required to pay an interest charge together with tax calculated
at maximum tax rates on certain “excess distributions” (defined to include
certain dividends from a PFIC and any gain on the sale of stock of a PFIC)
unless such holder made an election either to (1) include in his or her taxable
income his or her pro rata share of the PFIC’s ordinary earnings and net capital
gains under the Qualified Electing Fund rules or (2) mark to market his or her
Company common shares at the end of each taxable year as set forth in Section
1296 of the Internal Revenue Code of




-20-




1986, as
amended.  The elections require certain conditions be met such as
filing on or before the due date, as extended, for filing the shareholder’s
income tax return for the first taxable year to which the election will
apply.








Item
4.   Information on the Company.





History
and Development of the Company





The
Company was incorporated pursuant to the Company Act(British
Columbia) (the “Company Act”) on April 11, 2000 under the name “XS Capital
Corp.”  Initially, the Company had one share issued and outstanding,
which was held by Joseph Grosso, who at the time was not an officer or director
of the Company.  Mr. Grosso transferred the single outstanding share
to Mr. Cacos, President and a director of the Company, on April 11,
2001.  Effective February 2004, Mr. Grosso became the Chairman and a
director of the Company.  The Company remained without a business
asset and was inactive until March 2003, when the Company negotiated a number of
agreements to option and acquire interests in various mineral concessions
located in Argentina, as described below.  As a result of the decision
to engage in mineral exploration activities, the Company changed its name to
“Amera Resources Corporation” on March 4, 2003.  There was no change
of control or change in management in connection with the name
change.  In December 2003, the Company completed its initial public
offering (“IPO”) and commenced trading on the TSX-V under the symbol
“AMS”.  See “Item 10. Additional Information - Memorandum and Articles
of Association.”





The
Company is a mineral exploration company engaged in the business of acquiring,
exploring and evaluating natural resource properties, and potentially joint
venturing these properties depending on the evaluation of the
property.





To this
end, the Company entered into a Letter of Intent, dated March 6, 2003, (the
“Letter of Intent”), as amended by Amending Letter Agreement dated September 30,
2003, (the “Amended Letter Agreement”), with IMA Exploration Inc. (“IMA”) and
Inversiones Mineras Argentinas S.A. (“IMASA”), an indirect, wholly-owned
subsidiary of IMA, whereunder the Company was granted an irrevocable option (the
“Mogote Option”) to acquire a 51% undivided interest in the group of mineral
rights known as Mogote, located in the Province of San Juan, Argentina (the
“Mogote Project”).  See “Item 4. Information on the Company -
Property, Plant and Equipment - Principal Properties - Mogote Project” and “Item
7. Major Shareholders and Related Party Transactions - Related Party
Transactions.”  To exercise the option, the Company must issue an
aggregate 1,650,000 common shares and incur an aggregate US$1,250,000 in
exploration expenditures on the Mogote Project by July 1, 2007, less the amount
paid to IMA as reimbursement for all past payments made and expenditures
incurred by IMA on the Mogote Project, being $197,854.  As well, the
Company has agreed to make all payments required to maintain the Mogote Project
in good standing including all payments due to the underlying owners and vendors
thereof, which total US$269,100.  As of December 31, 2006 the full
amount of the exploration expenditures and the IMA expenditures obligation have
been paid and 750,000 common shares have been issued.





The
Company shall be the operator of the Mogote Project throughout the term of the
subject option.





On April
8, 2004, the Company and IMA entered into a further agreement (the “Second
Amending Letter Agreement”), whereby the Company can earn an additional 24%
interest Mogote Project, for a total 75% interest, after earning the initial 51%
interest, by issuing an additional 300,000 common shares to IMA and expending an
additional US$3 million of exploration expenditures over a three year
period.  The 300,000 common shares were issued to IMA
on  April 22, 2004.  See “Item 4. Information on the Company
- Property, Plant and Equipment - Principal Properties - Mogote Project” and
“Item 7.  Major Shareholders and Related Party Transactions - Related
Party Transactions.”





By an
assignment agreement dated June 28, 2004, effective July 7, 2004, IMA’s and
IMASA’s rights and obligations under these agreements were assigned to Golden
Arrow Resources Corporation (“Golden Arrow”) and Inversiones
Mineras  Australes S.A. (“IMAUSA”), an Argentine company and an
indirectly, wholly owned subsidiary of Golden Arrow, as a result of IMA
transferring its option on the Mogote property to Golden Arrow, through the
transfer of IMASA’s interest in the Mogote property to IMAUSA.





The
Company appointed a special committee of independent directors to re-negotiate
the terms of the Mogote Option with Golden Arrow.  According to the
resolutions adopted by the boards of both companies, the US$1,000,000 property
expenditures required by May 30, 2006 were extended to May 30, 2007 and the
US$1,000,000 property expenditures






-21-




required
by May 30, 2007 were extended to May 30, 2008.  In return for granting
of the extension, 10% of any payments, in terms of cash or stock received by the
the Company from a third party who enters into an agreement regarding the Mogote
property, will be paid to Golden Arrow.





In
addition, the Company entered into a Property Purchase Agreement, also dated
March 6, 2003, (the “Property Purchase Agreement”), with IMA and IMASA
whereunder the Company acquired a 100% interest in certain mineral exploration
properties located in the Province of Chubut, Argentina, consisting of three (3)
cateos known as Lago Pico, Loma Alta and Nueva Ruta (the “Chubut
Project”).  See “Item 4. Information on the Company - Property, Plant
and Equipment - Other Properties - Chubut Project” and “Item 7. Major
Shareholders and Related Party Transactions - Related Party
Transactions.”  In consideration therefore, the Company agreed to
issue 500,000 of its common shares to IMA (with a deemed value at the time of
the transaction of $22,000 which was IMA’s recorded cost for the properties).
IMA retained a 3% net smelter returns royalty in respect of such properties and
the Company agreed to pay a cash bonus of US$250,000 to IMA at such time as a
decision to place any of the properties in commercial production is
made.  Although the 500,000 shares had a deemed value of $22,000 at
the time of the transaction, the shares were not issued until November 2003, in
connection with the Company’s IPO.  Under Canadian GAAP, the shares
were required to be valued at the market price at the time of issuance, which
was $225,000 (based upon the initial public offering price of $0.45 per
share).  By an assignment agreement dated June 28, 2004, effective
July 7, 2004, IMA’s and IMASA’s rights and obligations under the Property
Purchase Agreement were assigned to Golden Arrow and IMAUSA.





In March
2003, when the Letter of Intent and Property Purchase Agreement were executed,
the Company was not publicly listed.  The agreements were negotiated
by the Company’s directors (then Messrs. Cacos, Minni and Coltura) who
considered among other factors the agreements, transactions of a similar nature
currently being entered in the mining industry, the Company’s business plan, the
Company’s future IPO and its planned listing on the TSX-V.  At the
time, Messrs. Minni and Coltura were disinterested members of the board of
directors.  At the time of the Second Amending Letter Agreement,
Messrs. Cacos and Grosso abstained from voting and the transaction was approved
by the remaining disinterested members of the board of directors, who at the
time were Messrs. Minni, Coltura and Bottomer.





In March
2005, pursuant to an acknowledgement agreement dated December 31, 2004, with
Steven K. Jones, M.Sc., C.P.G., the Company acquired two claim blocks in the
Roysten Hills area of Nye County of west central Nevada (the “Roy and Hills
Claims”). Mr. Jones, as agent for the Company, staked the Roy and Hills Claims
on behalf of the Company in November 2004 and the Company advanced all of the
costs associated with staking the claims during the last quarter of fiscal
2004.  Mr. Jones is an arm’s length, third party.  Mr. Jones
transferred the Roy and Hills Claims to Amera Resources (US) Inc., the Company’s
wholly-owned subsidiary and Quitclaim Deeds were filed with the Bureau of Land
Management on June 1, 2005.  During fiscal 2006, the Company granted
an option on its Roy and Hills properties in Nevada to Astral Mining (US)
Corporation.  Under the terms of the Astral Letter of Intent, Astral
may earn up to an 80% undivided interest in the Roy and Hills
Claims.  Astral can earn an initial 65% interest in the Roy and Hills
Claims by incurring US$2,500,000 in work expenditures over four years and
issuing 500,000 of its common shares to the Company.  Astral may then
elect to earn an additional 15% interest, by issuing a further 500,000 common
shares to the Company and completing a bankable feasibility stage, within three
years.





On April
11, 2005, the Company entered into an option agreement with a third party,
Carlos Martin Thompson Palacios, for the road-accessible 800 hectare Cruz de
Mayo property located in the southern portion of the Department of Cuzco in
Peru.  The Company also acquired by direct staking 2,200 hectares of
adjacent land for a total of 3,000 hectares. The Company may earn up to 100%
undivided interest in the Cruz de Mayo property by making US$150,00 in option
payments over four years and incur US$1,500,000 work expenditures over four
years.See “Item 4.
Information on the Company - Property, Plant and Equipment”.





In
October 2005, the Company applied for the 2,400 hectare Cocha concession
covering a copper-silver target in the Department of Junin, Peru approximately
23km east of the city of Huancayo and 220km to the east of Lima.  On
March 2, 2006 the Company announced that it had been formally granted the
concession title by the Peruvian government and now holds a 100% interest in the
property through its wholly-owned Peruvian subsidiary Recursos de los Andes
S.A.C.; a finders-fee has been paid to an arms-length individual in connection
with the identification of this target. See “Item 4. Information on the Company
- Property, Plant and Equipment”.





-22-


Effective
September 13, 2006, the Company received clearance for trading on the
Over-the-Counter Bulletin Board (“OTCBB”) operated by the National Association
of Securities Dealers, under the symbol “AJRSF”.





On
December 7, 2006, the Company executed, through its Peruvian subsidiary,
Recursos de los Andes S.A.C., a letter of intent with Chancadora Centauro S.A.C.
to enter into an option agreement to acquire up to a 90% interest in the 11,184
hectare Laguna Gold Project in the Pasco Department of west central
Peru.  Upon signing of a cession of mining rights for the property,
the Company will make a cash payment of US$120,000.  An initial 51%
interest will be earned upon incurring US$650,000 in work expenditures and
payment of US$890,000.  An additional 39% interest may be earned with
payment of US$4,000,000 and completion of a bankable feasibility study. See “Item 4. Information
on the Company - Property, Plant and Equipment”.





In those
situations where the Company issued shares of its common stock pursuant to the
agreements discussed above, the shares were valued at the closing market price
on the day of issuance.  This amount is the value that is recorded as
acquisition cost of the applicable property as described in Note 5 to the
Company’s December 31, 2006, financial statements.  The number of
shares which were issued for the acquisition of mineral properties and their
value is described in Note 6 of the Company’s December 31, 2006, financial
statements.





To date,
the Company has raised $12,609,768 in cash through the sale of its securities.
The Company intends to raise additional funding through the sale of its
securities to carry out additional exploration on its mineral
properties.  See “Item 5. Operating and Financial Review and Prospects
- Liquidity and Capital Resources”.  There are no assurances that the
Company will be able to sell additional securities to fund its exploration or
overhead requirements, or that the Company will receive a suitable price for any
securities sold.





Acquisition and Disposition
of Mineral Property Interests during the Three Prior Fiscal
Years





The
Company has made additions to mineral properties and deferred costs of $729,828,
$1,394,866 and, $1,330,719 and capital assets of $Nil, $Nil and $2,797 for the
fiscal years ended December 31, 2006, 2005 and 2004, respectively.





In fiscal
2006 the Company wrote off property costs for its Esperanza and Sayhue
properties in Peru in the amounts of  $511,883 and $13,631,
respectively.  In fiscal 2005 the Company wrote off the $225,000
carrying value in the Chubut properties in Argentina. During fiscal 2006, the
Company granted an option on its Roy and Hills properties in
Nevada.  See “Item 4.  Information on the Company -
Property, Plant and Equipment - Principal Properties – Roy and Hills,
Properties.” During fiscal 2004 the Company did not abandon, dispose, assign or
joint-venture any of its arrangements to earn interests in its mineral
properties.  To April 30, 2007, the Company has not abandoned,
disposed, assigned or joint-ventured any of its arrangements to earn interests
in its mineral properties.





Business
Objectives





The
principal business carried on and intended to be carried on by the Company is
the acquisition and exploration of natural resource properties.  The
Company intends on expending its existing cash resources to carry out
exploration on its mineral properties, to pay for administrative costs during
the fiscal year ending December 31, 2007, and for working
capital.  The Company may decide to acquire other property interests
in addition to mineral property interests currently held by the
Company.





No
capital expenditures were made by the Company during the 2004, 2005 and 2006
fiscal years other than expenditures relating to the Company’s mineral property
interests.  See “Item 4. Information on the Company - Business
Overview - Exploration Expenditures.”





Business
Overview





The
Company is an exploration stage company exploring primarily for precious and
base metals.  To date, the Company has not earned any production
revenue, nor found any “reserves” on any of its properties, as that term is
defined in Guide 7 adopted by the SEC.  Since March 2003, the Company
has proceeded to enter into a number of agreements to acquire interests in
resource properties located in Argentina, Peru and Nevada, United
States.  In addition, the Company has acquired interests in properties
located in Chile adjacent to the Company’s Mogote properties.  These
Chilean properties were staked to add to the Mogote property in
Argentina.  The Mogote property is located near the border of the two
countries.  The Chilean properties




-23-




are being
held by the Company’s wholly owned Chilean subsidiary.  See “Item
4.  Information on the Company - Property, Plant and Equipment -
Principal Properties - Mogote Project.”





Exploration
Expenditures





During
fiscal 2006 the Company incurred approximately $302,095 (including approximately
$126,000 which is attributed to 300,000 shares issued by the Company) for
mineral property acquisition costs and incurred approximately $427,733 for
exploration costs on its mineral property interests.





During
fiscal 2005 the Company incurred approximately $389,035 (including approximately
$143,500 which is attributed to 300,000 shares issued by the Company) for
mineral property acquisition costs and incurred approximately $1,005,831 for
exploration costs on its mineral property interests.





During
fiscal 2004 the Company incurred approximately $388,739 (including approximately
$329,250 which is attributed to 425,000 shares issued by the Company) for
mineral property acquisition costs and incurred approximately $941,980 for
exploration costs on its mineral property interests.





Exploration
Budget





See “Item
4. Information on the Company - Plan of Operation.”





Sales and Revenue
Distribution





As of the
date of this annual report the Company has not generated any revenues from its
mineral properties.





Organizational
Structure





As of the
date of this annual report, the Company has four wholly-owned subsidiaries,
Recursos de los Andes S.A.C., a Peruvian company which became active in December
2004, Amera Resources (US) Inc., a Nevada (U.S.) corporation, which was
incorporated on February 2, 2005, Amera-Chile Sociedad Contractual Minera, a
Chilean company which was formed in May 2005 and Amera Resources (BVI) Inc, a
British Virgin Islands company which was formed on January 10,
2007.  The Company is also a 50% shareholder in Golden Amera Resources
Inc. (BVI) (“Golden Amera”) a company incorporated in the British Virgin Islands
on January 30, 2007.  Golden Amera will establish a branch in
Colombia, South America that will manage any future projects in that
country.





Amera
Resources (US) Inc. was formed to hold the Company’s interests in its Nevada
properties.  The Company owns all of the outstanding voting and equity
interests in Amera Resources (US) Inc.





Recursos
de los Andes S.A.C. was formed to hold the Company’s interests in its Peruvian
properties.  The Company owns all of the outstanding voting and equity
interests in Recursos de los Andes S.A.C.





Amera-Chile
Sociedad Contractual Minera was formed in May 2005 to hold the Company’s
interest in its Chilean properties.  The Company owns all of the
outstanding voting and equity interests in Amera-Chile Sociedad Contractual
Minera.





Unless
otherwise indicated herein, the term “Company” means collectively the Company
and its subsidiaries.








-24-










Principal
Offices





The
Company’s principal office is located at #709 – 837 West Hastings Street,
Vancouver, British Columbia, V6C 3N6.  The Company’s registered office
is located at #709 – 837 West Hastings Street, Vancouver, B.C.  V6C
3N6 and its phone number is 604-687-1828.





On
September 1, 2002 the Company began sharing office facilities, capital assets
and personnel with IMA.  Effective January 1, 2005, the Company
entered into an agreement with Grosso Group Management Ltd. (“Grosso Group”)
pursuant to which the Grosso Group provides offices and administrative and
management services to the Company. See “Item 7.  Major Shareholders
and Related Party Transactions - Related Party Transactions.”





Property,
Plant and Equipment





The
Company’s activities are focused on the exploration of its mineral property
interests.  As of the date of this annual report, the Company does not
have any plant and equipment, mines or producing properties.  The
Company’s proposed programs are exploratory in nature and all of the Company’s
properties are without known reserves.





The
Company's principal assets are its options to acquire interests in unproven
mineral claims.  Under Canadian GAAP, option payments and exploration
and field support costs directly relating to mineral claims are deferred until
the claims to which they relate are placed into production, sold or
abandoned.  The deferred costs will be amortized over the life of the
ore body following commencement of production or written off if the property is
sold or abandoned.  Administration costs and other exploration costs
that do not relate to any specific property are expensed as
incurred.





On a
periodic basis, management reviews the carrying values of deferred acquisition
and exploration expenditures with a view to assessing whether there has been any
impairment in value.  Management takes into consideration various
information including, but not limited to, results of exploration activities
conducted to date, estimated future metal prices, and reports and opinions of
outside geologists, mine engineers and consultants.  In the event that
reserves are determined to be insufficient to recover the carrying value of any
property, the carrying value will be written down or written off, as
appropriate.  As of April 30, 2007, the Company has not established
that its option interests or its mineral claims have any known or proven
reserves.





-25-


This
accounting treatment is different under US GAAP, under which the Company would
expense the option payments and exploration costs relating to unproven mineral
claims as incurred.  In addition, US GAAP requires that exploration
costs not be capitalized until a positive feasibility study is
completed.  The capitalized costs of such claims would then be
measured, on a periodic basis, to ensure that the carrying value can be
recovered on an undiscounted cash flow basis.  If the carrying value
cannot be recovered on this basis, the mineral claims would be written down to
net recoverable value on a discounted cash flow basis.





Principal
Properties





Argentina
/ Chile





Mogote
Project





Location and
Access





The
Mogote Project property is located in the Departament Iglesia, Macho Muerto
zone, in the San Juan Province, close to the northern border with La Rioja
Province, approximately 300 kilometres northwest of the city of San Juan, and
bordering Chile (the “Mogote Property”).  Access to the property is
via either Chile or Argentina, but because special arrangements need to be made
to cross the international border where there are no established crossing
points, practical access is currently from the Argentina side.  The
nearest supply point where most goods and services are available is the town of
Guandacol in La Rioja Province.  From here the property is only
accessible by road during the months of October to April using a 4x4
vehicle.  Exploration activities can only be carried out during this
period due to seasonal weather conditions. Total distance from Guandacol to the
Mogote Property is approximately 250 kms and the travel time is 6-7
hours.  Access from Guandacol is through Aguadita, across Rio Blanco,
and through the historic La Brea mining camp.  Secondary and then
mountain tracks can be taken from Copiapo, Chile to reach the Chilean side of
the property in approximately 3-4 hours driving time.  Road conditions
are poor with local severe dust and generally un-maintained road
conditions.  There is no electrical grid in the area of the Mogote
Property.





The
following map identifies the location of the Mogote Property:














-26-









-27-


Mineral Titles Included in
Mogote Property





The
Mogote Property consists of one cateo, three discoveries and five minas. In
2004, the Company staked a number of claims adjoining the northwestern part of
the Mogote Property on the Chilean side of the border








CLAIM
      NAME & COUNTRY
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECT-ARES
            OWNER
            EXPIRY
      DATE
            WORK/PAYMENT
      REQUIREDMogotes
              (Argentina)
            338579-R-92
            CATEO
            2259
            IMAUSA
            N/A
            $2000
      peso
              payment
      after
              concession
      grantedADELA
      # 1
              (Argentina)
            425-098-A-2000
            DISCOVERY
            2000
            N.
      Arturo
            N/A
            No
      payment for 3 years;
              afterward
      $800 peso per
              year
      per 100 hectaresMOGOTES
      NORTE
              (Argentina)
            520-0275-R097
            DISCOVERY
            1650
            R.
      Viviani
            N/A
            No
      payment for 3 years;
              afterward
      $800 peso per
              year
      per 100 hectaresMOGOTES
      SUR
              (Argentina)
            520-0274-R-97
            DISCOVERY
            2100
            R.
      Viviani
            N/A
            No
      payment for 3 years;
              afterward
      $800 peso per
              year
      per 100 hectaresMOGOTE
      1
              (Argentina)
            156.277-S-76
            MINA
            48
            IMAUSA
            N/A
            $480
      peso per year
              canonMOGOTE
      9
              (Argentina)
            156.285-S-76
            MINA
            48
            N.
      Arturo
            N/A
            $480
      peso per year
              canonMOGOTE
      14
              (Argentina)
            156.290-S-76
            MINA
            48
            IMAUSA
            N/A
            $480
      peso per year
              canonMOGOTE
      4
              (Argentina)
            156.280-S-76
            MINA
            48
            IMAUSA
            N/A
            $480
      peso per year
              canonMOGOTE
      5
              (Argentina)
            156.280-S-76
            MINA
            48
            IMAUSA
            N/A
            $480
      peso per year canonTronquito
      1
              (Chile)
            -
            Concesion
      de Exploracion
            200
            Amera
      Chile
            N/A
            US$220
      per year canonTronquito
      2
              (Chile)
            -
            Concesion
      de Exploracion
            200
            Amera
      Chile
            N/A
            US$220
      per year canonTronquito
      3
              (Chile)
            -
            Concesion
      de Exploracion
            300
            Amera
      Chile
            N/A
            US$330
      per year canonTronquito
      4
              (Chile)
            -
            Concesion
      de Exploracion
            100
            Amera
      Chile
            N/A
            US$110
      per year canonTronquito
      5
              (Chile)
            -
            Concesion
      de Exploracion
            200
            Amera
      Chile
            N/A
            US$220
      per year canonTronquito
      6
              (Chile)
            -
            Concesion
      de Exploracion
            300
            Amera
      Chile
            N/A
            US$330
      per year canonTronquito
      Tres
              (Chile)
            842
            Pedimento
      Petition
            300
            Ámera
      Chile
            N/A
            $190,000
      peso per year canon





The
Company has not found any “reserves” on the Mogote Property, as that term is
defined in Guide 7 adopted by the SEC.





Agreements





See
“Item 4. Information on the Company – History and Development of the Company”
for a description of the Agreements under which the Company acquired its
interest in the Mogote Property.





As of
December 31, 2006, the Company had expended $1,056,309 in acquisition costs and
$1,255,195 in exploration expenses on the Mogote Property.





The
Company appointed a special committee of independent directors to re-negotiate
the terms of the Mogote Option with Golden Arrow.  According to the
resolutions adopted by the boards of both companies, the US$1,000,000 property
expenditures required by May 30, 2006 were extended to May 30, 2007 and the
US$1,000,000 property expenditures required May 30, 2007 were extended to May
30, 2008.  In return for granting of the extension, 10% of any
payments, in






-28-




terms of
cash or stock received by the the Company from a third party who enters into an
agreement regarding the Mogote Property, will be paid to Golden
Arrow.





Regional and Local
Geology





The
property is underlain by basement rocks of the Permian age Choiyoi Group, which
are faulted against and overlain by Tertiary age volcanic rocks.  The
Mogote Property is located in a region that has been subjected to multiple
volcanic and intrusive events dating from middle Miocene (~13.65 million years
ago) back at least as far as the Permo-Triassic (~250 million years ago), which
management believes makes the area particularly attractive for mineral
exploration.





Exploration
History





A brief
geological reconnaissance took place in March-April 2000, during which 21 rock
and talus samples were collected.  Anomalous samples came from zones
with clay and/or iron alteration.  In November-December 2000, a
reconnaissance geological and geochemical sampling program was carried out over
the property.  This work outlined an area measuring approximately 3
kilometres E-W near the northern property boundary which returned a high
proportion of anomalous copper and gold results in both rock and sediment
samples. In March 2001, IMA entered into a Joint Venture agreement with Rio
Tinto Mining and Exploration Limited, which carried out an eight-day program
commencing March 11, 2001, and which was subsequently terminated due to poor
weather.  Work accomplished included road construction, talus fines
and rock chip sampling and resulted in the identification of the Filo Este and
Filo Central targets which both displayed aspects of porphyry copper-gold and
high sulphidation epithermal precious metal systems.  During January
2003, IMA carried out a four week detailed surface exploration program of
mapping and geochemical sampling.





During
the period November 17 through December 14, 2003, the Company carried out an
exploration program comprising detailed geologic mapping, ground magnetics,
induced polarization (“IP”) geophysics, trench sampling, and surface
geochemistry in the northern part of the property. The work was focused on two
major zones of copper-gold mineralization, Filo Este and Filo Central, and one
zone of high sulphidation epithermal alteration, Zona Colorada. The copper-gold
mineralization is characterized by strongly anomalous values in copper and gold
related to potassic alteration of a Miocene (23.8 to 5.3 million years ago)
diorite porphyry system. The high sulphidation alteration is the upper level
expression of a separate, but similar diorite porphyry. The work indicated the
presence of a major mineralized porphyry beneath the Filo Este zone of potassic
and propylitic alteration. Mineralization is hosted within volcanic breccias and
phases of the Miocene diorite porphyry which have undergone moderate to strong
porphyry-type alteration. Hydrothermal mineralization consisted of copper
sulphide minerals chalcopyrite and bornite within quartz veins and as wallrock
disseminations. Recent supergene (surface-enriched) oxidation has altered the
primary copper minerals to various copper oxide and sulphate minerals including
malachite and antlerite.





A 600
metre trench was excavated over the Filo Este zone of potassic alteration and
encountered 510 metres of continuous mineralization that averaged 0.196% copper
and 0.331 ppm gold. Mineralization consisted of fracture controlled sulfates and
oxides and as disseminations in wallrock and quartz veins. Copper minerals were
approximately 80% oxide and 20% sulfides with the sulfides consisting of
chalcopyrite and bornite. Ground magnetics suggest a shallow porphyry system
underlying Filo Este ridge with strong magnetite alteration that covers an area
of at least 1.5 kilometres by 800 metres. The shallow depth of intrusion is
indicated by a steep magnetic gradient which management believes is consistent
with the level of exposure of alteration and mineralization. Two other distinct
magnetic sources were encountered at Filo Central and underlying the East Cirque
area. The IP indicates several distinct copper sulfide bodies of 2-4% sulfide
that are coincident with magnetite alteration on Filo Este.





March 2004 Drilling - Filo
Este





In March
2004, the Company carried out a 1,475 metre, five hole diamond drill program and
conducted further geological mapping and talus fine sampling on the northern
part of the Mogote Property.  The drilling tested a portion of the
Filo Este porphyry target to a depth of up to 495 metres over a strike length of
860 metres and a width of approximately 250 metres.  Hole MOG-04-1 had
to be abandoned at 71.6 metres and hole MOG-04-1A was drilled from the same
location to target depth.  Highlights of the drill results are
provided in table form below.


-29-





ppm
            ppm
            %Drillhole
            Total
      Depth
            From
            To
            Interval
            Gold
            Silver
            Copper(metres)
            (metres)
            (metres)
            (metres)
            (LWA)
            (LWA)
            (LWA)MOG-04-1
            71.6
            2.0
            70.0
            68.0
            0.43
            13.9
            0.244MOG-04-1A
            495.3
            6.0
            495.3
            489.3
            0.23
            2.6
            0.170Including
            
            258.0
            424.0
            166.0
            0.19
            2.2
            0.243And
            
            308.0
            396.0
            88.0
            0.20
            1.9
            0.290MOG-04-2
            315.4
            2.0
            315.4
            313.4
            0.16
            1.9
            0.171Including
            
            196.0
            315.4
            119.4
            0.21
            2.8
            0.248MOG-04-3
            300.0
            6.0
            300.0
            294.0
            0.11
            1.3
            0.078MOG-04-4
            292.9
            2.0
            292.9
            290.9
            0.23
            3.1
            0.104





In
addition to the drill program, regional surface work was carried out on Filo
Central and other targets in March 2004 to advance them to the drill-ready
stage. This work comprised detailed mapping, additional step-out talus sampling
and road/trench construction. Talus fine sampling on the Filo Central target,
defined by a strong magnetic signature coextensive with highly anomalous surface
geochemistry, has now extended the surface copper-gold geochemical anomaly of
greater than 0.1 ppm Au and 500 ppm Cu to 4,000 x 800 metres. Within this
anomaly is a 600 x 400 metre area of greater than 0.5 ppm. Management believes
Filo Central is a high priority target for the next phase of exploration on the
Mogote Property.





January-February 2005
Drilling – Filo Este and Filo Central





Between
mid-January and early February 2005 the Company completed a Phase II 2,577 metre
9-hole RC drill program on the Mogote Property.  Of the nine holes,
four were found to contain significant gold-copper mineralization hosted in
porphyry or in metamorphosed volcanic sediments at the margin of
porphyry.





All the
Phase II drill holes were sited to test strong areas of potassic-altered
intrusive porphyries within the Filo Este and Filo Central anomalies, defined by
strong magnetics, highly anomalous copper and gold geochemistry and surface
alteration.  Five holes were completed on Filo Este over an east-west
strike extent of 1.4 kilometres spanning a north-south distance of 720
metres.  The remaining four holes were spaced out over 1.6 kilometres
of strike length along Filo Central.  All drill holes were located on
the Argentina side of the international border.





The
significant intercepts include:





ppm
            ppm
            %Drillhole
            Zone
            Total
      Depth
            From
            To
            Interval
            Gold
            Silver
            Copper(metres)
            (metres)
            (metres)
            (metres)
            (LWA)
            (LWA)
            (LWA)MOG-6
            Este
            250
            0
            250
            250
            0.22
            
            0.083including
            
            
            176
            246
            70
            0.36
            3.0
            0.158MOG-7
            Este
            287
            0
            287
            287
            0.25
            3.0
            0.107MOG-8
            Este
            300
            4
            142
            138
            0.47
            2.0
            0.093MOG-12
            Este
            300
            214
            276
            62
            0.30
            1.1
            0.140





All
significant intercepts were from holes on Filo Este.  Drill holes
MOG-7, 8, and 12 are all located in the northwest corner of the property and in
the northwestern portion of the Filo Central anomaly.  These holes
were all hosted in, or spatially related to, a newly mapped occurrence of
fine-grained intrusive porphyry that is interpreted as an early porphyry phase
that typically alters to potassic or intermediate argillic
assemblages.





Copper
and gold mineralization in the drill holes was related to potassic
quartz-biotite alteration and directly related to early vein density and local
silicification. Vein hosted and disseminated sulfides include chalcopyrite,
pyrite, and minor bornite.





-30-


The 2005
Phase II drill program was carried out under the supervision of project
geologist Steven K. Jones, M.Sc., C.P.G., a Qualified Person under NI-43-101
guidelines.  Assays for the
drilling program were performed by Alex Stewart Labs, Mendoza, Argentina, an
internationally recognized assay service provider.  The Company has no
current plans to conduct exploration on the property and has not budgeted any
funds for further work at this time.





Chubut
Properties





The
Company entered into a Property Purchase Agreement, dated March 6, 2003, with
IMA and IMASA, whereunder the Company acquired a 100% interest in certain
mineral exploration properties located in the Province of Chubut, Argentina,
consisting of three (3) cateos known as Lago Pico, Loma Alta and Nueva Ruta (the
“Chubut Properties”).  See “Item 4.  Information on the
Company - History and Development of the Company - Property, Plant and Equipment
- Principal Properties and “Item 7. Major Shareholders and Related Party
Transactions - Related Party Transactions.”





The
Company has not found any “reserves” on the Chubut Properties, as that term is
defined in Guide 7 adopted by the SEC.





The
Company has spent $225,000 in acquisition costs (represented by the deemed value
of the common shares issued) and had not incurred any exploration expenses on
the Chubut Properties.





During
2005, the Company wrote off $225,000 in connection with the Chubut Properties,
representing the fair value of the Company’s shares issued upon acquisition of
the properties.  The Company decided to write off the Chubut
Properties, as there is no active exploration on the properties and the Company
has postponed any exploration indefinitely.  Additionally, on June 29,
2006, the Chubut provincial government announced a 36-month metallic mining
suspension in western Chubut Province.The Company continues to
hold legal title to the Chubut Properties.





Peru





Cocha
Copper-Silver Project, Department of Junin, Peru





In
October 2005, the Company applied for the 2,400 hectare Cocha concession
covering a copper-silver target in the Department of Junin, Peru.  The
Company was formally granted the concession titles to the property by the
Peruvian government on March 20, 2006 and April 10, 2006 and now holds a 100%
interest in the Cocha Property through its wholly-owned Peruvian subsidiary
Recursos de los Andes S.A.C.





Location and
Access





The Cocha
Property is located in the Department of Junin , Peru, approximately 220km east
of Lima.  UTM Coordinates at the center of the property are 497 000 m
E. and 8 675 000 m N.  The National map sheets covering the Property
are the Jauja 24-M and the Huancayo 25-M; Zone 18 South (1:100
000).  The following map identifies the location of the Cocha
Property.


-31-







-32-


Access to
the Cocha property is by road from the city of Huancayo, the capital of the
Junin Department.  From Lima to Huancayo, the route up the Central
Highway is 310 km long and takes about five and a half hours by
car.  This paved highway travels through the high mountain pass of
Anticona (Ticlio, at 4818m).  From Huancayo to the Property, travel
time is about one hour.  The main gravel road from Huancayo to
Acopallca is accessible year round and is one of the access roads to the Amazon
and eastern slopes of the Andes. The gravel road travels through deeply incised
valleys past the village of Acopallca where it bisects into two roads providing
access to the property’s north and south ends.  The property is not
always accessible by road during the rainy season and therefore the optimal
conditions exist for exploration work between May and October.





History





The Cocha
project has a very limited history of previous exploration and mining. At the
time of staking by the Company Resources, the Cocha property was free with only
two small concessions in the south central part of the property. Several
historical mineral showings previously explored and some of them mined by
individual “small miners” were identified on the Cocha property. It could be
assumed that copper was the main focus of the previous mining efforts. Most of
the workings are less than 2-3m deep and there was no significant production
from the property. Several overgrown and partially destroyed access mining roads
lead to previously explored showings.





Exploration
and Proposed Program





The
Cocha Property is located in a belt of Permian-aged clastic sedimentary rocks
known to host stratabound copper-silver mineralization.  Initial
sampling of the property at the Discovery Outcrop showing returned a continuous
series of chip samples which assayed 0.80% copper and 10g/t silver over 80m,
including two non-adjacent 10-metre intervals assaying 2.69 % copper and 24.4
g/t silver and 1.38% copper and 26.2 g/t silver (see table
below).  Mineralization is hosted by steeply-dipping malachite-stained
sandstone and mudstone of the Permian Mitu Formation.





Sample
      Number
            Location
            Type
            Interval
      (m)
            Cu
      (%)
            Ag
      (g/t)246006
            Discovery
      Outcrop
            chip
            10.0
            1.38
            26.2246005
            Discovery
      Outcrop
            chip
            10.0
            0.54
            7.6246008
            Discovery
      Outcrop
            chip
            10.0
            0.22
            1.3246003
            Discovery
      Outcrop
            chip
            10.0
            0.05
            0.3246002
            Discovery
      Outcrop
            chip
            10.0
            0.46
            3.6246001
            Discovery
      Outcrop
            chip
            10.0
            0.06
            0.4246200
            Discovery
      Outcrop
            chip
            10.0
            2.69
            24.4246241
            2.4km
      SSW of  D.O.(*)
            chip
            0.7
            2.89
            99.2246242
            1.6km
      SSW of D.O.(*)
            chip
            0.3
            1.65
            1.5


(*)D.O.
equals Discovery Outcrop





While
carrying out surface exploration work on the property the Company's geologists
discovered the Merce Showing which assayed 0.46% copper and 9.4 g/t silver over
9.5m in outcrop and is located approximately 700m northwest and on trend from
the Discovery Outcrop. This 9.5m interval is comprised of three consecutive chip
samples, including: 0.18% copper and 4.2 g/t silver over 4.0m, 1.7% copper and
25.1 g/t silver over 1.0m and 0.43% copper and 10.6 g/t silver over
4.5m.





The
area surrounding the Discovery Outcrop and the Merce showing is predominantly
overburden covered. Therefore a series of soil sample lines were established to
test for extensions to the mineralized zone under cover.  Widespread
anomalous copper-silver in soils extends for over 2.2km in length and up to 750m
in width along what has been named the Discovery Outcrop Trend. To date, 275
soil samples have been collected along it.  Soil samples were
collected along lines spaced at approximately 100m on either 12.5 or 25m
intervals. Morphologically the soil anomalies suggest that mineralization in
subsurface bedrock forms several sub-parallel zones. The strongest part of the
soil anomaly envelops the Discovery Outcrop.





-33-


In
November 2006 the Company announced that its ongoing surface exploration program
had revealed a new silver-copper soil anomaly in the southwestern portion of the
Cocha Property (South Cocha Trend-SCT) as well as four new copper-silver
targets. A total of 51 rock samples were collected during this exploration
program.  Results revealed the presence of four new copper-silver
targets.  Highlights of sample results from the new targets are
provided below in the table below.





Target
      #
            Sample
      Type
            Sample
      Length [m]
            Cu
      [ppm]
            Cu
      [%]
            Ag
      [g/t]1
            Chip
            0.5
            44,700
            4.47
            163.02
            Chip
            0.4
            28,000
            2.80
            1052
            Chip
            0.5
            9,700
            0.97
            51.23
            Chip
            2.0
            14,700
            1.47
            14.33
            Chip
            2.0
            15,300
            1.53
            6.63
            Chip
            2.0
            11,100
            1.11
            5.83
            Chip
            4.0
            6,750
            0.68
            5.63
            Chip
            0.5
            13,800
            1.38
            16.03
            Chip
            2.0
            9,200
            0.92
            11.44
            Chip
            1.1
            21,500
            2.15
            97.04
            Chip
            1.1
            19,600
            1.96
            59.24
            Chip
            1.1
            6,440
            0.64
            8.3





Targets
#1 and #2 represent vein-hosted mineralization related to the contact between
Pucara limestone and Mitu sandstone. Target #3 is a breccia zone and occurs on,
or close to, the contact between Mitu sandstone and Tarma group limestone.
Target #4 is structurally-controlled copper-silver mineralization hosted in Mitu
volcaniclastic sandstones.





The South
Cocha Trend-SCT soil anomaly is located on the contact between Pucara limestone
and Mitu sandstone. The SCT is located approximately 1.5km southwest of, and
sub-parallel to, the main Discovery Outcrop mineralized trend where a
copper-silver soil anomaly extends for over 2.2km in length and is up to 750m
wide.





A
total of 446 soils have been collected to date – results for silver and copper
are summarized in the following table:





Cu
      (ppm)
            #
      Samples
            Ag
      (ppm)
            #
      SamplesMinimum
            1.0
            
            
            0.1Maximum
            3230
            
            
            4.7Total
      Number
            
            446.0
            
            446.00-50
            338
            0.1-0.5
            40551-100
            39
            0.6-1.0
            16101-500
            51
            1.1-2.5
            16500-3230
            18
            2.6-4.7
            9





The new
SCT anomaly is at present 2.4km long, when the two completed soil grids are
combined, and 400 to 850m wide and is open along strike in both
directions.  Soil coverage is being extended to cover the extensions
to the SCT soil anomaly and to evaluate the areas around the newly discovered
bedrock showings.





Phase I
drill program on the Cocha Project began in August 2006 and complete results
were received and reported in November 2006.  The program was designed
to provide a preliminary test of approximately 400m of the strike length along
the mineralized trend in either direction from the Discovery Outcrop to
approximately 150m vertical depth. A total of 1,394m in eleven diamond drill
holes were completed.  Highlights from Phase I drill program are
provided in the table below.




-34-




Drill
      Hole
            Azimuth
            Inclination
            Total
            From
            To
            Interval
            Cu
            Ag
            Mo
            Pb
            ZnDepth
            [m]
            [m]
            [m]
            [%]
            [g/t]
            [ppm]
            [%]
            [%]COCHA-06-01
            220
            -45
            93.9
            
            NSR**COCHA-06-02
            220
            -55
            150.7
            0
            13.31
            13.31
            0.8
            10.8COCHA-06-02
            
            
            
            32.02
            50.03
            18.01
            1.93
            17.2COCHA-06-02
            
            
            
            64.72
            76.27
            11.55
            0.82
            9.2COCHA-06-03
            220
            -65
            183.3
            73.00
            75.83
            2.83
            0.29
            3.4COCHA-06-03
            
            
            
            82.90
            113.13
            30.23
            2.67
            24.1Including
            
            
            
            89.65
            96.40
            6.75
            4.71
            43.5COCHA-06-04
            220
            -45
            116.5
            23.85
            25.60
            1.75
            0.2
            4.3COCHA-06-04
            
            
            
            42.00
            45.20
            3.20
            0.21
            2.6COCHA-06-04
            
            
            
            62.05
            86.23
            24.18
            0.11
            3.7COCHA-06-04
            
            
            
            67.85
            85.80
            17.95
            
            
            109.4COCHA-06-04
            
            
            
            79.05
            86.23
            7.18
            
            
            
            0.54COCHA-06-05
            220
            -55
            151.0
            64.98
            66.60
            1.62
            0.45
            5.7COCHA-06-05
            
            
            
            107.8
            109.35
            1.55
            1.02
            25.7COCHA-06-06
            220
            -45
            113.6
            71.20
            83.45
            12.25
            0.13
            8.7COCHA-06-06
            
            
            
            69.15
            84.00
            14.85
            
            
            70.4
            0.67COCHA-06-06
            
            
            
            80.90
            83.45
            2.55
            
            
            
            
            0.69COCHA-06-06
            
            
            
            91.00
            99.75
            8.75
            0.14
            6.4COCHA-06-06
            
            
            
            91.60
            100.30
            8.70
            
            
            85.7COCHA-06-06
            
            
            
            96.50
            102.00
            5.50
            
            
            
            0.73COCHA-06-06
            
            
            
            97.00
            100.30
            3.30
            
            
            
            
            0.40COCHA-06-07
            220
            -45
            103.1
            67.2
            69.35
            2.15
            0.15
            3.5COCHA-06-08
            220
            -55
            91.5
            
            NSRCOCHA-06-09
            220
            -65
            100.0
            
            NSRCOCHA-06-10
            260
            -50
            170.0
            
            NSRCOCHA-06-11
            220
            -45
            120.0
            89.3
            92.2
            2.9
            0.06
            3.2


**NSR = No Significant
Results





All
drillholes cored a package of volcaniclastic rocks belonging to the Mitu
Formation. Lithologies comprised mainly ash, lapilli and tuff agglomerates with
local volcanic flow interbeds overlaying red sandstone. Copper and silver
mineralization is associated with the presence of fine-grained dark horizons of
argillic composition containing carbonaceous material within the volcaniclastic
sequences characterized by carbonate content and stronger foliation. The most
common ore minerals are bornite, chalcocite, and pyrite, with associated minor,
chalcopyrite, magnetite, and iron oxides. Chlorite, carbonate with minor silica
and epidote alteration were also observed.





The
geochemical zonation from copper-silver mineralization in the Discovery Outcrop
area (trench samples and drillholes COCHA-06-02 and 03) to the more polymetallic
copper-silver-molybdenum-lead-zinc mineralization found in holes COCHA-06-04,
70m to the southeast, and in COCHA-06-06, 235m southeast of the Discovery
Outcrop, is a characteristic property of sediment-hosted copper-silver
mineralized systems.  At the Lubin deposit in the Kupferschiefer
district of Poland a lead-zinc enriched zone occurs stratigraphically above the
main copper-silver horizon.





Local
Peruvian drilling company Geotecnia Peruana S.R.L. was contracted to carry out
the drilling program.  They used an Atlas Copco Diamec 262 drill rig
recovering mostly HQ core (6.35cm).  Drill core was cut on site using
a rock saw or




-35-




split
using a core splitter.  Half of the core samples were submitted to the
assay lab for analysis while the remainder was stored in core boxes for future
reference.  A rigorous program of QA/QC involving the use of standard
samples has been incorporated into the sampling regime for the
project.





At
present the Company is focused on gaining a better understanding of the controls
to the mineralized system present in the Discovery Outcrop area through detailed
geological and structural interpretation of the drill core and metal zonation
patterns identified in the multi-element geochemical data.  This work
will provide guidance on targeting future drilling.  One of the
primary aims is expanding the significant copper-silver mineralization
intersected in drill holes COCHA-06-02 and COCHA-06-03.  In addition
the Company will be conducting an intensive surface exploration program along
the new parallel South Cocha trend and newly discovered copper-silver
showings.  These two concurrent programs will allow the the Company to
plan a Phase II drill program for the first part of 2007.  Positive
results from the drill program combined with the discovery of the new showings
and mineralized trend prompted the Company to apply for additional concessions
in the Cocha Property area.





The
Company has not found any “reserves” on the Cocha Property, as that term is
defined in Guide 7 adopted by the SEC.





Analyses
for the samples from the Cocha Property were performed by ALS Chemex
Laboratories in Lima, Peru and North Vancouver, Canada.  Work was
carried out under the direction of Piotr Lutynski, M.Sc., P.Eng., and reviewed
by Dr. David A. Terry, P.Geo., Vice President Exploration, both Qualified
Persons.





Cruz
de Mayo Property, Department of Cuzco, Peru





Location
and Access:





The Cruz
de Mayo Project is located in the southern part of the Department of Cusco,
Peru.    The property is road accessible from the village of
Velille.  Travel time is 9 hours from Cusco to Velille and 15 minutes
from Velille to the property.  The following map identifies the
location of the Cruz de Mayo Property as well as the Acero and Fuyani Properties
which are also within the Department of Cusco.





-36-







-37-


Mineral
Tenure:





In July
2005, the Company obtained an option to acquire the 800 hectare Cruz de Mayo
property located in the southern portion of the Department of Cuzco in Peru (the
“Cruz de Mayo Property”) from Carlos Thompson a Peruvian Lawyer.  The
Company also acquired, by direct staking, 2,200 hectares of adjacent land for a
total of 3,000 hectares.  Mineral titles included in the Cruz de Mayo
Project are described below.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDCRUZ
      DE MAYO I
            010-0137-05
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCRUZ
      DE MAYO II
            010-0138-05
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCRUZ
      DE MAYO III
            010-0139-05
            Concession
            200
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearPAQUITA
      2004
            010-2330-04
            Concession
            100
            Carlos
      Thompson
            N/A
            See
      payment schedule belowPAQUITA
      DOS 2004
            010-2331-04
            Concession
            700
            Carlos
      Thompson
            N/A
            See
      payment schedule below





To earn
the interest in the Cruz de Mayo Property, the Company must pay US$150,000 in
option payments to Carlos Thompson over the period of four years (US$35,000
paid) and incur US$1,500,000 expenditures over a four year period as
follows:





Option
      Payments
              US
      $
            
            
            Exploration
              Expenditures
              US
      $
            
            Date35,000
            
            
            
            -
            
            April
      11, 2005 (paid)25,000
            
            
            
            200,000
            
            April
      11, 2007 (extended to June 30, 2007)40,000
            
            
            
            550,000
            
            April
      11, 200850,000
            
            
            
            750,000
            
            April
      11, 2009150,000
            
            
            
            1,500,000





A US$3
per Hectare per year validity fee applies for the three claims staked by the
Company through its wholly owned Peruvian subsidiary Recursos de los Andes
S.A.C.





Prior to
commencing work and obtaining government permits for drilling an agreement must
be reached with the local community concerning access to the
property.  To date no agreement is in place.  The Company is
working with the  local communities to obtain access to the Cruz de
Mayo Property.





History





Historical
mining activity is evident in a series of trenches and dams that were used in a
placer operation to wash gold from the bedrock.  These possibly date
from Spanish colony times.  More recent trenching is also apparent but
no comprehensive report describes the nature and results of this
work.





Exploration
and Proposed Program





The Cruz
de Mayo property is underlain by Jurassic sandstone intruded by
diorite.  Three high priority target zones have been identified on the
Cruz de Mayo Property:  (i) the Fatima Gold Target, (ii) the Central
Zone Porphyry Copper-Gold Target, and (iii) Skarn Targets, each as described
below.





Fatima
Gold Target





Fatima is
a bulk tonnage target with potential for bonanza-grade veins as it comprises
multiple higher-grade gold bearing shears and veins enveloped by lower-grade
material.  The zone occurs in a northwesterly-oriented trend of
alteration and




-38-




veining
which is at least 1.2 kilometres in length and up to 600 metres
wide.  Within this target area, historical mining activity is evident
in a series of trenches and dams that were used in a placer operation to wash
gold from the bedrock.  The structures are strongly oxidized at
surface and all sulphide minerals have been leached.  Results reported
in the table below were collected within an area measuring 550m by
450m.





Zone
            Sample
      Type
            Sample
            Trench
      [T]
            Au
            Ag
            Pb
            Cu[m]
            Panel
      [P]
            [ppm]
            [ppm]
            [ppm]
            [%]Fatima
      Zone
            Chip
            1.0m
            FZ-T1
            14.35
            43.9
            1,980
            0.05Fatima
      Zone
            Chip
            0.5m
            FZ-T2
            8.36
            12.1
            156
            0.06Fatima
      Zone
            Chip
            8.5m
            FZ-T3
            2.90
            11.7
            870
            0.08including
            0.2m
            
            24.80
            143.0
            838
            0.52including
            3.6m
            
            4.69
            17.3
            473
            0.14Fatima
      Zone
            Chip
            8.0m
            FZ-T4
            0.91
            25.6
            5,400
            0.07Fatima
      Zone
            Chip
            6.0m
            FZ-T5
            0.42
            20.0
            2,573
            0.02Fatima
      Zone
            Chip
            10.0m
            FZ-T6
            0.35
            1.4
            297
            0.04Fatima
      Zone
            Chip
            14.0m
            FZ-T7
            0.29
            2.8
            1,256
            0.03Fatima
      Zone
            Chip
            9.0m
            FZ-T8
            0.17
            9.5
            4,150
            0.15Fatima
      Zone
            Chip
            7.0m
            FZ-T9
            0.14
            1.3
            1,120
            0.02Fatima
      Zone
            Panel
            10.0x20.0m
            FZ-P1
            1.86
            14.0
            215
            0.05Fatima
      Zone
            Panel
            10.0x20.0m
            FZ-P2
            0.43
            8.0
            148
            0.09





Central
Zone Porphyry Copper-Gold Target





The
Central Zone bulk-tonnage porphyry Cu-Au target is located in the south-central
part of the property.  Malachite-stained copper-bearing sandstone has
been mapped over an area of approximately 300 metres by 700
metres.  Several gold-bearing shears which cut the copper-bearing
sandstone were historically mined for gold in this area.  Sample
results reported below were collected from outcrops and historical trenches
within a surface area measuring 300m by 500m.





Zone
            Sample
      Type
            Sample
            Trench
      [T]
            Au
            Cu[m]
            Panel
      [P]
            [ppm]
            [%]Central
      Zone
            Chip
            23.0m
            CZ-T1
            0.07
            0.28Central
      Zone
            Panel
            5.0
      x 5.0m
            CZ-P1
            2.87
            0.02Central
      Zone
            Panel
            5.0
      x 5.0m
            CZ-P2
            0.01
            1.81Central
      Zone
            Panel
            10.0
      x 10.0m
            CZ-P3
            0.32
            0.12Central
      Zone
            Panel
            1.0
      x 3.0m
            CZ-P4
            0.51
            0.10





The
Company has not found any “reserves” on the Cruz de Mayo Property, as that term
is defined in Guide 7 adopted by the SEC.





The
Company plans a detailed surface exploration program comprising geological
mapping, rock and soil sampling on the project to fully evaluate the dimensions,
grade and character of the mineralized zones identified to date and to better
delineate drill targets. Work on the Cruz de Mayo Property has been carried out
under the direction of Piotr Lutynski, M.Sc., P.Eng. and has been reviewed by
Dr. David A. Terry, P.Geo., Vice President Exploration for the Company, both
Qualified Persons.  All assays from the Cruz de Mayo Property were
carried out by ALS Chemex.





-39-


Acero
Copper-Gold Project, Department of Cuzco, Peru





Location
and Access:


The 1,700
hectare Acero Property lies within the Santo Tomas Porphyry Copper Belt and is
located just 8km west of the Company's Cruz de Mayo Property near the town of
Velille.  It is road accessible from the village of
Velille.  The property location map can be found under the section
“Cruz de Mayo” above.





Mineral
Tenure:





In 2005,
the Company acquired by staking, the Acero porphyry copper-gold property in
southern Department of Cuzco, Peru.  Mineral titles included in the
Acero Project are summarized below.








CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDACERO
      I
            010-2343-05
            Concession
            800
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearACERO
      II
            010-2344-05
            Concession
            900
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per year





History





Claims
were held in the Acero Property area in the past by Southwestern Resources
through a joint-venture Southern Peru Copper. They reported discovering two
zones of altered feldspar porphyry with potassic alteration and associated leach
cap with copper oxides and secondary chalcocite.  A limited drill
program reportedly intersected “thick zones” of sulphide porphyry copper style
mineralization with grades ranging between 0.3 and 0.5% copper with local narrow
sections assaying over 1% copper (Southwestern Gold Corp. 2000 Annual
Report).





Exploration
and Proposed Program





Several
phases of intrusive have been mapped on the property including dacite,
micro-diorite and granodiorite; the majority of mineralization and alteration
identified to date is hosted by dacitic intrusive.  Quartz stockwork,
with individual veinlets up to 3cm wide, is widespread in the southwest portion
of the mineralized area.  Copper mineralization identified on surface
on the Acero Property appears to be open to the southeast of current mapping and
sampling coverage.





Tabulated
preliminary sample results from surface sampling of the Acero Property are
presented below.





Sample
      Type
            Sample
      Length
              [m]
            Trench
      [T]
              Panel
      [P]
              Grab
      [G]
            Cu
              [%]
            Au
              [ppm]
            Ag
              [ppm]
            Mo
              [ppm]Chip
            4.0m
            T1
            0.55
            0.01
            0.2
            4Chip
            10.0m
            T2
            0.55
            0.04
            0.3
            6Chip
            10.0m
            T3
            0.47
            0.02
            0.5
            5Chip
            12.0m
            T4
            0.42
            0.13
            1.0
            5Chip
            10.0m
            T5
            0.36
            0.03
            0.3
            8Chip
            10.0m
            T6
            0.31
            0.03
            0.2
            5Chip
            3.0m
            T7
            0.31
            0.11
            2.0
            4Chip
            10.0m
            T8
            0.28
            0.17
            0.7
            3






-40-


Sample
      Type
            Sample
      Length
              [m]
            Trench
      [T]
              Panel
      [P]
              Grab
      [G]
            Cu
              [%]
            Au
              [ppm]
            Ag
              [ppm]
            Mo
              [ppm]


Chip
            10.0m
            T9
            0.24
            0.03
            0.4
            9Chip
            11.0m
            T10
            0.22
            0.04
            0.5
            4Chip
            10.0m
            T11
            0.16
            0.10
            0.4
            1Chip
            11.0m
            T12
            0.14
            0.12
            0.9
            1Chip
            12.0m
            T13
            0.13
            0.75
            316.0
            36Chip
            30.0m
            T14
            0.11
            0.06
            1.0
            46Panel
            5.0
      x 5.0m
            P1
            0.48
            0.06
            0.9
            109Panel
            3.0
      x 5.0m
            P2
            0.12
            0.05
            0.7
            2





The
Company has not found any “reserves” on the Acero Property, as that term is
defined in Guide 7 adopted by the SEC.





The
Company is planning a comprehensive surface exploration program to identify
drill targets on the core area and to evaluate the remainder of the Acero
Property.  Prior to commencing work and obtaining government permits
for drilling an agreement must be reached with the local community concerning
access to the property.  To date no agreement is in
place.  The Company is working with the local communities to obtain
access to the Acero Property.





Work on
the Acero Property has been carried out under the direction of Piotr Lutynski,
M.Sc., P.Eng. and has been reviewed by Dr. David A. Terry, P.Geo., both
Qualified Persons.  All assays from the Acero Property were carried
out by ALS Chemex.





Fuyani
Copper-Gold Property, Department of Cusco, Peru





Location
and Access:





The
Fuyani Property is located 40km north of Santo Tomas in the Department of Cusco,
in the Santo Tomas Porphyry Copper belt.  It is easily accessed along
the gravel road connecting Santo Tomas with Cusco, 70km north of the Fuyani
Property. The Fuyani Property lies 40km NW of the Constancia copper-molybdenum
project currently being explored by Norsemont Mining Inc; the high-profile Liam
epithermal gold project of Newmont Peru Limited/Southwestern Resources Corp. is
located 80km to the southwest; and BHP Billiton's Tintaya copper-gold-silver
porphyry-related skarn deposit is located 100km to the
southeast.  Location map for the Fuyani Gold Property can be viewed
under the section “Cruz de Mayo Property” above.





Mineral
Tenure:





The 1000
Hectares Fuyani copper-gold property was acquired by staking in
2006.  It consists of a single concession registered under Recursos de
los Andes, a wholly owned subsidiary of the Company.  The claim is
described in the table below.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDFUYANI
            01-00875-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per year





-41-


History





There is
no indication of previous work or historical workings on the Fuyani
property.





Exploration
and Proposed Program





The
Fuyani property is underlain by Cretaceous volcaniclastics intruded by tertiary
granodioritic intrusive. Tertiary sediments cover topographically low areas.
Porphyry-style copper (malachite, chalcopyrite, and bornite) and silver
mineralization, with elevated lead, zinc and molybdenum, is hosted by
epidote-altered granodiorite. Abundant massive magnetite and garnet float in
several creeks draining the Fuyani property suggests also presence of skarn type
mineralization.





The
Company has not found any “reserves” on the Fuyani Property, as that term is
defined in Guide 7 adopted by the SEC. Only 4 rock samples have been collected
from the Fuyani Property to date.





Mitu
Copper-Silver Property, Department of Junin, Peru





Location
and Access:





The Mitu
Property is located approximately 155km northeast of Lima, 80km southeast of the
historic mining camp of Cerro de Pasco and 110km northwest of the Company's
Cocha copper-silver project in the department of Junin, Peru.  The
Mitu Property is easily accessible via a paved road-connecting Lima with Oroya
and Cerro de Pasco. From the paved road there are several 4x4 roads leading to
different areas of the property. Elevations on the property range from 3,700m to
4,400m above sea level.  The following map identifies the location of
the Mitu Property:








--
 -42-







-43-


Mineral
Tenure





In June
2006 the Company was granted the 5,600 hectare Mitu concession.  The
Company holds a 100% interest in the Mitu Property, acquired by direct
staking.  Mineral titles for the Mitu Property are described in the
table below.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDMITU
      1
            01-00869-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearMITU
      2
            01-00870-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearMITU
      3
            01-00871-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearMITU
      4
            01-00872-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearMITU
      5
            01-00873-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearMITU
      6
            01-00874-06
            Concession
            600
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per year





History





Small
historical workings are evident on the Mitu property but there are no reports of
modern exploration prior to the Company’s staking.





Exploration
and Proposed Program





The
Company has not found any “reserves” on the Mitu Property, as that term is
defined in Guide 7 adopted by the SEC.


Sediment-hosted
copper-silver mineralization occurs in the clastic Mitu Formation at, or close
to, its upper contact with the Pucara limestone. Three rock chip samples
collected from historical workings during an initial site evaluation of the Mitu
concession assayed 4.5% copper and 128 ppm silver over 1.2m, 6.2% copper and 324
ppm silver over 0.4m, and 1.7% copper and 45 ppm silver over 0.3m; all samples
were collected across structurally and/or stratigraphically-controlled
horizons.





The
Company is currently carrying out a comprehensive surface exploration program
comprising prospecting, geological mapping and soil grid sampling to delineate
drill targets.  Drilling is expected to begin in the Fall
2007.





Analyses
for the samples from the Mitu Property were performed by ALS
Chemex.  Work on the Mitu Property was carried out under the direction
of Piotr Lutynski, M.Sc., P.Eng., and technical information from the property
was reviewed by Dr. David A. Terry, P.Geo., Vice President Exploration both
Qualified Person.





Laguna
Gold Property, Department of Pasco, Peru





Location
and Access:





The
Laguna Gold Property is located in the Cerro de Pasco district and is
immediately west of the mineral belt that includes the Cerro de Pasco and
Colquijirca area polymetallic deposits.  The property is easily
accessible from the town of Cerro de Pasco by following the main road west past
the large tailings dam and out onto the flat gravel-covered plateau to the east
where the property is located.  Gravel roads access many areas of the
property. The Quicay Mine in the centre of the property has electrical
power.  Several small communities such as Pachoyan are scattered
around the area of the property.   The following map identifies
the location of the Laguna Gold Property:





-44-







-45-


Mineral
Tenure





On
December 7, 2006, the Company signed a letter of intent with Chancadora Centauro
S.A.C. to enter into an option agreement to acquire up to a 90% interest in the
11,184 hectare Laguna Gold Project in the Pasco Department of west central Peru
(the “Laguna Gold Property”).  In addition, applications have been
filed for additional claims covering 8,800 hectares in adjacent areas bringing
the project total to 19,984 hectares.  The table below summarizes the
titles for the claims pertaining to the option agreement.  Mineral
titles for the additional claims are pending.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDPDP
      8
            01-03443-04
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPDP
      9
            01-03444-04
            Concession
            200
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPDP
      15
            01-01283-05
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPDP
      18
            01-01803-05
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPDP
      19
            01-01802-05
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPAMPA
      DOS A
            04013412X01
            Concession
            400
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPAMPA
      DOS C
            04013412X10
            Concession
            250
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPAMPA
      DOS D
            04013412X16
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowPAMPA
      DOS E
            04013412X19
            Concession
            450
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 3
            01-00064-92
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 4
            01-00065-92
            Concession
            1000
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 5
            01-00066-92
            Concession
            334.224
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 6
            01-00067-92
            Concession
            50
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 9
            01-00070-92
            Concession
            800
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 10
            01-00061-92
            Concession
            800
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent belowCENTROMIN
      No 11
            01-00060-92
            Concession
            900
            Chancadora
      Centauro S.A.C.
            N/A
            See
      terms of the letter of intent below





Under the
terms of the letter of intent, the Company may earn up to a 90% interest in the
Laguna Gold Property. An initial 51% interest may be earned by incurring
US$650,000 in work expenditures and US$900,000 in option payments over 2 years.
The Company may then elect to earn an additional 39% interest, by making a
further US$4,000,000 in option payments and completing a bankable feasibility
study, within seven years after the exercise of the initial option. The letter
of intent provides for a legal and technical due diligence period.





History





The Cerro
de Pasco district is well known for its precious and base metal
deposits.  The Laguna Gold Property is located in close proximity to
the Quicay mine (see map).  The area has been prospected and explored
for by numerous companies with greater emphasis in the last ten
years.  In 2001, Anglo American Exploration Peru S.A. carried out a
large Spectrum airborne survey with 200m line spacing identifying 37 targets in
the Laguna area. The Spectrum system measures conductivity/resistivity and
included a magnetometer. Placer Dome acquired an option on the property in 2005
and carried out property-wide geochemical survey, reviewed the Anglo Spectrum
data and anomalies and conducted a review of surface geology and structure. The
result of Placer Dome's work was the identification of 6 high priority drill
targets selected for testing in 2006. With the takeover of Placer Dome by
Barrick Gold Corporation the Laguna Gold Project option was terminated and the
targets have yet to be tested. The Company has acquired the sizable exploration
database and will be using it to confirm the previously-identified
targets.





-46-


Exploration
and Proposed Program





The
Company has not found any “reserves” on the Laguna Gold Property, as that term
is defined in Guide 7 adopted by the SEC.





The
Company’s primary target on the Laguna Gold Property is buried high sulphidation
gold or polymetallic deposits.  To date, six high-priority drill
targets that have similar geological characteristics to the Quicay gold deposit
have been identified on the Laguna Gold Property and they will be systematically
reviewed by the Company's technical team to prioritize drill
targets.





Much of
the area within the Laguna Gold Property lies within an intermountain basin and
is covered with transported alluvium, colluvium, and possibly glacial drift
deposits. While the cover thickness is believed to locally exceed 100m, the
target Miocene-aged siliceous alteration systems form topographic highs where
exposed and likely are present under reduced thicknesses of transported cover
sequences. Mineralized Miocene intrusives and erosion-resistant silicified
domains occur within the project area, specifically at the Quicay mine site, a
siliceous topographic high resulting from high sulphidation epithermal gold
mineralization.





Nevada
USA





Roy
and Hills, Properties





Location
and Access:





The 478
hectare (1,180 acre) Roy and the 421 ha (1,040 acre) Hills Properties are
located 56 and 65 kilometres respectively northwest of Tonopah.  The
Roy and Hills Claims are both adjacent to the Pole Line road and access to them
is by truck from Tonopah.  A power line follows the Pole Line road
just east of the Roy and Hills property.  The following map identifies
the location of the Roy and Hills Claims:








-47-







-48-


Mineral
Tenure





In March
2005, pursuant to an acknowledgement agreement dated December 31, 2004, with
Steven K. Jones, M.Sc., C.P.G., the Company acquired two claim blocks in the
Roysten Hills area of Nye County of west central Nevada (the “Roy and Hills
Claims”). Mr. Jones, as agent for the Company, staked the Roy and Hills Claims
on behalf of the Company in November 2004 and the Company advanced all of the
costs associated with staking the claims during the last quarter of fiscal
2004.  Mr. Jones is an arm’s length, third party.  Mr. Jones
transferred the Roy and Hills Claims to Amera Resources (US) Inc., the Company’s
wholly-owned subsidiary and Quitclaim Deeds were filed with the Bureau of Land
Management on June 1, 2005.





Mineral
Titles included in the Roy and Hills Projects:





PROPERTY
            CLAIMS
            CLAIM
      NUMBER
            ACRE
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDROY
              (59
      claims)
            1
      to 59
            884363
      to 884421
            1,180
            Amera
      Resources (US)
            N/A
            US$125
      per claim for federal and US$8.50 per claim for countyHILLS(52
      claims)
            1
      to 28
            884422
      to 884449
            1,040
            Amera
      Resources (US)
            N/A
            US$125
      per claim for federal and US$8.50 per claim for county29
      to 52
            902686
      to 902709
            Amera
      Resources (US)
            N/A
            US$125
      per claim for federal and US$8.50 per claim for
  county





History





The Roy
and Hills properties are located along the northern margin of the prolific
Walker Lane epithermal belt, which has seen past production of more than 35
million gold equivalent ounces.  The details of previous work on the
Hills property is not known.  On the Roy property, several short
rotary drill hole sites were found testing the more silicified
alteration.  Results from this earlier drilling are
unknown.





Exploration
and Proposed Program





Both
the Roy and Hills claim blocks are underlain by Oligocene and Miocene-age
volcanic rocks that consist of latites, quartz latites and dacite flows that
have undergone epithermal alteration and mineralization prior to being covered
by lacustrian volcanic sediments and Quaternary gravels. Work by the Company on
the Roy and Hills Claims includes surface mapping, geological sampling, and a
ground magnetics survey carried out by Quantec Geophysic along 200 meter-spaced
lines with 10 meter-spaced sample points.  On the Roy property a
gold-silver epithermal system is hosted within an alteration zone that outcrops
over a 2.25 square kilometre area.





On June
9, 2006 the Company signed a letter of agreement to option to Astral Mining
Corporation (“Astral”) its Roy and Hills Claims (the “Astral Letter of
Agreement”).  Under the terms of the Astral Letter of Agreement,
Astral may earn up to an 80% undivided interest in the Roy and Hills
Claims.  Astral can earn an initial 65% interest in the Roy and Hills
Claims by incurring US$2,500,000 in work expenditures over four years and
issuing 500,000 of its common shares to the Company.  Astral may then
elect to earn an additional 15% interest, by issuing a further 500,000 common
shares to the Company and completing a bankable feasibility stage, within three
years.  The Astral Letter of Agreement was approved by the TSX-V, and
Astral issued the first 100,000 shares to the Company on August 4,
2006.





On May
18, 2007 Astral reported the results from a 7-hole 1,000m Phase I Reverse
Circulation (RC) drill program on the Roy and Hills gold projects commenced in
January, 2007.  The best results from the program were a 6.1m interval
averaging 0.89 g/t gold, including a 1.5m interval assaying 2.1 g/t gold, from
between 3.0 and 9.1m depth in hole R-07-5. Zones of anomalous arsenic
concentration were observed in all holes except R-07-7; zones of elevated silver
and copper were detected in hole R-07-05 and a 20.1m wide zone of
arsenic-mercury±antimony±copper was present near the top of hole
R-07-06.





-49-


The Roy
and Hills drilling program was carried out under the supervision of John Rice,
C.P.G., a Qualified Person as defined in National Instrument
43-101.  All analytical work for the Roy and Hills drilling program
was performed by American Assay Laboratories Inc., an internationally recognized
analytical services provider located in Sparks, Nevada.  The technical
information discussed above  has also been reviewed by Dr. David A.
Terry, P.Geo., Vice President Exploration for the Company and a Qualified Person
as defined in National Instrument 43-101..





The
Company has not found any “reserves” on the Roy and Hills Claims, as that term
is defined in Guide 7 adopted by the SEC.





Dr. David
A. Terry, P.Geo. is the Qualified Person for the Roy and Hills
Claims.


Esperanza
Project





On August
24, 2004 the Company entered into an option agreement with Arcturus Ventures
Inc. (“Arcturus”) whereby it could earn up to an 80% undivided interest in the
3,000 hectare Esperanza Property located in northern Arequipa Province,
Peru.  The Company terminated its option agreement with Arcturus on
July 31, 2006 and the Esperanza property carrying value of $511,883 was written
off during the year ended December 31, 2006.





Plan
of Operation and Exploration Budget





As of
April 30, 2007, the Company had working capital of approximately
$3,800,000.





Reconnaissance
programs designed to identify properties for staking in high potential mineral
belts in Peru are ongoing and the projected budgets for these programs may be
adjusted up or down dependent on results. In addition, the Company is
continually evaluating property submittals and opportunities in a number of
prospective jurisdictions and has an active property review program. As
prospective opportunities are identified, additional funds may be allocated to
acquisitions and exploration work based on the recommendations of management and
the board of directors.





The
Company has not budgeted for any exploration programs on the Mogote Property
during 2007 and is actively seeking joint venture partners to advance the
project.





Preliminary
surface exploration comprising prospecting, geological mapping, rock, soil and
silt sampling was carried out in late 2005 and early 2006 on the Cocha
Property.  Early results from the work on the Cocha Property indicate
a significant zone of near-surface sediment-hosted copper-silver mineralization
is present.  A Phase I eleven hole 1,394m diamond drill program was
completed during August-September 2006.  A follow-up Phase II program
is planned for 2007 budgeted at $420,000.





Further
surface work is planned for the Mitu Property.  Numerous showings of
high-grade copper-silver mineralization has been identified on surface and in
old workings.  A Phase I drill program to test some of these targets
is planned for late 2007 – the project has a budget of $210,000.





Subsequent
to satisfactory completion of due diligence on the Laguna Gold Property, and
checking of all the geophysical-geochemical anomalies, a drill program to test
at least six high priority targets will be permitted and carried
out.  The 2007 budget for the Laguna Gold Property is
$650,000.





Exploration
carried out during 2005 has identified two zones of mineralization on the Cruz
de Mayo Property.  The company plans to carry out a detailed soil and
rock sampling program, ground geophysics and, dependant on results, a
preliminary drill test of the property.  A total of $220,000 has been
budgeted for this work.





A total
of $200,000 has been budgeted to advance other properties the Company currently
has in its portfolio through surface exploration programs for the remainder of
2007.





Reconnaissance
and evaluation activities aimed at identifying properties to acquire by direct
staking or through agreements with third parties are planned to continue through
the first half of 2007 in Peru.  In addition the Company will be
continually evaluating submittals and other exploration opportunities as they
arise. It is the aim of the Company to acquire additional properties over the
next year, primarily in Peru, Chile or Columbia.  The Company has
budgeted




-50-




$850,000
for these activities during fiscal 2007.  Management may have to make
adjustments to the budget throughout the year, dependant upon exploration
results and/or acquisition opportunities.





The table
below sets forth the Company’s exploration budget for the fiscal 2007
period.





Location
            January-May
            June-December
            TotalCocha
            Cu-Ag
            Peru
            $100,000
            $320,000
            $420,000Mitu
            Cu-Ag
            Peru
            $50,000
            $160,000
            $210,000Cruz
      de Mayo
            Au-Cu
            Peru
            $50,000
            $170,000
            $220,000Laguna
            Au
            
            $150,000
            $500,000
            $650,000Other
      Peru Properties
            
            Peru
            $50,000
            $150,000
            $200,000Peru
      Generative and Acquisitions
            
            
            $250,000
            $350,000
            $600,000Other
      Evaluations
            
            
            $100,000
            $150,000
            $250,000Total
            
            
            $750,000
            $1,800,000
            $2,550,000





The
Company does not believe it has sufficient financial resources to conduct all of
the planned exploration of its mineral property interests and to fund its
ongoing overhead expenses during the 12 months from January 1, 2007 to December
31, 2007.  In the future, the Company may need to raise additional
capital through the sale of its equity securities to fund further exploration
activities.  See “Item 5. Operating and Financial Review and Prospects
- Liquidity and Capital Resources.”  The Company may not be able to
raise the necessary funds, if any, and may not be able to raise such funds at
terms which are acceptable to the Company.  In the event the Company
is unable to raise adequate finances to fund the proposed activities, it will
need to reassess its alternatives and may have to abandon one or more of its
property interests as a result.





Item
5.  Operating and Financial Review and Prospects.





The
following discussion of the results of operation of the Company for the fiscal
years ended December 31, 2006, 2005 and 2004 should be read in conjunction with
the accompanying audited financial statements of the Company and related notes
included therein.





The
Company’s financial statements are prepared in accordance with Canadian GAAP,
the application of which, in the case of the Company, conforms in all material
respects for the period presented with US GAAP except for the differences noted
in Note 11 of the Company’s audited financial statements for the years ended
December 31, 2006, 2005 and 2004 which are included herein.  The noon
rate of exchange on April 30, 2007, reported by the United States Federal
Reserve Bank of New York, for the conversion of Canadian dollars into United
States dollars was CDN$1.1068 (US$0.9035 = CDN S1.00).  The effects of
inflation and price changes have not had a material impact on the Company since
its incorporation.  The Company does not engage in hedging
activities.





The
Company’s financial statements were prepared on a going concern basis which
assumes that the Company will be able to realize its assets and discharge
liabilities in the normal course of business.





Overview





The
Company was incorporated on April 11, 2000 and remained without a business asset
until March 2003, when the Company negotiated a number of agreements to option
and acquire interests in various mineral concessions located in
Argentina.  In December 2003, the Company completed its initial public
offering and commenced trading on the TSX-V under the symbol
“AMS”.  Effective September 13, 2006, the Company received clearance
for trading on the Over-the-Counter Bulletin Board (“OTCBB”) operated by the
National Association of Securities Dealers, continuing under the symbol
“AJRSF”.





The
Company is an exploration stage company engaged in the business of acquiring,
exploring and evaluating natural resource properties, and potentially joint
venturing these properties depending on the evaluation of the
property.  The Company has been focusing on conducting exploration
programs on the Mogote property in Argentina and on its




-51-




portfolio
of properties in Peru.  The Company’s material mineral property
interests are located in Argentina, Peru and in US.  The Company is
currently reviewing other mineral property interest opportunities in South and
North America and has budgeted approximately $850,000 for fiscal 2007 for
generative exploration program.





During
December 2004 the Company staked the Roy and Hills claim blocks in
Nevada.  See “Item 4. Information on the Company - Property, Plant and
Equipment - Other Properties - Nevada, USA, Properties.”  During 2005
the Company staked or optioned the Cruz de Mayo, Acero and Cocha properties in
Peru.  During 2006 and the beginning of 2007, the Company staked or
optioned the Fuyani, Mitu, and Laguna properties in Peru. See “Item 4.
Information on the Company - Property, Plant and Equipment - Other
Properties.”





Results
of Operations





Fiscal
Year Ended December 31, 2006 Compared to Fiscal Year Ended December 31,
2005





For the
year ended December 31, 2006, the Company reported a net loss of $1,920,249
($0.10 per share), an increase in loss of $485,698 from the $1,434,551 ($0.09
per share) for the year ended December 31, 2005.





A total
of $1,422,749 of general and administrative costs were incurred for the year
ended December 31, 2006, compared to $1,187,928 for the year ended December 31,
2005.  Significant expenditures were incurred in the following
categories:







-
            Corporate
      development and investor relations costs of $227,747, compared to $252,981
      during 2005, are comprised of costs related to investor relations,
      investor conferences and distributing general corporate
      information.  These costs have decreased from the prior year
      primarily as a result of the Company discontinuing its contract with an
      external investor relations firm in early 2006.-
            General
      exploration costs of $296,810 were incurred during 2006 compared to
      $199,264 during 2005 as the Company expanded its generative exploration
      activities in Peru, Chile and
Colombia.


-
            Management
      fees of $85,833 were paid to the President of the Company pursuant to an
      employment agreement compared to $73,500 paid in 2005.  Under
      the contract the President was paid $6,125 per month in 2005 which
      increased to $7,292 per month on May 1,
2006.


-
            Office
      and sundry expenses were $122,639 during 2006 compared to $92,724 during
      2005 as a result of the increase in activity in
  2006.


-
            Rent
      of $90,099 increased by $16,526 from $73,573 rent paid in
      2005.  The rent expense is comprised of an allocation of fees
      from the Grosso Group.


-
            Salaries
      of $372,063 in 2006 increased $77,893 from $294,170 salaries paid in
      2005.  In 2006 salaries are comprised of an allocation of fees
      paid to the Grosso Group.  In 2005 salaries were comprised of an
      allocation of fees paid to the Grosso Group and salaries paid to employees
      in the Peru office.


-
            Stock-based
      compensation of $90,850 is the estimated fair value of 415,000 stock
      options granted to employees, directors and consultants during 2006
      compared to $52,500 the estimated fair value of the 250,000 stock options
      granted during 2005.  Stock-based compensation is accounted for
      at fair value as determined by the Black-Scholes option pricing model
      using amounts that are believed to approximate the volatility of the
      trading price of the Company’s stock, the expected lives of awards of
      stock-based compensation, the fair value of the Company’s stock and the
      risk-free interest rate.


-
            The
      $525,514 write-off of mineral properties in 2006 primarily consists of the
      $511,883 write-off of the Esperanza property.  The Company
      terminated its option agreement with Arcturus in August 2006 in order to
      focus its exploration efforts on its other Peruvian
      properties.  In 2005, the Company wrote-off the $225,000
      carrying value of its Chubut properties as there was no active exploration
      on the properties.





During
the year ended December 31, 2006, the Company capitalized $451,169 of
expenditures on the Cocha Property, $179,770 on the Mogote Property, $111,775 on
the Cruz de Mayo Property, $3,657 on the Korimarca Property, and $49,915 on
other properties.





Fiscal
Year Ended December 31, 2005 Compared to Fiscal Year Ended December 31,
2004





For the
year ended December 31, 2005, the Company reported a net loss of $1,434,551
($0.09 per share), an increase in loss of $560,219 from the $874,332 loss ($0.07
per share) for the year ended December 31, 2004.





-52-


A total
of $1,187,928 of general and administrative costs were incurred for the year
ended December 31, 2005 compared to $863,499 for the year ended December 31,
2004.  Significant expenditures were incurred in the following
categories:







-
            Corporate
      development and investor relations of $182,702, compared to $151,739
      during 2004, is comprised of costs related to investor relations, investor
      conferences and general corporate information.-
            General
      exploration costs of $199,264 were incurred during 2005 (2004 - $18,318)
      as the Company expanded its generative exploration activities in Peru and
      in the US.


-
            Management
      fees of $73,500 were paid to the President of the Company pursuant to an
      employment agreement compared to $72,400 during
  2004.


-
            Office
      and sundry expenses were $92,724 during 2005 compared to $51,173 during
      2004 as a result of the increase in activity in 2005.-
            Rent
      of $73,573 increased by $44,062 from $29,511 rent paid in 2004 to
      IMA.  The rent expense in 2005 represents allocation of fees
      from the Grosso Group.




-
            Salaries
      of $294,170 represent allocation of fees paid to the Grosso Group during
      2005 and salaries paid to employees in Peru office, compared to $154,074
      during 2004.  Total fees of $377,410 was incurred by the Company
      from the Grosso Group during 2005 compared to $108,390, which was paid to
      IMA for rent, salaries and administrative services during
      2004.


-
            Stock-based
      compensation of $52,500 is the estimated fair value of stock options
      granted to employees, directors and consultants during 2005 compared to
      $131,805 the estimated fair value of the stock options granted during
      2004.  Stock-based compensation is accounted for at fair value
      as determined by the Black-Scholes option pricing model using amounts that
      are believed to approximate the volatility of the trading price of the
      Company’s stock, the expected lives of awards of stock-based compensation,
      the fair value of the Company’s stock and the risk-free interest
      rate.-
            Write
      off of mineral properties consists of the $225,000 write off of Chubut
      properties, as there is no active exploration on the properties and the
      Company has postponed any exploration indefinitely.  These
      properties located in Western Chubut Province of Argentina are subject to
      an ongoing government moratorium on exploration
  activities.







During
the year ended December 31, 2005, the Company capitalized $801,830 of
expenditures on the Mogote Property, $341,402 on the Esperanza property, $31,687
on the Korimarca property, $55,448 on the Cruz de Mayo Property, $25,655 on the
Cocha Property, $40,879 on the Walker Lane property and $42,841 on other
properties.





Fiscal
Year Ended December 31, 2004 Compared to Fiscal Year Ended December 31,
2003





The
Company reported a net loss of $874,332 in 2004 ($0.07 per share), an increase
in loss of $468,576 from the $405,756 loss ($0.08 per share) for the year ended
December 31, 2003.





General
and administrative costs in 2003 were nominal as the Company had just negotiated
a number of mineral property agreements and had not yet commenced significant
corporate or exploration activities.  In addition, the Company did not
commence its efforts to begin its initial public offering until the second
quarter of 2003.  A total of $408,3852 of general and administrative
costs were incurred in 2003.  The 2004 period represents the first
full year since the Company completed its initial public offering and became a
publicly-traded company.  A total of $863,499 of general and
administrative costs were incurred in the year ended December 31,
2004.  Significant expenditures were incurred in 2004 in the following
categories:





-
            Corporate
      development and investor relations ($151,739) comprise of a monthly fee of
      $7,500 paid to Raven Capital for market awareness and investor relations
      for January to April.  The arrangement with Raven Capital was
      terminated in April. Ridgecrest Capital S.A. was retained to provide
      consulting services for the Company with European investors and was paid
      fees of $18,305.  The arrangement with Ridgecrest Capital was
      terminated effective December 31, 2004.  Attendance at
      investment conferences was a cost of $30,100.  The remaining
      corporate development and investor relations costs in fiscal 2004 was
      comprised of costs related to general corporate information and fees paid
      to consultants to assist the Company with its
  financings.


-
            Management
      fees ($72,400) represents fees charged by the President of the Company
      pursuant to an employment
agreement.




-53-




-
            Professional
      fees ($48,200) include accounting and consulting fees for market
      research.


-
            Legal
      fees ($63,058) have increased due to costs related to the preparation and
      filing of the Company’s Form 20-F registration statement and increased
      corporate legal costs for its
activities.


-
            Salaries
      ($154,074) consists mainly of fees that were paid to IMA for the provision
      of personnel under a cost sharing arrangement and salary plus $25,000
      relocation allowance paid to the Company’s Vice President,
      Exploration.  A total of $108,390 was paid to IMA for rent and
      administrative services.


-
            Office
      and Sundry ($51,173) is comprised mainly of printing costs of $20,803,
      telephone expense of $8,837 and other office
  expenses.


-
            Travel
      ($47,018) principally related to attendance at conferences and
      presentations.


-
            Advertising
      ($60,745) included costs to prepare materials for potential and existing
      shareholders.


-
            Stock-based
      compensation ($131,805) is the estimated fair value of stock options
      granted to employees, directors and
consultants.





During
2004 the Company incurred $707,631 of exploration expenditures on the Mogote
Property.  In addition, a total of $93,576 of foreign value added
taxes were also recorded as part of mineral resource interests and deferred
exploration costs.  The Company also issued 300,000 common shares to
IMA, with a deemed value of $279,000, to earn an additional 24% interest in the
Mogote Property, pursuant to the April 8, 2004 agreement between the Company and
IMA. On July 7, 2004 IMA’s rights and interests under these agreements were
assigned to Golden Arrow.  In July the Company issued 100,000 shares
to Golden Arrow, with a deemed value of $40,000, as required under the
agreement.





During
2004, the Company completed a number of private placements of common shares to
raise gross proceeds of $2,891,350, of which $658,350 had been received by the
Company at December 31, 2003.  The Company also received a further
$244,900 from the exercises of warrants and an option.





Liquidity
and Capital Resources





The
Company’s cash position at December 31, 2006 was $531,126, an increase of $8,799
from $522,327 at December 31, 2005. Short-term investments balance increased to
$100,000 at December 31, 2006 from $Nil at December 31, 2005.  The
subscription receivable of $166,250 that was outstanding as of December 31, 2006
from the Company’s December, 2006 private placement was received in January
2007.  There was no subscription receivable at December 31,
2005.  Total assets increased to $4,343,852 at December 31, 2006 from
$3,843,389 at December 31, 2005.  This increase is mainly as a result
of exploration expenditures incurred in 2006 which were capitalized to the
Company’s mineral properties and deferred costs, increased funds on deposit and
short-term investments and the subscription receivable at December 31,
2006.





As the
Company is an exploration stage company, revenues are limited to interest earned
on cash held with the Company’s financial institutions.  During the
year ended December 31, 2006, the Company earned interest income of $30,924, an
increase of $15,923 from the year ended December 31, 2005 as a result of
increased funds on deposit.





The
Company has financed its operations through the sale of its equity
securities.  During the year ended December 31, 2006, the Company
completed:





i)
            A
      private placement financing of 1,412,000 units at $0.60 per unit, for
      gross proceeds of $847,200.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $0.65 per share on or before January 30,
    2008.





ii)
            A
      private placement financing of 2,235,000 units at $0.35 per unit, for
      gross proceeds of $782,250.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $0.45 per share on or before December 8, 2008.  In
      addition, the Company issued 48,000 Agent's Warrants at $0.45 and 8,000
      Agent's Units at $0.35 per Unit as a Corporate Finance
      Fee.  There were also cash commissions and administration fees
      paid of $14,000.





The
Company also received a further $716,700 (2005 - $326,649) from the exercises of
warrants and $Nil (2005 - $8,250) from the exercise of stock options during
2006.





-54-


During
the year ended December 31, 2006, the Company requested and was granted
permission by the TSX Venture Exchange to amend the exercise price for 2,750,000
of $1.20 warrants with the March 24 and March 31, 2006 expiry
date.  The amended exercise price was $0.60 per warrant, however,
there was no extension to the term of the warrants and the warrants expired on
March 24 and March 31, 2006.





On April
19, 2007, the Company completed a brokered financing of 11,700,000 units at a
price of $0.35, for total proceeds of $4,095,000. Each unit consists of one
common share and one half common share purchase warrant. Each full warrant will
entitle the holder thereof to purchase one additional common share in the
capital of the Company for a period of 2 years at $0.45 per share. Additionally,
once the resale restrictions on the shares have expired, and upon the Company’s
shares trading at or above a weighted average trading price of $0.75 for 20
consecutive trading days, the Company may give notice that the warrants will
expire 30 days from the date of providing such notice.





The
Agents were paid a commission of 7.5% cash and 8% Agents' Warrants. The Agents'
Warrants will be exercisable into one common share at a price of $0.45 per
warrant, for a period of 2 years. The Agents' Warrants will not be subject to
early expiry.





The
Company has received $Nil from the exercise of options and warrants from January
1 to April 30, 2007.  As at April 30 2007, the Company had working
capital of approximately $3,800,000.





The
Company believes it has adequate resources to maintain its core activities for
the 12 months from January 1, 2007 to December 31, 2007, but may not have
sufficient working capital to fund all its planned exploration
activities.   In the future, the Company may need to raise
additional capital through the sale of its equity securities to fund further
exploration activities.  The Company may not be able to raise the
necessary funds, if any, and may not be able to raise such funds at terms which
are acceptable to the Company.  In the event the Company is unable to
raise adequate finances to fund the proposed activities, it will need to
reassess its alternatives and may have to abandon one or more of its property
interests as a result.  Any further additional equity financing
undertaken by the Company may cause dilution to its shareholders.





The
Company does not know of any trends, demand, commitments, events or
uncertainties that will result in, or that are reasonably likely to result in,
its liquidity either materially increasing or decreasing at present or in the
foreseeable future.  Material increases or decreases in liquidity are
substantially determined by the success or failure of the exploration
programs.  The Company does not have any loans or bank debt and there
are no restrictions on the use of its cash resources.





Research
and Development





See  “Item
4. Information on the Company - Business Overview - Dispositions” and “Item 4.
Information on the Company - Business Overview - Exploration
Expenditures.”





Trend
Information





None of
the Company’s assets are currently in production or generate
revenue.





Off-Balance
Sheet Arrangements





The
Company does not have any material off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on the Company’s
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources.





-55-


Tabular Disclosure of Contractual
Obligations





Payments Due by
      PeriodTotal
            Less
      than
              1
      Year
            1
      - 3 Years
            3
      - 5 Years
            More
      than
              5
      YearsContractual
      Obligations(1)
            -
            -
            -
            -
            -Total
            -
            -
            -
            -
            -





(1)           As
of December 31, 2006.





Item
6. Directors, Senior Management and Employees.





Directors
and Senior Management





The
names, positions held with the Company and terms of office of each director and
officer of the Company as of the date of this annual report, are as
follows:





Name,
      Position and Country of Residence
            Principal
      Occupation and if not at
              present
      an elected Director, Occupation during the past five years(1)
            Period
      of Services as a Director/officerNIKOLAOS
      CACOS
              President,
      Chief Executive Officer
              and
      Director
              (resident
      of Vancouver, BC, Canada)
              Age
      40
            President,
      CEO and Director of the Company.  VP, North America Corporate
      Development of IMA Exploration Inc. since June 2005.  Director
      and Corporate Secretary of Golden Arrow Resources Corporation since
      2004.
            April
      2000JOSEPH
      GROSSO
              Chairman
      and Director
              (resident
      of Burnaby, BC, Canada)
              Age
      69
            Director,
      President and CEO of IMA Exploration Inc. since February
    1990.
            February
      2004JERRY
      A. MINNI
              Director
              (resident
      of Vancouver, BC, Canada)
              Age
      45
            Partner
      of Minni, Clark & Company, Certified General Accountants since
      1988;  Director and CEO Raytec Development since
      1992.
            November
      2002ROBERT
      COLTURA
              Director
              (resident
      of Langley, BC, Canada)
              Age
      41
            Businessman/Consultant,
      has been President of Matalia Investments Ltd. since  Oct. 1993
      to the present.
            August
      2002ARTHUR
      LANG
              Secretary,
      CFO
              (resident
      of Vancouver, BC, Canada)
              Age
      63
            Chief
      Financial Officer.  Director and officer of IMA Exploration Inc.
      since April 2004 and a Director and Officer of Golden Arrow Resources
      Corporation since June 2004.   Consultant providing
      financial management services to various clients from 1999 to April 2004
      through Arthur G Lang Inc., a private British Columbia
      company.
            March
      2005






-56-




Name,
      Position and Country of Residence
            Principal
      Occupation and if not at
              present
      an elected Director, Occupation during the past five years(1)
            Period
      of Services as a Director/officer


DAVID
      TERRY
              Vice
      President, Exploration
              (resident
      of Maple Ridge, BC, Canada)
              Age
      41
            Vice
      President for the Company since March 2004 to present.  Vice
      President, Exploration for the Grosso Group from January 2005 to present.
      Regional geologist with the British Columbia Ministry of Energy and Mines
      in Cranbrook, British Columbia from May 2001 to March 2004
            March
      2004GERALD
      CARLSON
              Director
              (resident
      of West Vancouver, BC, Canada)
              Age
      61
            President
      and Director of Copper Ridge Exploration Inc., a public British Columbia
      mineral exploration company from March 1999 to present.
              President
      of Nevada Star Resources Corp, from March 5, 2002 to September
      2004.  President of Golden Aria Corp. from March 2005 to
      present
            November
      2006





There are
no family relationships between any directors or executive officers of the
Company.  To the best of the Company’s knowledge, there are no
arrangements or understandings with major shareholders, customers, suppliers, or
others, pursuant to which any of the Company’s officers or directors was
selected as an officer or director of the Company.





Conflicts of
Interest





There are
no existing or potential conflicts of interest among the Company, its directors,
officers or promoters as a result of their outside business interests with the
exception that certain of the Company’s directors, officers and promoters serve
as directors, officers and promoters of other companies, and, therefore, it is
possible that a conflict may arise between their duties as a director, officer
or promoter of the Company and their duties as a director or officer of such
other companies.





The
directors and officers of the Company are aware of the existence of laws
governing accountability of directors and officers for corporate opportunity and
requiring disclosures by directors of conflicts of interest and the Company will
rely upon such laws in respect of any directors’ and officers’ conflicts of
interest or in respect of any breaches of duty by any of its directors or
officers. All such conflicts will be disclosed by such directors or officers in
accordance with the BCBCA, and they will govern themselves in respect thereof to
the best of their ability in accordance with the obligations imposed upon them
by law.





All of
the Company’s directors are also directors, officers or shareholders of other
companies that are engaged in the business of acquiring, developing and
exploiting natural resource properties including properties in countries where
the Company is conducting its operations.  Such associations may give
rise to conflicts of interest from time to time.  Such a conflict
poses the risk that the Company may enter into a transaction on terms which
place the Company in a worse position than if no conflict
existed.  The directors of the Company are required by law to act
honestly and in good faith with a view to the best interest of the Company and
to disclose any interest which they may have in any project or opportunity of
the Company. However, each director has a similar obligation to other companies
for which such director serves as an officer or director.  The Company
has no specific internal policy governing conflicts of interest.





-57-


See “Item
3.  Key Information - Risk Factors.”





The
following table identifies, as of April 30, 2007, the name of each officer and
director of the Company and any company (i) which employs such officer or
director, (ii) for which such officer or director currently serves as an officer
or director, or (iii) which is affiliated with such officer or
director:





Name of Director
            Name of Company
            Description of Business
            Position
            Term of ServiceNikolaos
      Cacos
            IMA
      Exploration Inc.
            Mineral
      Exploration
            Vice
      President
            June
      2005 to presentGolden
      Arrow Resources Corp.
            Mineral
      Exploration
            Director
            July
      2004 to presentCorporate
      Secretary
            July
      2004 to presentBlue
      Sky Uranium Corp
            Uranium
      Exploration
            Director
            Nov.
      2005 to presentJoseph
      Grosso
            IMA
      Exploration Inc.
            Mineral
      Exploration
            Director
            February
      1990 to presentPresident
      & CEO
            February
      1990 to presentGolden
      Arrow Resources Corp.
            Mineral
      Exploration
            Director,
      Chairman
            May
      2004 to presentPresident
      & CEO
            May
      2004 to presentGold
      Point Energy Corp.
            Mineral
      Exploration
            Chairman,
      Director
            April
      2006 to presentJerry
      Minni
            Raytec
      Development Corp.
            Food
      Equipment Manufacturer
            Director
            February
      1992 to presentPresident
            February
      1992 to presentGlobal
      Sortweb.com Inc.
            Software
      Development
            Director
            July
      1998 to presentCFO
            July
      1998 to presentAvantec
      Technologies Inc.
            Chemical
      Equipment
            Director
            June
      1999 to presentGerald
      G. Carlson
            Copper
      Ridge Explorations
            
            President/Director
            Mar
      1999 to presentGolden
      Aria Corp.
            
            President/Director
            Mar
      2005 to presentAlmaden  Minerals
      Ltd.
            
            Director
            Jul
      1998 to presentIMA
      Exploration Inc.
            Mineral
      Exploration
            Director
            Feb
      1999 to presentDavid
      Terry
            Golden
      Arrow Resources Corp.
            Mineral
      Exploration
            Director
            July
      2004 to presentV.P.
      Exploration
            July
      2004 to presentIMA
      Exploration Inc
            Mineral
      Exploration
            Director
            May
      2004 to presentV.P.
      Exploration
            June
      2004 to presentAstral
      Mining Corporation
            Mineral
      Exploration
            Director
            March
      2005 to presentRobert
      Coltura
            Matalia
      Investments Ltd.
            Hospitality
      and Tourism Consulting
            President
            October
      1993 to presentArthur
      Lang
            IMA
      Exploration Inc.
            Mineral
      Exploration
            Director
            April
      2004 to presentVP
      & CFO
            April
      2004 to presentGolden
      Arrow Resources Corp.
            Mineral
      Exploration
            Director
            June
      2004 to presentVP
      and CFO
            July
      2004 to presentAstral
      Mining Corporation
            Mineral
      Exploration
            CFO
            March
      2007 to present





Each
director’s and officer’s term of office shall expire at the Company’s next
annual general meeting.  The Company does not have an executive
committee or a compensation committee.  The Company’s audit committee
is responsible for reviewing the Company’s financial statements before they are
approved by the Company’s directors.





The
Company is an exploration stage mining company.  As such, management
does not believe the Company requires full-time employees.  The
Company's needs will be dependent upon its level of exploration programs and
financial condition.  The officers and directors of the Company will
devote as much time as is needed.  See “Item 6. Directors, Senior
Management and Employees - Management Contracts - Grosso Group Management Ltd.”
and “Item 7.  Major Shareholders and Related Party Transactions -
Related Party Transactions - Conflicts of Interest.”





Compensation





Effective
January 1, 2005, the Company engaged the Grosso Group to provide services and
facilities to the Company.  The Grosso Group is a private company
equally owned by the Company, IMA Exploration Inc. (“IMA”) Golden Arrow
Resources Corporation (“Golden Arrow”), Gold Point Energy Corp. (“Gold Point”),
Blue Sky Uranium Corp (“Blue Sky”) and Astral Mining Corporation
(“Astral”).  The Grosso Group provides its shareholder companies with
geological,




-58-




corporate
development, administrative and management services on a cost recovery
basis.  During the year ended December 31, 2006, the Company incurred
fees of $533,469 (2005 - $377,410) to the Grosso Group: $480,545 (2005 -
$290,858) was paid in twelve monthly payments and $52,924 (2005 - $86,552) is
included in accounts payable as a result of a review of the allocation of the
Grosso Group costs to the member companies for the year.  In addition,
included in other receivables, prepaids and deposits is a $95,000 (2005 -
$95,000) deposit to the Grosso Group for the purchase of equipment and leasehold
improvements and for operating working capital.





Prior to
the signing of the Administrative Services Agreement with the Grosso Group in
2005, the Company shared office facilities with IMA.  During the year
ended December 31, 2004, the Company was charged $108,390 by IMA for shared rent
and administration costs.  During the year ended December 31, 2004,
the Company paid $113,400 for professional fees (including a $25,000 relocation
allowance), billed by a director and by an officer of the Company.  Of
this amount $42,000 was reimbursed by IMA as an allocation of the professional
services.





Effective
January 2, 2004, the Company entered into an agreement with Mr. Nikolaos Cacos,
President of the Company, for his services.  Under the agreement Mr.
Cacos was paid $6,125 per month.  Effective April 1, 2006, the
agreement was modified so that the monthly fee was payable to a private company
controlled by Mr. Cacos and on May 1, 2006 the monthly fee increased to
$7,292.  During the year ended December 31, 2006, the Company paid
$85,833 (2005 - $73,500; 2004 - $72,400) to Mr. Cacos or to the private company
controlled by Mr. Cacos.  The agreement also provides that, in the
event the services are terminated without cause or upon a change in control of
the Company, a termination payment would include eighteen months of compensation
plus a bonus amount agreed to by the parties.





The
Company does not have any retirement plans or benefits.





Executive
Compensation





The
following information provides details of the compensation paid by the Company
to its directors and officers during the fiscal year ended December 31, 2006,
which has been released by the Company in accordance with the regulations (the
“Regulations”) made under the Securities Act (British Columbia).





Summary Compensation
Table





Named
Executive Officers mean the Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”) of the Company, regardless of the amount of compensation of that
individual and each of the Company’s four most highly compensated executive
officers, other than the CEO and CFO, who were serving as executive officers at
the end of the most recent financial year.  In addition, disclosure is
also required for any individual whose total salary and bonus during the most
recent financial year was at least $150,000, whether or not they were an
executive officer at the end of the financial year.





During
the Company’s last completed financial year ended December 31, 2006, the Company
had two Named Executive Officers, Mr. Nikolaos Cacos and Mr. Arthur
Lang.





The
following table (presented in accordance with the Regulations) sets forth all
annual and long term compensation for services in all capacities to the Company
for the financial years ended December 31, 2006, 2005 and 2004 (to the extent
required by the Regulations) in respect of the Named Executive
Officer:


-59-





Name
      and Principal Position
            Year
      Ended
              December
      31
            Annual
      Compensation
            Long-Term
      Compensation
            All
      Other
              Compensation
              ($)Salary
              ($)
            Bonus
              ($)
            Other
      Annual Compensation
              ($)
            Awards
            PayoutsSecurities
      Under Options/
              SARs
      Granted(1)
              (#)
            Restricted
      Shares or Restricted Share Units
              (#)
            LTIP
      Payouts
              ($)Nikolaos
      Cacos
              President
      and CEO
            2006
              2005
              2004
            85,833
              73,500
              72,400
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            75,000
              Nil
              50,000
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            Nil
              Nil
              NilArthur
      Lang
              Secretary
      and
              CFO
            2006
              2005
              2004
            15,223(2)
              13,402(3)
              Nil
      (4)
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            30,000
              Nil
              Nil
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil


NOTE:


(1)
            Figures
      represent options granted during a particular year; see “Aggregate Option”
      table for the aggregate number of options outstanding at year
      end.


(2)
            During
      the year 2006, Mr. Lang’s total compensation from Grosso Group Management
      Ltd. (the “Grosso Group”) was $135,021, of which $15,223 was allocated to
      the Company as part of the Grosso Group fees for the
  year.


(3)
            During
      the year 2005, Mr. Lang’s total compensation from Grosso Group was
      $94,667, of which $13,402 was allocated to the Company as part of the
      Grosso Group fees for the year.(4)
            During
      the year 2004, Mr. Lang received his compensation from
  IMA.




Long Term Incentive Plan
Awards





The
Company does not have any long term incentive plan awards (“LTIP”) defined as
“any plan providing compensation intended to motivate performance over a period
longer than one financial year and does not include option or SAR plans or plans
for compensation through restricted shares or units.”





Option/Stock Appreciation
Right (“SAR”) Grants and Repricings During the Most Recently Completed Financial
Year





The
following table sets forth stock options granted by the Company during the
financial year ended December 31, 2006 to the Named Executive Officers of the
Company:




Name
            Securities
      Under
              Options Granted
              (#)
            %
      of Total Options
              Granted
      in
              Financial Year(1)
            Exercise
      or
              Base Price(2)
              ($/Security)
            Market
      Value
              of
      Securities
              Underlying
      Options
              on Date of Grant
              ($/Security)
            Expiration DateNikolaos
      Cacos
              
              Arthur
      Lang
            75,000
              
              30,000
            18%
              
              7%
            $0.60
              
              $0.60
            $0.60
              
              $0.60
            July
      11, 2011
              
              July
      11, 2011





(1)
            Percentage
      of all options granted during the financial
  year.


(2)
            The
      exercise price of stock options was set according to the rules of the
      TSX-V. The exercise price of stock options may only be adjusted in the
      event that specified events cause dilution of the Company’s share
      capital.





Aggregated Option Exercises
During the Most Recently Completed Financial Year and Financial Year-end
Option/SAR Values





The
following table sets forth details of all exercises of stock options during the
financial year ended December 31, 2006 by the Named Executive Officer(s), and
the financial year end value of unexercised options on an aggregated
basis:





-60-


Name
            Securities
      Acquired on Exercise(1)
              (#)
            Aggregate
      Value
              Realized(2)
              ($)
            Unexercised
      Options at Financial Year End(3)
              Exercisable/Unexercisable
              (#)
            Value
      of Unexercised in the Money Options at Financial Year End(3)(4)
              Exercisable/Unexercisable
              ($)Nikoloas
      Cacos
            Nil
            Nil
            250,000/
      NA
            Nil/
      NAArthur
      Lang
            Nil
            Nil
            30,000/NA
            Nil/NA





NOTES:


(1)
            Number
      of common shares of the Company acquired on the exercise of stock
      options.


(2)
            Calculated
      using the closing price of common shares of the Company on the
      TSX-V.


(3)
            As
      freestanding SARs have not been granted, the number of shares relate
      solely to stock options.


(4)
            Value
      of unexercised in-the-money options calculated using the closing price of
      common shares of the Company on the TSX-V on December 31, 2006 of $0.39
      per share, less the exercise price of in-the-money stock
      options.





Termination of Employment or
Change of Control





Other
than the management agreement with Mr. Cacos, the Company has no plans or
arrangements with respect to remuneration received or that may be received by
the Named Executive Officers during the Company’s most recently completed
financial year or current financial year in view of compensating such officers
in the event of termination of employment (as a result of resignation,
retirement, change of control, etc.) or a change in responsibilities following a
change of control, where the value of such compensation exceeds $100,000 per
executive officer. See “Item 6.  Directors, Senior Management and
Employees - Employment Agreements.”





Pension
Plan





The
Company does not provide retirement benefits for directors or executive
officers.





Director
Compensation





Cash
Compensation





The
Company does not compensate its directors in their capacities as such, although
directors of the Company are reimbursed for their expenses incurred in
connection with their services as directors.





Non-Cash
Compensation





The
following table sets forth information concerning stock options granted to
directors, as a group, who are not Named Executive Officers during the most
recently completed fiscal year:





Name
            Securities Under Options Granted(1)
              (#)
            %
      of Total Options Granted in
              Financial
      Year(2)
            Exercise
      or
              Base
      Price(3)
              ($/Security)
            Market
      Value
              of
      Securities
              Underlying
      Options
              on Date of
      Grant
              ($/Security)
            Expiration
      DateDirectors
      as a group who are not Named Executive Officers
            40,000
            9.6
            0.60
            0.60
            July
      11, 2011




(1)
            All
      options are for the Company’s Common
Shares.




(2)
            Percentage
      of all options granted in the year.




(3)
            The
      exercise price of the option is set at not less than the market value of
      the Company’s Common Shares on the date of grant, less a discount allowed
      by the TSX-V. The exercise price may be adjusted under certain
      circumstances, subject to regulatory
acceptance.





-61-


The
following table sets forth details of all exercises of stock options during the
financial year ended December 31, 2004 by the directors who are not the Named
Executive Officers, and the financial year end value of unexercised
options:





Name
            Securities
      Acquired on Exercise(1)
              (#)
            Aggregate
      Value
              Realized(2)
              ($)
            Unexercised
      Options at Financial Year End(3)
              Exercisable/
              Unexercisable
              (#)
            Value
      of Unexercised in the Money Options at Financial Year End
              Exercisable/
              Unexercisable(3)(4)
              ($)Directors
      as a group who are not Named Executive Officers
            Nil
            Nil
            365,000
      / N/A
            NA/
      NA





NOTES:


(1)
            Number
      of common shares of the Company acquired on the exercise of stock
      options.


(2)
            Calculated
      using the closing price of common shares of the Company on the
      TSX-V.


(3)
            As
      freestanding SARs have not been granted, the number of shares relate
      solely to stock options.


(4)
            Value
      of unexercised in-the-money options calculated using the closing price of
      common shares of the Company on the TSX-V on December 31, 2006 of $0.39
      per share, less the exercise price of in-the-money stock
      options.





Employment
Agreements





Effective
January 2, 2004, the Company entered into an agreement with Mr. Nikolaos Cacos,
President of the Company, for his services.  Under the agreement Mr.
Cacos was paid $6,125 per month.  Effective April 1, 2006, the
agreement was modified so that the monthly fee was payable to a private company
controlled by Mr. Cacos and on May 1, 2006 the monthly fee increased to
$7,292.  During the year ended December 31, 2006, the Company paid
$85,833 (2005 - $73,500; 2004 - $72,400) to Mr. Cacos or to the private company
controlled by Mr. Cacos.  The agreement also provides that, in the
event the services are terminated without cause or upon a change in control of
the Company, a termination payment would include eighteen months of compensation
plus a bonus amount agreed to by the parties.





Mr. David
Terry, Vice President,
Exploration for the Company,provides his services as part of the
Company’s agreement with the Grosso Group.  Mr. Terry has entered into
an agreement with the Grosso Group.  Prior to January 1, 2005, Mr.
Terry had a consulting agreement with the Company.  See “Item 6.
Directors, Senior Management and Employees - Management Contracts - Grosso Group
Management Ltd.” and “Item 7. Major Shareholders and Related Party Transactions
- Related Party Transactions.”





Mr.
Arthur Lang, Secretary and Chief Financial Officer for the Company, provides his
services as part of the Company’s agreement with the Grosso
Group.  Mr. Lang has entered into an agreement with the Grosso
Group.  Prior to January 1, 2005, Mr. Lang’s services to the Company
were provided as part of the Company’s agreement with IMA.  See “Item
6. Directors, Senior Management and Employees - Management Contracts - Grosso
Group Management Ltd.” and “Item 7. Major Shareholders and Related Party
Transactions - Related Party Transactions.”





Other
than the Company’s agreement with Mr. Cacos, there are no other agreements with
any of the Company’s officers or directors which provide for benefits upon
termination of employment.





Management
Contracts





Grosso Group Management
Ltd.




Effective
January 1, 2005, the Company engaged Grosso Group Management Ltd. (“Grosso
Group”) to provide services and facilities to the Company.  The formal
agreement was approved by the TSX-V May 19, 2005.




The
Grosso Group is a private company which is owned by the Company, Golden Arrow, IMA, Gold Point, Blue Sky and
Astral, each of which own one share.  The Grosso Group provides
its shareholder companies with geological,




-62-




corporate
development, administrative and management services.  The Grosso Group
staff is available to the shareholder companies on a cost recovery basis without
the expense of full time personnel.  The shareholder companies pay
monthly fees to the Grosso Group.  The fee is based upon a reasonable prorating of the Grosso Group’s costs including
its staff and overhead costs among each shareholder company with regard to the
mutually agreed average annual level of services provided to each shareholder
company.During the year ended December 31, 2006, the Company
incurred fees of $533,469 (2005 - $377,410) to the Grosso Group: $480,545 (2005
- $290,858) was paid in twelve monthly payments and $52,924 (2005 - $86,552) is
included in accounts payable as a result of a review of the allocation of the
Grosso Group costs to the member companies for the year.   In
addition, included in other receivables, prepaids and deposits is a $95,000
(2005 - $95,000) deposit to the Grosso Group for the purchase of equipment and
leasehold improvements and for operating working capital.  The fees the Company pays to the Grosso Group are
allocated to various expense items that reflect the nature of the actual costs:
rent, salaries, office and telephone.  These fees are equivalent to
costs the Company would have incurred
directly.





The Administration Services Agreement may be terminated
by a shareholder company upon 30 days’written notice to
the Grosso Group.





It is anticipated that upon termination of the
Administration Services Agreement, a shareholder company will agree to resell its common share back to the
Grosso Group for $1.00 and the shareholder companies will not be able to sell,
transfer or otherwise dispose of or encumber such share during the term of the
Administration Services Agreement.





The GrossoGroup’s areas of experience encompass financing, marketing,
property acquisition, community relations, socioeconomic issues, regulatory
compliance, government relations, property exploration and investor
relations.  Additionally the Grosso Group has a number of other
support staff at its corporate office and arrangements with contract providers
of accounting and administrative services at the country operations’offices inArgentinaandPeru.





The members of the board of directors of the Grosso
Group are appointed by the shareholder
companies, with each shareholder company appointing one of its directors to
serve as a director of the Grosso Group.  As of March 31, 2007, the
directors of the Grosso Group are Nikolaos Cacos,Joseph Grosso,
Arthur Lang,NickDeMare,Sean
HurdandManfred Kurschner.  Mr. Grosso is an officer and director of
the Company, a director and officer of IMA and a director and officer of Golden
Arrow.  Mr. Lang is an officer of the Company, a director and officer
of IMA and Golden Arrowand an officer of Astral. Nikolaos Cacos isa director of Blue Sky,an officer of IMA, a director and officer of Golden
Arrow and a director and officer of the Company.Nick DeMareis an
officer and director of Gold Pointand Blue
Sky.  Mr. DeMare
indirectly owns 100% of Chase Management
Ltd., a company which provides consulting services to the Company and other
Grosso Group shareholder companies.  Mr. Hurd is an officer and
director of Blue Sky and Golden Arrow, an officer of IMA and a director of Gold
Point.  Mr. Kurschner is a director of Golden
Arrow and an officer and a director of Astral.





Each of the public company shareholders of the Grosso
Grouphasits own separate board of directors (whose members
include persons employed by the Grosso Group); however, some directors will serve on multiple boards and
on the board of directors of companies which are not shareholders of the Grosso
Group.





Board
Practices





Audit
Committee





The
Company’s Audit Committee must be comprised of at least three directors, the
majority of whom are not employees, control persons or members of
management of the Company or any of its associates or affiliates.  The
board of directors of the Company, after each annual shareholder’ meeting must
appoint or re-appoint an audit committee.  As of the date of this
annual report, the members of the Audit Committee were Messrs. Minni, Coltura,
and Carlson.  All the members of the Audit Committee are independent
directors who are not officers or employees of the Company or its
affiliates.





The Audit
Committee must review the annual financial statements of the Company before they
are approved by the board of directors of the Company.  The board of
directors of the Company must review, and if considered appropriate, approve the
annual financial statements of the Company before presentation to the
shareholders of the Company.





-63-


Remuneration
Committee





The
Company does not have a separate remuneration committee.  The full
Board reviews the terms and conditions of employment, management agreements and
remuneration levels for officers and directors.





Employees





The
Company’s officers serve on a part-time basis and, given the current level of
the Company’s activities, management does not believe the Company requires
full-time employees.  See “Item 6. Directors, Senior Management and
Employees - Directors and Senior Management.” During the fiscal year ended
December 31, 2006, the Company directly employed Nikolaos Cacos and indirectly
employed approximately 24 employees (2005 – 20 employees) through the
Administration Services Agreement with the Grosso Group, including corporate,
accounting, geological and administrative services. The Company has five
employees (2005 – one part-time employee) in its Lima, Peru office.


The
Company entered into a management agreement with the Grosso Group, effective
January 1, 2005, pursuant to which employees of the Grosso Group provide
services to the Company.  See “Item 6. Directors, Senior Management
and Employees - Management Contracts - Grosso Group Management Ltd.” and “Item
7. Major Shareholders and Related Party Transactions - Related Party
Transactions.”  During the year ended December 31, 2004, the Company
had five part-time employees, Nikolaos Cacos, Joseph Grosso, Jerry Minni, David
Terry, and Arthur Lang.  During the fiscal year ended December 31,
2003, the Company had two part-time employees, Nikolaos Cacos and Jerry
Minni.  During the fiscal year ended December 31, 2003, the Company
also utilized the services of two geologists.  During the fiscal years
ended December 31, 2002 and 2001, the Company had one part-time employee,
Nikolaos Cacos.  The Company's needs will be dependent upon its level
of exploration programs and financial condition.





Share
Ownership





The
following table sets forth certain information regarding ownership of the
Company's shares by the Company's officers and directors as of April 30,
2007.





Title
      of Class
            Name
      of Owner
            Shares
      and Rights Beneficially
              Owned
      or Controlled (1)
            Percent
      of Class (1)Common
      Stock
            Nikolaos
      Cacos
            1,398,413(2)
            6.4%Common
      Stock
            Joseph
      Grosso
            1,345,680(3)
            6.2%Common
      Stock
            Robert
      Coltura
            138,332(4)
            0.6%Common
      Stock
            Jerry
      Minni
            151,549(5)
            0.7%Common
      Stock
            Gerald
      Carlson
            150,000(6)
            0.7%Common
      Stock
            David
      A. Terry
            200,000(7)
            0.9%Common
      Stock
            Arthur
      Lang
            40,000(8)
            0.2%TOTAL
            
            3,423,974
            15.8%





NOTES:


(1)
            Where
      persons listed on this table have the right to obtain additional shares of
      common stock through the exercise of outstanding options or warrants
      within 60 days from March 31, 2007,
      these additional shares are deemed to be outstanding for the purpose of
      computing the percentage of common stock owned by such persons, but are
      not deemed to be outstanding for the purpose of computing the percentage
      owned by any other person.  Based on  21,740,592
      shares of common stock outstanding as of April 30,
  2007.


(2)
            Includes
      the following shares, options and warrants held by Mr. Cacos and Aspasia
      Cacos (Mr. Cacos’ wife):


a.
            197,636
      shares held by Mr. Cacos;


b.
            67,000
      shares held by Mrs. Cacos;


c.
            359,277
      shares held by NAC Investments Inc.


d.
            Options
      held by Mr. Cacos to acquire 250,000
shares;


e.
            Options
      held by Mrs. Cacos to acquire 24,500
shares;


f.
            Warrants
      held by Mr. Cacos to acquire 200,000 shares at a price of $0.65 per share,
      exercisable until February 2, 2008




-64-




g.
            Warrants
      held by Mr. Cacos to acquire 200,000 shares at a price of $0.45 per share,
      exercisable until December 8, 2008


h.
            Warrants
      held by NAC Investments Inc. to acquire 100,000 shares at a price of $0.45
      per share, exercisable until December 8,
2008


See “Item
6. Directors, Senior Management and Employees - Options, Warrants and Other
Rights to Acquire Securities.”


(3)
            Includes
      the following shares and options held by Mr. Grosso and Evelyn Grosso (Mr.
      Grosso’s wife):


a.
            939,680
      shares held by Mr. Grosso;


b.
            56,000
      shares held by Mr. Grosso in an RRSP
Account;


c.
            Options
      held by Mr. Grosso to acquire 250,000
shares;


d.
            Warrants
      held by Mr. Grosso to acquire 100,000 shares at a price of $0.65 per
      share, exercisable until February 2,
2008


See
      “Item 6. Directors, Senior Management and Employees - Options, Warrants
      and Other Rights to Acquire
Securities.”


(4)
            Includes
      the following shares, options and warrants held by Mr. Coltura and Betty
      Coltura (Mr. Coltura’s wife):


a.
            56,332
      shares held by Mr. Coltura


b.
            7,500
      shares held by Mrs. Coltura


c.
            Options
      held by Mr. Coltura to acquire 50,000
shares;


d.
            Warrants
      held by Mr. Coltura to acquire 7,000 shares at a price of $0.65 per share
      exercisable until February 2, 2008 and warrants to acquire 10,000 shares
      at a price of $0.45 per share exercisable until December 8, 2008 and
      warrants to acquire 7,500 shares at a price of $0.45 per share exercisable
      until April 12, 2009


See
      “Item 6. Directors, Senior Management and Employees - Options, Warrants
      and Other Rights to Acquire
Securities.”


(5)
            Includes
      the following shares, options and warrants held by Mr.
    Minni:


a.
            44,549
      shares held by Mr. Minni


b.
            90,000
      options; and


c.
            Warrants
      held by Mr. Minni to acquire an additional 17,000 shares shares at a price
      of $0.65 per share, exercisable until February 2,
  2008


See “Item
6. Directors, Senior Management and Employees - Options, Warrants and Other
Rights to Acquire Securities.”


(6)
            Includes
      50,000 shares held by Mr. Carlson and options held by Mr. Carlson to
      acquire 50,000 shares and warrants to acquire 50,000 shares at a price of
      $0.45 per share, exercisable until December 8, 2008.  See “Item
      6. Directors, Senior Management and Employees - Options, Warrants and
      Other Rights to Acquire
Securities.”


(7)
            Includes
      50,000 shares  held by Mr. Terry, options to acquire 100,000
      shares and warrants to acquire 20,000 shares at a price of $0.65 per
      share, exercisable until February 2, 2008 and warrants to acquire 30,000
      shares at $0.45 per share, exercisable until December 8,
      2008.  See “Item 6. Directors, Senior Management and Employees -
      Options, Warrants and Other Rights to Acquire
  Securities.”


(8)
            Includes  5,000
      shares held by Mr. Lang, options to acquire 30,000 shares and warrants to
      acquire 5,000 shares at a price of $0.65 per share, exercisable until
      February 2, 2008.  See “Item 6. Directors, Senior Management and
      Employees – Options, Warrants and Other Rights to Acquire
      Securities.”





All of
the Company’s shareholders have the same voting rights.





Options,
Warrants and Other Rights to Acquire Securities





As of
April 30, 2007, the Company had entered into property acquisition or option
agreements pursuant to which up to 900,000 common shares of the Company may be
issued.  See “Item 4. Information on the Company - Property, Plant and
Equipment - Principal Properties - Mogote Project” and “Item 4. Information on
the Company - Property, Plant and Equipment - Other Properties - Esperanza
Project.”





Additionally,
as of April 30, 2007, the Company had granted a number of stock options and
issued a number of warrants pursuant to which up to 12,293,522 common shares of
the Company may be issued.  The following is a brief summary of these
stock options and warrants.





Stock
Options





The TSX-V
requires all TSX-V listed companies to adopt stock options plans, and such plans
must contain certain provisions.  At the annual and extraordinary
general meetings of shareholders of the Company held on June 28, 2006, June 22,
2005 and June 30, 2004, the shareholders approved the Company’s stock option
plan (the “Stock Option Plan”). The Stock Option Plan approved June 30, 2004
replaced the Company’s 2003 stock option plan.  The purpose of the
Stock Option Plan is to provide incentive to the Company’s employees, officers,
directors, and consultants responsible for the continued success of the
Company.  The following is a summary of the Stock Option
Plan.





-65-


Administration of the Stock
Option Plan





The Stock
Option Plan provides that it will be administered by the Company’s board of
directors (the “Board”), or by a stock option committee (the “Committee”) of the
Company’s Board consisting of not less than 2 of its members. The Stock Option
Plan is currently administered by the Board.





Description of Stock Option
Plan





The
effective date (the “Effective Date”) of the Stock Option Plan is April 13,
2004, the date the Board of Directors approved the Stock Option Plan, and it
will terminate ten years from the Effective Date.





The Stock
Option Plan provides that options may be granted to any employee, officer,
director or consultant of the Company or a subsidiary of the
Company.





The
options issued pursuant to the Stock Option Plan will be exercisable at a price
not less than the market value of the Company’s common shares at the time the
option is granted.  “Market Value” means:





(a)
            for
      each organized trading facility on which the common shares are listed,
      Market Value will be the closing trading price of the common shares on the
      day immediately preceding the grant date less any discounts permitted by
      the applicable regulatory
authorities;


(b)
            if
      the Company’s common shares are listed on more than one organized trading
      facility, the Market Value shall be the Market Value as determined in
      accordance with subparagraph (a) above for the primary organized trading
      facility on which the common shares are listed, as determined by the Board
      (or a committee thereof), subject to any adjustments as may be required to
      secure all necessary regulatory
approvals;


(c)
            if
      the Company’s common shares are listed on one or more organized trading
      facilities but have not traded during the ten trading days immediately
      preceding the grant date, then the Market Value will be determined by the
      Board (or a committee thereof), subject to any adjustments as may be
      required to secure all necessary regulatory approvals;
  and


(d)
            if
      the Company’s common shares are not listed for trading on a stock exchange
      or over the counter market, the value which is determined by the Board (or
      a committee thereof) to be the fair value of the Company’s common shares,
      taking into consideration all factors that the Board (or a committee
      thereof) deems appropriate, including, without limitation, recent sale and
      offer prices of the Company’s shares in private transactions negotiated at
      arms’ length.





Options
under the Stock Option Plan will be granted for a term not to exceed 10 years
from the date of their grant, provided that if the Company is then a “Tier 2”
company listed on the TSX-V, the term of the option will be not more than five
years.





Options
under the Stock Option Plan will be subject to such vesting schedule as the
Committee may determine.  In the event that an option is to be
terminated prior to expiry of its term due to certain corporate events, all
options then outstanding shall become immediately exercisable for 10 days after
notice thereof, notwithstanding the original vesting schedule.





Options
will also be non-assignable and non-transferable, provided that they will be
exercisable by an optionee’s legal heirs, personal representatives or guardians
for up to 12 months following the death or termination of an optionee due to
disability, or up to 12 months following the death of an employee if the
employee dies within 12 months of termination due to disability.  All
such options will continue to vest in accordance with their original vesting
schedule.





The
maximum number of common shares to be reserved for issuance under the Stock
Option Plan, including options currently outstanding, will not exceed 10% of the
number of common shares of the Company issued and outstanding on the applicable
date of grant.




-66-




If a
material alteration in the capital structure of the Company occurs as a result
of a recapitalization, stock split, reverse stock split, stock dividend, or
otherwise, the Committee shall make adjustments to the Stock Option Plan and to
the options then outstanding under it as the Committee determines to be
appropriate and equitable under the circumstances, unless the Committee
determines that it is not practical or feasible to do so, in which event the
options granted under the Stock Option Plan will terminate as set forth
above.





The TSX-V
requires all TSX-V listed companies who have adopted stock option plans which
reserve a maximum of 10% of the number of common shares of the Company issued
and outstanding on the applicable date of grant, to obtain shareholder approval
to the Stock Option Plan on an annual basis.





As of
April 30, 2007, an aggregate of 1,907,000 incentive stock options to purchase
shares of the Company’s common stock remain outstanding to the following
persons:


Optionee
            Nature
              of Option(1)
            No.
      of
              Options
            Exercise
              Price/Share
            Expiry Date$Gerry
      Carlson
            Director
            25,000
              25,000
            0.60
              0.45
            Dec
      12, 2008
              Apr.
      2, 2009Nick
      DeMare
            Consultant
            50,000
              25,000
            0.60
              0.90
            Dec
      12, 2008
              Apr
      2, 2009Nikolaos
      Cacos
            Director
            125,000
              50,000
              75,000
            0.60
              0.90
              0.60
            Dec
      12, 2008
              Apr,
      2, 2009
              July
      11, 2011Art
      Lang
            Officer
            30,000
            0.60
            July
      11, 2011Sean
      Hurd
            Consultant
            100,000
              30,000
              50,000
            0.60
              0.60
              0.90
            Dec
      12, 2008
              July
      11, 2011
              Apr.
      2, 2009Steve
      Phillips
            Consultant
            75,000
              25,000
            0.60
              0.90
            Dec
      12, 2008
              Apr.
      2, 2009Juan
      Carlos Berretta
            Consultant
            25,000
            0.60
            Dec
      12, 2008William
      Lee
            Consultant
            25,000
            0.60
            Dec
      12, 2008Joseph
      Grosso
            Director
            100,000
              85,000
              65,000
            0.60
              0.90
              0.60
            Dec
      12, 2008
              Apr.
      2, 2009
              July
      11, 2011Carlo
      Timossi
            Consultant
            50,000
            0.60
            Dec
      12, 2008Evelyn
      Grosso
            Consultant
            55,000
            0.60
            Dec
      12, 2008Robert
      Coltura
            Director
            50,000
            0.60
            Dec
      12, 2008Jerry
      Minni
            Director
            50,000
              40,000
            0.60
              0.60
            Dec
      12, 2008
              July11,
      2011Louis
      P. Salley
            Consultant
            25,000
            0.60
            Dec
      12, 2008Carlos
      D'Amico
            Consultant
            100,000
            0.60
            Dec
      12, 2008Judy
      Wong
            Consultant
            20,000
            0.60
            Dec
      12, 2008David
      Terry
            Officer
            60,000
              40,000
            0.90
              0.75
            Apr
      2, 2009
              Mar.
      21, 2010Diane
      Reeves
            Consultant
            25,000
            0.90
            Apr
      2, 2009Tookie
      Angus
            Consultant
            45,000
            0.90
            Apr
      2, 2009Aspasia
      Cacos
            Consultant
            24,500
            0.90
            Apr
      2, 2009Campbell
      Smyth
            Consultant
            37,500
            0.40
            Feb.
      14, 2012Claudia
      Sandoval
            Consultant
            25,000
            0.75
            Mar
      21, 2010Oliver
      Frank
            Consultant
            25,000
            0.60
            Jul.
      11, 2011Joerg
      Schweizer
            Consultant
            150,000
            0.40
            Mar.
      26, 2008Kyle
      Johnson
            Consultant
            50,000
            0.40
            Mar.
      26, 2008Mark
      Chadwick
            Consultant
            50,000
            0.40
            Mar.
      26, 2008TOTAL:
            
            1,907,000




-67-




(1)
            Pursuant
      to the rules of the TSX-V the Company has issued stock options to
      employees, directors, and consultants. The Company, for the purposes of
      issuing stock options, designates consultants as employees; therefore,
      certain persons designated as employees are, in fact,
      consultants.





As of
April 30, 2007, the directors and officers of the Company, as a group (7
persons), held options to purchase 769,500 shares of the Company’s common stock,
including options held by their spouses.





Warrants





As of
April 30, 2007, there were non-transferable common share purchase warrants
exercisable for the purchase of 10,386,522 common shares, 1,412,000 of which
expire on February 2, 2008 and may be exercised at $0.65 per share
and  2,291,000 of which expire on December 8, 2008 and may be
exercised at $0.45 per share  and 5,850,000 which expire on April 17,
2009 and may be exercised at $0.45 per share and 833,522 which expire on April
19, 2009 and may be exercised at $0.45 per share.





As of
April 30, 2007, the directors and officers of the Company, as a group (7
persons), held warrants to purchase 691,500 shares of the Company’s common
stock.





There are
no assurances that the option or warrants described above will be exercised in
whole or in part.





Item
7.  Major Shareholders and Related Party
Transactions.





Major
Shareholders





The
following table sets forth certain information regarding ownership of the
Company's shares by all persons who own five percent (5%) or more of the
Company's outstanding shares, as of April 30, 2007.





Title
      of Class
            Name
      and Address of Owner
            Shares
      and Rights Beneficially Owned or Controlled (1)
            Percent
      of Class (1)Common
      Stock
            Nikolaos
      Cacos
            1,398,413(2)
            6.4%Common
      Stock
            Joseph
      Grosso
            1,345,680
      (3)
            6.2%Total
            2,744,093
            12.6%





NOTES:


(1)
            Where
      persons listed on this table have the right to obtain additional shares of
      common stock through the exercise of outstanding options or warrants
      within 60 days from March 31, 2007, these additional shares are deemed to
      be outstanding for the purpose of computing the percentage of common stock
      owned by such persons, but are not deemed to be outstanding for the
      purpose of computing the percentage owned by any other
      person.  Based on 21,748,592shares of common
      stock outstanding as of March 31,
2007.


(2)
            Includes
      the following shares, options an warrants held by Mr. Cacos and Aspasia
      Cacos (Mr. Cacos’ wife):


a.
            197,636
      shares held by Mr. Cacos;


b.
            67,000
      shares held by Mrs. Cacos;


c.
            359,277
      shares held by NAC Investments Inc.


d.
            Options
      held by Mr. Cacos to acquire 250,000
shares;


e.
            Options
      held by Mrs. Cacos to acquire 24,500
shares;


f.
            Warrants
      held by Mr. Cacos to acquire 200,000 shares at a price of $0.65 per share,
      exercisable until February 2, 2008


g.
            Warrants
      held by Mr. Cacos to acquire 200,000 shares at a price of $0.45 per share,
      exercisable until December 8, 2008


h.
            Warrants
      held by NAC Investments Inc. to acquire 100,000 shares at a price of $0.45
      per share, exercisable until December 8,
2008


See “Item 6. Directors, Senior
Management and Employees - Options, Warrants and Other Rights to Acquire
Securities.”


(3)
            Includes
      the following shares and options held by Mr. Grosso and Evelyn Grosso (Mr.
      Grosso’s wife):


a.
            939,680
      shares held by Mr. Grosso;


b.
            56,000
      shares held by Mr. Grosso in an RRSP
Account;


c.
            Options
      held by Mr. Grosso to acquire 250,000
shares;


d.
            Warrants held by Mr. Grosso to
      acquire 100,000 shares at a price of $0.65 per share, exercisable until
      February 2, 2008


See
      “Item 6. Directors, Senior Management and Employees - Options, Warrants
      and Other Rights to Acquire
Securities.”





None of
the Company’s principal shareholders have voting rights different from any of
the Company’s other common shareholders.





-68-


Changes
in Shareholdings





Initially,
the Company had one share issued and outstanding, which was held by Joseph
Grosso. Mr. Grosso transferred the single outstanding share to Mr. Cacos on
April 11, 2000.  Subsequently, Messrs. Cacos and Grosso have acquired
additional shares of the Company’s common stock in private placements, the
initial public offering and purchases through the TSX-V. There have been no
significant changes in the percentage ownership of either Mr. Cacos or Mr.
Grosso within the last three years.





Escrow
Shares





All
escrow shares were released on December 2, 2006.





United
States Shareholders





As of
April 30, 2007, there was one registered holder of the Company’s common shares
in the United States, with holdings of 50,000 shares, representing 0.02% of the
issued shares of the Company on April 30, 2007.  The Company does not
know how many beneficial shareholders it has in the United States, but
management believes there are less than 300 such shareholders.





Control
by Foreign Government or Other Persons





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





Change
of Control





As of the
date of this annual report, there are no arrangements known to the Company which
may at a subsequent date result in a change of control of the
Company.





Related
Party Transactions





Other
than as disclosed below, from January 1, 2004 through April 30, 2007 the Company
has not entered into any transactions or loans between the Company and
any:  (a) enterprises that directly or indirectly through one or more
intermediaries, control or are controlled by, or are under common control with,
the Company; (b) associates; (c) individuals owning, directly or indirectly, an
interest in the voting power of the Company that gives them significant
influence over the Company, and close members of any such individuals' family;
(d) key management personnel and close members of such individuals' families; or
(e) enterprises in which a substantial interest in the voting power is owned,
directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.





1)
            On
      April 8, 2004, the Company, IMA and IMASA entered into a further agreement
      on the Mogote Property.  On April 8, 2004, Messrs. Cacos and
      Grosso, were officers, directors and/or principal shareholders of the
      Company and officers and directors of IMA.  As of April 8, 2004,
      Mr. Lang was a consultant to the Company and was an officer and director
      of IMA.  The Company can earn an additional 24% interest, for a
      total 75% interest, after earning the initial 51% interest, by issuing an
      additional 300,000 common shares (issued), with a deemed value of $279,000
      and expending an additional US$3 million on exploration expenditures, as
      follows:




Exploration
              Expenditures
              US$
            
            Date1,000,000
            
            May
      30, 20051,000,000
            
            May
      30, 20061,000,000
            
            May
      30, 20073,000,000





-69-


As a
result of the April 8, 2004 agreement, the aggregate expenditures which must be
incurred by the Company on the Mogote Property, in order to earn the initial 51%
interest and the additional 24% interest, are as follows:





Date
      for Completion
            Expenditures
              US
      $
            Cumulative
              US
      $July
      1, 2004
            250,000
            250,000May
      30, 2005
            1,000,000
            1,250,000July
      1, 2005
            300,000
            1,550,000May
      30, 2007(1)
            1,000,000
            2,550,000July
      1, 2007(1)
            300,000
            2,850,000May
      30, 2008(1)
            1,000,000
            3,850,000July
      1, 2008(1)
            400,000
            4,250,000TOTAL
            4,250,000





(1)
            The
      dates subsequent to December 31, 2005 reflect the May 2006 amendment to
      the agreement:  Subsequent to December 31, 2005 the Company
      appointed a special committee of independent directors to re-negotiate the
      terms of the Mogote property option agreement with Golden
      Arrow.  According to the resolutions adopted by both companies
      Boards, the US$1,000,000 property expenditures required by May 30, 2006
      are now extended to May 30, 2007 and the US$1,000,000 property
      expenditures required May 30, 2007 are now extended to May 30,
      2008.  In return for granting of the extension, 10% of any
      payments, in terms of cash or stock received by the Company from a third
      party who enters into an agreement regarding the Mogote property, will be
      paid to the Golden Arrow.





Pursuant
to an agreement dated June 28, 2004, effective July 7, 2004, IMA’s and IMASA’s
rights and interests under these agreements were transferred to Golden Arrow and
IMAUSA, respectively.  As of June 28, 2004, Mr. Grosso was an officer,
director and principal shareholder of the Company and an officer and director of
IMA and Golden Arrow.  As of June 28, 2004, Mr. Cacos, an officer,
director and principal shareholder of the Company, and Mr. Terry, an officer of
the Company, were officers and directors of IMA.  Mr. Lang was a
consultant to the Company as of June 28, 2004, and an officer and director of
IMA.  During July 2004, Messrs. Cacos and Terry, officers, directors
and/or principal shareholders of the Company, became officers and directors of
Golden Arrow.  Mr. Lang, an officer of the Company, became and officer
and director of Golden Arrow during July 2004.





See “Item
4. Information on the Company - History and Development of the Company” and
“Item 4. Information on the Company - Property, Plant and Equipment - Principal
Properties - Mogote Project.”





2)
            During
      the year ended December 31, 2004, the Company purchased a 100% undivided
      interest from IMA in three mineral properties (the “Chubut Properties”),
      comprising 24,280 hectares, located in Chubut Province, Argentina, by
      issuing 500,000 common shares (issued in November 2003) for a fair value
      of $225,000. (At the time this agreement was negotiated the 500,000 shares
      had a deemed value of $22,000 which was IMA’s recorded cost for the
      properties).  In addition, in the event that a decision is made
      to place the Chubut Properties into commercial production, the Company
      will pay IMA and IMASA (now Golden Arrow and IMAUSA) a bonus of US$250,000
      and a 3% net smelter returns royalty.  Pursuant to an agreement
      dated June 28, 2004, effective July 7, 2004, IMA’s and IMASA’s rights and
      interests under this agreement were assigned to Golden Arrow and IMAUSA,
      respectively.  As of June 28, 2004, Mr. Grosso was an officer,
      director and principal shareholder of the Company and an officer and
      director of IMA and Golden Arrow.  As of June 28, 2004, Mr.
      Cacos, an officer, director and principal shareholder of the Company, and
      Mr. Terry, an officer of the Company, were officers and directors of
      IMA.  As of June 28, 2004, Mr. Lang was a consultant to the
      Company and an officer and director of IMA.  During July 2004,
      Messrs. Cacos and Terry, officers, directors and/or principal shareholders
      of the Company, became officers and directors of Golden
      Arrow.  Mr. Lang, an officer of the Company, also became an
      officer and director of Golden Arrow in July
  2004.





See “Item
4. Information on the Company - History and Development of the Company” and
“Item 4. Information on the Company - Property, Plant and Equipment - Other
Properties - Chubut Project.”





-70-


3).
            Prior
      to the signing of the Administrative Services Agreement with the Grosso
      Group in 2005, the Company shared office facilities with
      IMA.  During the year ended December 31, 2004, the Company was
      charged $108,390 (2003 - $35,110) by IMA for shared rent and
      administration costs.  During the year ended December 31, 2004,
      the Company paid $113,400 (2003 - $nil) for professional fees (including a
      $25,000 relocation allowance), billed by a director and by an officer of
      the Company.  Of this amount $42,000 was reimbursed by IMA as an
      allocation of the professional services.  See Item 6.
      “Directors, Senior Management and Employees – Management Contracts” for
      update effective January 1, 2005.





4).
            Effective
      January 2, 2004, the Company entered into an agreement with the President
      of the Company for his services.  See “Item 6. Directors, Senior
      Management and Employees - Employment Agreements.”  Under the
      agreement the President was paid $6,125 per month.  Effective
      April 1, 2006, the agreement was modified so that the monthly fee was
      payable to a private company controlled by the President and on May 1,
      2006 the monthly fee increased to $7,292.  During the year ended
      December 31, 2006, the Company paid $85,833 (2005 - $73,500; 2004 -
      $72,400) to the President or to the private company controlled by the
      President.  During the three months ended March 31, 2007, the
      Company paid $21,875 (2005 - $21,375) to the President.  The
      contract also provides that, in the event the services are terminated
      without cause or upon a change in control of the Company, a termination
      payment would include eighteen months of compensation plus a bonus amount
      agreed to by the parties.





5).
            The
      following table provides a listing of the offerings and private placements
      conducted by the Company, during the period from January 1, 2006 through
      April 30, 2007, along with the names of the officers, directors and/or
      principal shareholders which purchased securities in these offerings and
      private placements and the use of
proceeds:




Placee
            Participation
      by Insiders
            Purchase
      Price
              $
            Market
      Price(1)
              $





Private
      Placement – 1,412,000 units, announced January 16, 2006
            
            0.60
            0.59Each
      unit comprised one common share and one non-transferable share purchase
      warrant.  Each warrant entitles the holder thereof to purchase
      one common share in the capital of the Company on or before February 2,
      2008 at a purchase price of $0.65.Nikolaos
      Cacos
            200,000Joseph
      Grosso
            100,000Robert
      Coltura
            7,000Lindsay
      Bottomer
            10,000Jerry
      Minni
            17,000David
      Terry
            12,000Arthur
      Lang
            5,000Total
            351,000





Private
      Placement – 2,235,000 units, announced November 15, 2006
            
            0.35
            0.35Each
      unit comprised one common share and one non-transferable share purchase
      warrant.  Each warrant entitles the holder thereof to purchase
      one common share in the capital of the Company on or before December 8,
      2008 at a purchase price of $0.45.Nikolaos
      Cacos
            200,000Robert
      Coltura
            10,000Gerald
      Carlson
            50,000Jerry
      Minni
            15,000Vera
      Minni (wife of Jerry Minni)
            15,000David
      Terry
            30,000Total
            320,000





-71-





Private
      Placement – 11,700,000 units, announced March 12, 2007
            
            0.40
            0.35Each
      unit comprised one common share and one half non-transferable share
      purchase warrant.  1,100,000 of the full warrants entitle the
      holder thereof to purchase one common share in the capital of the Company
      on or before April 12, 2009 at a purchase price of $0.45 and 4,750,000 of
      the full warrants entitle the holder thereof to purchase one common share
      in the capital of the Company on or before April 17, 2009 at a purchase
      price of $0.45.Robert
      Coltura
            15,000Total
            15,000


(1)
            Quoted
      closing price on date of announcement of private placement or
      offering.





6).           See
“Item 6.  Directors, Senior Management and Employees -
Compensation.”





7).
            The
      Grosso Group is a private company which is owned by the Company, Golden Arrow, IMA, Gold Point, Blue Sky and
      Astral, each of which own one share.  The Grosso Group
      provides its shareholder companies with geological, corporate development,
      administrative and management services.  The Grosso Group staff
      is available to the shareholder companies on a cost recovery basis without
      the expense of full time personnel.  The shareholder companies
      pay monthly fees to the Grosso Group.  The fee is based upon
      a reasonable prorating of the Grosso
      Group’s costs including its staff and overhead costs
      among each shareholder company with regard to the mutually agreed average annual level of services
      provided to each shareholder company.During the year
      ended December 31, 2006, the Company incurred fees of $533,469 (2005 -
      $377,410) to the Grosso Group: $480,545 (2005 - $290,858) was paid in
      twelve monthly payments and $52,924 (2005 - $86,552) is included in
      accounts payable as a result of a review of the allocation of the Grosso
      Group costs to the member companies for the year.   In
      addition, included in other receivables, prepaids and deposits is a
      $95,000 (2005 - $95,000) deposit to the Grosso Group for the purchase of
      equipment and leasehold improvements and for operating working
      capital.  The fees the Company
      pays to the Grosso Group are allocated to various expense items that
      reflect the nature of the actual
      costs: rent, salaries, office and telephone.  These fees are
      equivalent to costs the Company would have incurred
      directly.





Indebtedness of Directors,
Officers, Promoters and Other Management





As at
December 31, 2006, the President of the Company and a consultant of the Company
each owed $70,000 to the Company for units purchased through the Company’s
private placement announced November 15, 2006.  These amounts were
paid to the Company on January 29, 2007 and January 24, 2007
respectively.





Except as
mentioned above, during the fiscal years ended December 31, 2006, 2005, 2004,
none of the following were indebted to the Company:





(a)
            enterprises
      that directly or indirectly through one or more intermediaries, control or
      are controlled by, or are under common control with, the
      Company;


(b)
            associates;


(c)
            individuals
      owning, directly or indirectly, an interest in the voting power of the
      Company that gives them significant influence over the Company, and close
      members of any such individuals'
family;


(d)
            key
      management personnel and close members of such individuals' families;
      or


(e)
            enterprises
      in which a substantial interest in the voting power is owned, directly or
      indirectly, by any person described in (c) or (d) or over which such a
      person is able to exercise significant
  influence.





Interests
of Experts and Counsel





Not
applicable.




-72-


Item
8.  Financial Information.


Description
            
            PageConsolidated
      Financial Statements and other financial information
              for
      the Years Ended December 31, 2006, 2005 and 2004
            
            F-1 - F-27





Significant
Changes





None.





Dividend
Policy





The
Company has not paid any dividends on its common shares and does not intend to
pay dividends on its common shares in the immediate future.  Any
decision to pay dividends on its common shares in the future will be made by the
board of directors of the Company on the basis of earnings, financial
requirements and other such conditions that may exist at that time.





Legal
Proceedings





None.








Item
9.  The Offer and Listing.





Price
History





The
Company’s common stock commenced trading on the TSX-V on December 2,
2003.  The Company’s stock currently trades on the TSX-V under the
symbol “AMS” and CUSIP number 02351P105.





The
following table sets forth the market price ranges and the aggregate volume of
trading of the common shares of the Company on the TSX-V for the periods
indicated:





TSX-Venture Exchange Stock Trading
Activity





Sales
      Price ($)Year
      Ended
            Volume
            
            High
            
            LowDecember
      31, 2006
            9,473,300
            
            0.73
            
            0.32December
      31, 2005
            12,673,600
            
            0.94
            
            0.35December
      31, 2004
            7,113,900
            
            1.12
            
            0.35December
      31, 2003(1)
            1,444,847
            
            0.95
            
            0.60(1)  Period
      from December 2, 2003 to December 31, 2003.Sales
      Price ($)Quarter
      Ended
            Volume
            
            High
            
            LowMarch
      31, 2007
            1,889,200
            
            0.44
            
            0.35December
      31, 2006
            2,153,400
            
            0.44
            
            0.32September
      30, 2006
            1,191,400
            
            0.48
            
            0.34June
      30, 2006
            2,880,400
            
            0.70
            
            0.32March
      31, 2006
            3,248,100
            
            0.73
            
            0.51December
      31, 2005
            3,247,900
            
            0.80
            
            0.46September
      30, 2005
            1,290,900
            
            0.94
            
            0.35June
      30, 2005
            8,988,100
            
            0.51
            
            0.37





-73-





Sales
      Price ($)Month
      Ended
            Volume
            
            High
            
            LowApril
      30, 2007
            860,600
            
            0.43
            
            0.36March
      31, 2007
            568,100
            
            0.42
            
            0.35February
      28, 2007
            978,300
            
            0.44
            
            0.35January
      31, 2007
            342,800
            
            0.42
            
            0.36December
      31, 2006
            519,900
            
            0.44
            
            0.35November
      30, 2006
            1,151,500
            
            0.44
            
            0.33





Over-the-Counter
Bulletin Board and Pink Sheet Trading Activity





The
Company’s common shares have been listed in the Pink Sheets under the symbol
“AJRSF” since January 2004.  Effective September 13, 2006, the Company
received clearance for trading on the Over-the-Counter Bulletin Board (“OTCBB”)
operated by the National Association of Securities Dealers, continuing under the
symbol “AJRSF”. The following tables set forth the market price ranges and the
aggregate volume of trading of the common shares of the Company in the OTCBB and
Pink Sheets for the periods indicated.  These quotations reflect
inter-dealer prices without retail mark-up, mark-down, or commissions and may
not necessarily represent actual transactions.





Closing
      Sales Price (US $)Year
      Ended
            Volume
            
            High
            
            LowDecember
      31, 2006
            684,750
            
            0.73
            
            0.281December
      31, 2005
            365,910
            
            0.76
            
            0.30December
      31, 2004
            330,750
            
            0.84
            
            0.27Closing
      Sales Price (US $)Quarter
      Ended
            Volume
            
            High
            
            LowMarch
      31, 2007
            85,500
            
            0.357
            
            0.292December
      31, 2006
            195,900
            
            0.381
            
            0.281September
      30, 2006
            155,200
            
            0.48
            
            0.43June
      30, 2006
            181,750
            
            0.70
            
            0.32March
      31, 2006
            151,900
            
            0.73
            
            0.51December
      31, 2005
            87,970
            
            0.68
            
            0.41September
      30, 2005
            145,430
            
            0.76
            
            0.30June
      30, 2005
            76,230
            
            0.41
            
            0.30




Closing
      Sales Price (US $)Month
      Ended
            Volume
            
            High
            
            LowApril
      30, 2007
            45,300
            
            0.351
            
            0.32March
      31, 2007
            14,000
            
            0.345
            
            0.312February
      28, 2007
            40,000
            
            0.357
            
            0.315January
      31, 2007
            31,500
            
            0.339
            
            0.292December
      31, 2006
            53,200
            
            0.381
            
            0.292November
      30, 2006
            71,300
            
            0.377
            
            0.281





Registration,
Transfer and Par Value





The
Company's common shares, no par value, are registered.  The Company's
transfer agent is Computershare Trust Company of Canada, 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9, Canada.





-74-


Item
10.  Additional Information.








Memorandum
and Articles of Association





Previously
reported in the Company’s registration statement on Form 20-F, filed with the
SEC on October 28, 2004.





Material
Contracts





The
following are material contracts to which the Company is a party and which were
entered into during the two years proceeding the date of this annual
report:





1.
            Agency
      Letter Agreement between the Company and Canaccord Capital Corporation
      dated February 18, 2005, pursuant to which Canaccord agreed to the Company
      with a portion of an offering for sale of 900,000 units at $0.55 per unit.
      Each unit consisted of one share and one half warrant exercisable at
      $0.60.  Canaccord’s compensation included an 8% of the amount
      placed, payable either in cash or in agent’s units at the election of the
      agent.  The agent’s units will have the same terms as the
      client’s units.  In addition, the Company agreed to issue
      warrants to Canaccord equal to 10% of the units subscribed, each warrant
      will be exercisable to purchase an additional share at $0.60 for a period
      of one year from closing.  In addition, the Company will pay
      Canaccord a corporate finance fee, payable by the issuance of 27,000
      units, having the same terms as the clients’ units.  The Company
      will pay an administration fee plus expenses to Canaccord of
      $5,000.





2.
            Property
      option agreement between the Company and Carlos Martin Thompson Palacoos
      dated May 11, 2005, pursuant to which the Company may earn up to 100%
      undivided interest in the Cruz de Mayo Property located in the southern
      portion of the Department of Cuzco in Peru.  To earn the
      interest in the property the Company must pay US$150,000 in option
      payments to the Vendor (US$35,000 paid) and incur US$1,500,000
      expenditures over the period of four years as
  follows:





Option
      Payments
              US
      $
            
            
            Exploration
              Expenditures
              US
      $
            
            Date35,000
            
            
            
            -
            
            April
      11, 2005 (paid on signing)25,000
            
            
            
            200,000
            
            April
      11, 2007 (extended to June 30, 2007)40,000
            
            
            
            550,000
            
            April
      11, 200850,000
            
            
            
            750,000
            
            April
      11, 2009150,000
            
            
            
            1,500,000





3.
            Letter
      of intent between the Company and Astral dated June 12, 2006 to option to
      Astral its Roy and Hills properties.  Under the terms of the
      Letter of Intent, Astral may earn up to an 80% undivided interest in the
      Roy and Hills Properties.  An initial 65% interest in the
      project may be earned by incurring US$2,500,000 in work expenditures over
      four years and issuing 500,000 common shares to the
      Company.  Astral may then elect to earn an additional 15%
      interest, by issuing a further 500,000 shares and completing a bankable
      feasibility stage, within three years.  This Letter of Intent is
      subject to TSX-V approval, upon which Astral must issue the first 100,000
      shares to the Company.





4.
            Effective
      January 2, 2004, the Company entered into an agreement with Mr. Nikolaos
      Cacos, President of the Company, for his services.  Under the
      agreement Mr. Cacos was paid $6,125 per month.  Effective April
      1, 2006, the agreement was modified so that the monthly fee was payable to
      a private company controlled by Mr. Cacos and on May 1, 2006 the monthly
      fee increased to $7,292.  The agreement also provides that, in
      the event the services are terminated without cause or upon a change in
      control of the Company, a termination payment would include eighteen
      months of compensation plus a bonus amount agreed to by the
      parties.





-75-


Exchange
Controls





There are
no governmental laws, decrees, or regulations in Canada relating to restrictions
on the export or import of capital, or affecting the remittance of interest,
dividends, or other payments to non-resident holders of the Company’s common
stock.  Any remittances of dividends to United States residents are,
however, subject to a 15% withholding tax (10% if the shareholder is a
corporation owning at least 10% of the outstanding common stock of the Company)
pursuant to Article X of the reciprocal tax treaty between Canada and the United
States.  See “Item 10. Additional Information -
Taxation”.





Except as
provided in the Investment Canada Act, there are no limitations specific to the
rights of non-Canadians to hold or vote the common stock of the Company under
the laws of Canada or the Province of British Columbia or in the charter
documents of the Company.





Management
of the Company considers that the following general summary is materially
complete and fairly describes those provisions of the Investment Canada Act
pertinent to an investment by an American investor in the Company.





The
following discussion summarizes the principal features of the Investment Canada
Act for a non-resident who proposes to acquire the common shares.





The
Investment Canada Act generally prohibits implementation of a reviewable
investment by an individual, government or agency thereof, corporation,
partnership, trust or joint venture (each an “entity”) that is not a “Canadian”
as defined in the Investment Canada Act (a “non-Canadian”), unless after review,
the Director of Investments appointed by the minister responsible for the
Investment Canada Act is satisfied that the investment is likely to be of net
benefit to Canada.  An investment in the common shares by a
non-Canadian other than a “WTO Investor” (as that term is defined by the
Investment Canada Act, and which term includes entities which are nationals of
or are controlled by nationals of member states of the World Trade Organization)
when the Company was not controlled by a WTO Investor, would be reviewable under
the Investment Canada Act if it was an investment to acquire control of the
Company and the value of the assets of the Company, as determined in accordance
with the regulations promulgated under the Investment Canada Act, equals or
exceeds $5 million for direct acquisition and over $50 million for indirect
acquisition, or if an order for review was made by the federal cabinet on the
grounds that the investment related to Canada's cultural heritage or national
identity, regardless of the value of the assets of the Company.  An
investment in the common shares by a WTO Investor, or by a non-Canadian when the
Company was controlled by a WTO Investor, would be reviewable under the
Investment Canada Act if it was an investment to acquire control of the Company
and the value of the assets of the Company, as determined in accordance with the
regulations promulgated under the Investment Canada Act was not less than a
specified amount, which for 2005 was any amount in excess of $250
million.  A non-Canadian would acquire control of the Company for the
purposes of the Investment Canada Act if the non-Canadian acquired a majority of
the common shares.  The acquisition of one third or more, but less
than a majority of the common shares would be presumed to be an acquisition of
control of the Company unless it could be established that, on the acquisition,
the Company was not controlled in fact by the acquirer through the ownership of
the common shares.





Certain
transactions relating to the common shares would be exempt from the Investment
Canada Act, including:  (a) an acquisition of the common shares
by a person in the ordinary course of that person's business as a trader or
dealer in securities; (b) an acquisition of control of the Company in connection
with the realization of security granted for a loan or other financial
assistance and not for a purpose related to the provisions of the Investment
Canada Act; and (c) an acquisition of control of the Company by reason of an
amalgamation, merger, consolidation or corporate reorganization following which
the ultimate direct or indirect control in fact of the Company, through the
ownership of the common shares, remained unchanged.





Taxation








Material Canadian Federal
Income Tax Consequences





Management
of the Company considers that the following discussion fairly describes the
material Canadian federal income tax consequences applicable to a holder of
common stock of the Company who is a resident of the United States




-76-




and who
is not a resident of Canada and who does not use or hold, and is not deemed to
use or hold, his shares of common stock of the Company in connection with
carrying on a business in Canada (a “non-resident shareholder”).





This
summary is based upon the current provisions of the Income Tax Act (Canada) (the
“ITA”), the regulations thereunder (the “Regulations”), the current publicly
announced administrative and assessing  policies of Revenue Canada,
Taxation and all specific proposals (the “Tax Proposals”) to amend the ITA and
Regulations announced by the Minister of Finance (Canada) prior to the date
hereof.  This description is not exhaustive of all possible Canadian
federal income tax consequences and, except for the Tax Proposals, does not take
into account or anticipate any changes in law, whether by legislative,
governmental or judicial action.





Dividends





Dividends
paid on the common stock of the Company to a non-resident will be subject to
withholding tax.  The Canada-U.S. Income Tax Convention (1980)
provides that the normal 25% withholding tax rate is reduced to 15% on dividends
paid on shares of a corporation resident in Canada (such as the Company) to
residents of the United States, and also provides for a further reduction of
this rate to 5% where the beneficial owner of the dividends is a corporation
which is a resident of the United States which owns at least 10% of the voting
shares of the corporation paying the dividend. In the event of the Company
declaring and paying dividends it would withhold any applicable
taxes.





Capital
Gains





In
general, a non-resident of Canada is not subject to tax under the ITA with
respect to a capital gain realized upon the disposition of a share of a
corporation resident in Canada that is listed on a prescribed stock
exchange.  For purposes of the ITA, the Company is listed on a
prescribed stock exchange.  Non-residents of Canada who dispose of
shares of the Company will be subject to income tax in Canada with respect to
capital gains if:





(a)
            the
      non-resident holder;(b)
            persons
      with whom the non-resident holder did not deal with at arm's length;
      or(c)
            the
      non-resident holder and persons with whom the non-resident holder did not
      deal with at arm's length,





owned not
less than 25% of the issued shares of any class or series of the Company at any
time during the five-year period preceding the disposition.  In the
case of a non-resident holder to whom shares of the Company represent taxable
Canadian property and who is resident in the United States, no Canadian taxes
will be payable on a capital gain realized on such shares by reason of the
Canada-U.S. Income Tax Convention (1980) (the “Treaty”) unless the value of such
shares is derived principally from real property situated in
Canada.  However, in such a case, certain transitional relief under
the Treaty may be available.








Material United States
Federal Income Tax Considerations





The
following discussion summarizes the material United States federal income tax
consequences, under current law, applicable to a U.S. Holder (as defined below)
of the Company’s common stock. This discussion does not address consequences
peculiar to persons subject to special provisions of federal income tax law,
such as tax-exempt organizations, qualified retirement plans, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, nonresident alien individuals or foreign
corporations, and shareholders owning common stock representing 10% of the vote
and value of the Company. In addition, this discussion does not cover any state,
local or foreign tax consequences.





The
following discussion is based upon the sections of the Internal Revenue Code of
1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue
Service (“IRS”) rulings, published administrative positions of the IRS and court
decisions that are currently applicable, any or all of which could be materially
and adversely changed, possibly on a retroactive basis, at any time. In
addition, this discussion does not consider the potential effects, both adverse
and beneficial of recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time.  Holders and
prospective holders of the Company's common stock are urged to consult their own
tax advisors about




-77-




the
federal, state, local and foreign tax consequences of purchasing, owning and
disposing of shares of common stock of the Company.





U.S.
Holders





As used
herein, a “U.S. Holder” is defined as (i) citizens or residents of the U.S., or
any state thereof, (ii) a corporation or other entity created or organized under
the laws of the U.S., or any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income tax regardless of source or
that is otherwise subject to U.S. federal income tax on a net income basis in
respect of the common stock, or (iv) a trust whose administration is subject to
the primary supervision of a U.S. court and which has one or more U.S.
fiduciaries who have the authority to control all substantial decisions of the
trust, whose ownership of common stock is not effectively connected with the
conduct of a trade or business in the United States and shareholders who
acquired their stock through the exercise of employee stock options or otherwise
as compensation.





Distributions on Shares of
Common Stock





U.S.
Holders receiving dividend distributions (including constructive dividends) with
respect to the Company’s common stock are required to include in gross income
for United States federal income tax purposes the gross amount of such
distributions to the extent that the Company has current or accumulated earnings
and profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder’s United States federal income tax
liability or, alternatively, may be deducted in computing the U.S. Holder’s
United States federal taxable income by those who itemize deductions. (See more
detailed discussion at “Foreign Tax Credit” below.) To the extent that
distributions exceed current or accumulated earnings and profits of the Company,
they will be treated first as a return of capital up to the U.S. Holder’s
adjusted basis in the common stock and thereafter as gain from the sale or
exchange of such shares. Preferential tax rates for long-term capital gains are
applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a U.S.
Holder which is a corporation. Dividends paid on the Company’s common stock will
not generally be eligible for the dividends received deduction provided to
corporations receiving dividends from certain United States
corporations.





Foreign Tax
Credit





A U.S.
Holder who pays (or has withheld from distributions) Canadian income tax with
respect to the ownership of the Company’s common stock may be entitled, at the
option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income
subject to tax. This election is made on a year-by-year basis and applies to all
foreign taxes paid by (or withheld from) the U.S. Holder during that year.
Subject to certain limitations, Canadian taxes withheld will be eligible for
credit against the U.S. Holder’s United States federal income taxes. Under the
Code, the limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. Dividends paid by the
Company generally will be either “passive” income or “financial services”
income, depending on the particular U.S. Holder’s circumstances. Foreign tax
credits allowable with respect to each class of income cannot exceed the U.S.
federal income tax otherwise payable with respect to such class of income. The
consequences of the separate limitations will depend on the nature and sources
of each U.S. Holder’s income and the deductions appropriately allocated or
apportioned thereto. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific and holders and
prospective holders of common stock are urged to consult their own tax advisors
regarding their individual circumstances.





Disposition of Shares of
Common Stock





A U.S.
Holder will recognize gain or loss upon the sale of shares of common stock equal
to the difference, if any, between (i) the amount of cash plus the fair market
value of any property received; and (ii) the shareholder’s tax basis in the
common stock. This gain or loss will be capital gain or loss if the shares are a
capital asset in the hands of the U.S. Holder, and such gain or loss will be
long-term capital gain or loss if the U.S. Holder has held the common stock for
more than one year. Gains and losses are netted and combined according to
special rules in arriving at the overall capital gain or loss for a particular
tax year. Deductions for net capital losses are subject to significant
limitations. For U.S.




-78-




Holders
who are individuals, any unused portion of such net capital loss may be carried
over to be used in later tax years until such net capital loss is thereby
exhausted. For U.S. Holders which are corporations (other than corporations
subject to Subchapter S of the Code), an unused net capital loss may be carried
back three years from the loss year and carried forward five years from the loss
year to be offset against capital gains until such net capital loss is thereby
exhausted.





Other
Considerations





The
Company has not determined whether it meets the definition of a “passive foreign
investment company” (a “PFIC”). It is unlikely that the Company meets the
definition of a “foreign personal holding company” (a “FPHC”) or a “controlled
foreign corporation” (a “CFC”) under current U.S. law.





If more
than 50% of the voting power or value of the Company were owned (actually or
constructively) by U.S. Holders who each owned (actually or constructively) 10%
or more of the voting power of the Company’s common shares (“10% Shareholders”),
then the Company would become a CFC and each 10% Shareholder would be required
to include in its taxable income as a constructive dividend an amount equal to
its share of certain undistributed income of the Company. If (1) more than 50%
of the voting power or value of the Company’s common shares were owned (actually
or constructively) by five or fewer individuals who are citizens or residents of
the United States and (2) 60% or more of the Company’s income consisted of
certain interest, dividend or other enumerated types of income, then the Company
would be a FPHC. If the Company were a FPHC, then each U.S. Holder (regardless
of the amount of the Company’s common shares owned by such U.S. Holder) would be
required to include in its taxable income as a constructive dividend its share
of the Company’s undistributed income of specific types.





If 75% or
more of the Company’s annual gross income has ever consisted of, or ever
consists of, “passive” income or if 50% or more of the average value of the
Company’s assets in any year has ever consisted of, or ever consists of, assets
that produce, or are held for the production of, such “passive” income, then the
Company would be or would become a PFIC. The Company has not provided assurances
that it has not been and does not expect to become a PFIC. Please note that the
application of the PFIC provisions of the Code to resource companies is somewhat
unclear.





If the
Company or any of its subsidiaries is deemed to be a PFIC, a United States
holder of the Company’s common shares would be required to pay an interest
charge together with tax calculated at maximum tax rates on certain “excess
distributions” (defined to include certain dividends from a PFIC and any gain on
the sale of stock of a PFIC) unless such holder made an election either to (1)
include in his or her taxable income his or her pro rata share of the PFIC’s
ordinary earnings and net capital gains under the Qualified Electing Fund rules
or (2) mark to market his or her Company common shares at the end of each
taxable year as set forth in Section 1296 of the Internal Revenue Code of 1986,
as amended. The elections require certain conditions be met such as filing on or
before the due date, as extended, for filing the shareholder’s income tax return
for the first taxable year to which the election will apply.





Information Reporting and
Backup Withholding





U.S.
information reporting requirements may apply with respect to the payment of
dividends to U.S. Holders of the Company’s shares. Under Treasury regulations
currently in effect, non-corporate holders may be subject to backup withholding
at a 31% rate with respect to dividends when such holder (1) fails to furnish or
certify a correct taxpayer identification number to the payor in the required
manner, (2) is notified by the IRS that it has failed to report payments of
interest or dividends properly or (3) fails, under certain circumstances, to
certify that it has been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments.





Inspection
of Documents





Copies of
the documents referred to in this annual report may be inspected at the
Company’s corporate office at Suite 709, 837 West Hastings Street, Vancouver,
British Columbia, V6C 3N6, Canada, during normal business hours.





The
Company’s documents publicly filed with the Securities and Exchange Commission
may also be viewed and inspected at the SEC’s Public Reference Room located at
450 Fifth Street, NW, Washington, D.C. 20549. Copies may also be obtained from
the SEC at prescribed rates.  Documents may also be viewed on the
SEC’s Internet website at www.sec.gov.





-79-


Item
11.  Quantitative and Qualitative Disclosures About Market
Risk.





Not
applicable.








Item
12.  Description of Securities Other than Equity
Securities.





Not
applicable.














PART
II








Item
13.  Defaults, Dividend Arrearages and
Delinquencies.





Not
applicable.








Item
14.  Material Modifications to the Rights of Security Holders and Use
of Proceeds.





Not
applicable.








Item
15.   Controls and Procedures.





An
evaluation was performed under the supervision and with the participation of the
Company’s management, including Mr. Cacos, the Company’s chief executive
officer, and Mr. Lang, the Company’s chief financial officer, of the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”) as of December 31,
2006.  Based upon that evaluation, Messrs. Cacos and Lang, concluded
that the Company’s disclosure controls and procedures are effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.





During
the fiscal year ended December 31, 2006, there were no changes in the Company’s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.








Item
16A.   Audit Committee Financial Expert.





The Board
of Directors has determined that the Company has at least one audit committee
financial expert, Mr. Jerry Minni, who serves on the Company’s audit
committee.  Mr. Minni is an independent director within the meaning
of


and as
required by the Ontario Securities Commission’s Multilateral Instrument
52-110—Audit Committees.








Item
16B.   Code of Ethics.





Our Audit
Committee has adopted a Code of Business Conduct and Ethics to provide
principles for the purpose of promoting:




-80-





·
            Honest
      and ethical conduct, including the ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships;


·
            Full,
      fair, accurate, timely, and understandable disclosure in reports and
      documents that we file with, or submit to, the Securities and Exchange
      Commission and in other public
communications;


·
            Compliance
      with applicable governmental laws, rules and
  regulations;


·
            The
      prompt internal reporting of violations of our Code of Business Conduct
      and Ethics; and


·
            Accountability
      for adherence to our Code of Business Conduct and
  Ethics.





No
waivers of any provision of the Code of Business Conduct and Ethics may be made
except by the Audit Committee.  Only the Audit Committee may amend the
Code of Business Conduct and Ethics.  Any waiver or amendment shall be
reported as required by law or regulation.





The Company also has adopted aWhistleblower Policy and a Corporate Disclosure and
Insider Trading Policy.





The Company’s Code of Business
Conduct and Ethics, Whistleblower Policy and Corporate Disclosure and Insider Trading Policy may be
viewed at the Company’s website at:





http://www.ameraresources.com/s/CorporateGovernance.asp.





Additionally, each document is available in its entirety, free of charge, upon
written request to us, attention of our Secretary, at the address listed on the
front cover of this filing.








Item
16C.   Principal Accountant Fees and Services
..





Audit
Fees





For the
fiscal year ended December 31, 2006, the Company’s principal accountant is
expected to bill approximately $35,000, and for the fiscal year ended December
31, 2005, the Company’s principal accountant billed approximately $29,500 for
the audit of the Company’s annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal years.





Audit
Related





The
Company’s principal accountant billed $Nil and $1,785 amounts for the fiscal
years ended December 31, 2006 and 2005, respectively, for assurance, tax and
related services that were reasonably related to the performance of the audit or
review of the Company’s financial statements outside of those fees disclosed
above under “Audit Fees”.





Tax
Fees





The
Company’s principal accountant billed $Nil and $Nil for the fiscal years ended
December 31, 2006 and 2005, respectively, for tax services
performed.





Other
      Accounting Fees





The
Company’s principal accountant billed $Nil and $Nil for the fiscal years ended
December 31, 2006 and 2005, respectively, for other accounting services
performed.





The
      above listed services were approved by the Company’s audit
      committee.








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





Not
applicable.





-81-





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





Not
applicable.







PART
III








Item
17.  Financial Statements.


PageAudited
      Financial Statements for the Years
              Ended
      December 31, 2006, 2005 and 2004
            
            F-1
      - F25








Item
18.  Financial Statements.








Not
applicable.








Item
19.  Exhibits.





Exhibit
      Number
            Description1.1
            Articles
      (1)1.2
            Memorandum
      and Certificate of Incorporation (1)1.3
            Certificate
      of Change of Name and Altered Memorandum (1)1.4
            Notice
      of Articles (1)4.1
            Letter
      Agreement dated October 1, 2002 made between the Company and IMA
      Exploration Inc. (1)4.2
            Letter
      of Intent made between the Company, IMA Exploration Inc. and Inversiones
      Mineras Argentinas S.A. dated March 6, 2003 (1)4.3
            Property
      Purchase Agreement made between the Company, IMA Exploration Inc. and
      Inversiones Mineras Argentinas S.A. dated March 6, 2003
(1)4.4
            Stock
      Option Plan dated April 13, 2004 (1)4.5
            Escrow
      Agreement among the Company, Computershare Trust Company of Canada and the
      Principals of the Company dated April 30, 2003 (1)4.6
            Agency
      Agreement between the Company and Canaccord Capital Corporation dated July
      31, 2003 (1)4.7
            Amending
      Letter Agreement made between the Company, IMA Exploration Inc. and
      Inversiones Mineras Argentinas S.A. dated September 30, 2003
      (1)4.8
            Agreement
      with Nikolaos Cacos dated January 2, 2004 (1)4.9
            Consulting
      Agreement with David Terry dated February 16, 2004 (1)4.10
            Engagement
      Agreement between the Company and Canaccord Capital Corporation dated
      March 8, 2004 (1)4.11
            Amending
      Letter Agreement made between the Company, IMA Exploration Inc. and
      Inversiones Mineras Argentinas S.A. dated April 8, 2004
(1)4.12
            Amendment
      to Consulting Agreement with David Terry dated June 29, 2004
      (1)4.13
            Assignment
      and Assumption Agreement dated June 28, 2004 among IMA Exploration Inc.,
      Inversiones Mineras Argentinas S.A., Golden Arrow Resources Corporation,
      Inversiones Mineras Australes S.A. and the Company (relating to the
      Argentinean properties) (1)






-82-




Exhibit
      Number
            Description4.14
            Assignment
      and Assumption Agreement dated June 28, 2004 among IMA Exploration Inc.,
      Inversiones Mineras Argentinas S.A., Golden Arrow Resources Corporation,
      Inversiones Mineras Australes S.A. and the Company (relating to the Mogote
      Property) (1)4.15
            Letter
      Agreement dated August 24, 2004 between the Company and Arcturus Ventures
      Inc. (1)4.16
            Acknowledgement
      between the Company and Steven K. Jones dated
              December
      31, 2004 (2)4.17
            Agency
      Letter Agreement dated February 18, 2005 between the Company and Canaccord
      Capital Corporation (2)4.18
            Form
      of Agreement with the Grosso Group Management Ltd., effective January 1,
      2005 (2)4.19
            Agreement
      between Recursos de lo Andes S.A.C., Company’s wholly owned subsidiary,
      and Carlos Martin Thompson Palacoos dated May 11, 2005 (3)4.20
            Amendment
      to consulting agreement with Nikolaos Cacos dated April 12, 2006
      (3)4.21
            Letter
      of Intent made between the Company and Astral Mining Corporation dated
      June 9, 2006 (3)8.1
            List
      of Subsidiaries (4)12.1
            Certification
      of  Nikolaos Cacos Pursuant to Rule 13a-14(a)12.2
            Certification
      of Arthur Lang Pursuant to Rule 13a-14(a)13.1
            Certification
      of Nikolaos Cacos Pursuant to 18 U.S.C. Section 135013.2
            Certification
      of Arthur Lang Pursuant to 18 U.S.C. Section 1350





(1)
            Incorporated
      by reference to the exhibits to the Company’s registration statement on
      Form 20-F filed with the Securities and Exchange Commission on October 28,
      2004, file number 0-51005.


(2)
            Incorporated
      by reference to the exhibits to the Company’s registration statement on
      Form 20-F filed with the Securities and Exchange Commission on April 28,
      2005, file number 0-51005.


(3)
            Incorporated
      by reference to the exhibits to the Company’s annual report on Form 20-F
      filed with the Securities and Exchange Commission on June 23, 2006, file
      number 0-51005.


(4)
            Incorporated
      by reference to the exhibits to the Company’s annual report on Form 20-F
      filed with the Securities and Exchange Commission on May 30, 2007, file
      number 0-51005.








-83-


SIGNATURES








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





AMERA RESOURCES
      CORPORATIONDated: 
      June 6, 2008
              /s/ 
      Nikolaos CacosNikolaos
      Cacos, President and Director







-84-






















AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)





CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE
YEARS ENDED


DECEMBER
31, 2006, 2005 AND 2004





(Expressed
in Canadian Dollars)























-F1-






































Management’s
Responsibility for Financial Reporting





The
accompanying consolidated financial statements of the Company have been prepared
by management in accordance with accounting principles generally accepted in
Canada and reconciled to accounting principles generally accepted in the United
States as set out in Note 11, and contain estimates based on management’s
judgment.  Management maintains an appropriate system of internal
controls to provide reasonable assurance that transactions are authorized,
assets safeguarded, and proper records maintained.





The Audit
Committee of the Board of Directors has met with the Company’s independent
auditors to review the scope and results of the annual audit, and to review the
financial statements and related financial reporting matters prior to submitting
the financial statements to the Board for approval.





The
Company’s independent auditors, Ernst & Young Chartered Accountants, are
appointed by the shareholders to conduct an audit in accordance with generally
accepted auditing standards in Canada and the Public Company Accounting
Oversight Board (United States), and their report follows.





/s/
      Nikolaos Cacos
              
              /s/
      Art LangNikolaos
      Cacos
              
              Art
      LangPresident
              
              Chief
      Financial Officer











-F2-







REPORT
OF INDEPENDENT AUDITORS
 
 
 To the
Shareholders of
 Amera
Resources Corporation
 
 We have
audited the consolidated balance sheets of Amera Resources Corporation(the “Company”)as at December 31, 2006
and 2005 and the consolidated statements of operations and deficit and cash
flows for each of the years in the three year period ended December 31, 2006.
These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
 
 We
conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. We were not engaged to perform an audit of the Company’s
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
 In our
opinion, these financial statements present fairly, in all material respects,
the financial position of the Company as at December 31, 2006 and 2005 and the
results of its operations and its cash for each of the years in the three year
period ended December 31, 2006 in conformity with Canadian generally accepted
accounting principles.
 
 As
described in Note 11, the financial statements have been restated.
 
 The
financial statements as at December 31, 2004 and for the year then ended, prior
to the restatement described in Note 11, were audited by other auditors who
expressed an opinion without reservation on those statements in their report
dated April 22, 2005.  We have audited the adjustments that were applied to
restate the 2004 financial statements and in our opinion, such adjustments are,
in all material respects, appropriate and have been properly
applied.
 
 
 
 
 Vancouver,
Canada,                                                                                                                      
Chartered Accountants
 April 20,
2007 except for Note 11 which is
 as of May
30, 2008.
 
 
  A Member of Ernst & Young
Global
  -F3-


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company – See Note 1)


CONSOLIDATED
BALANCE SHEETS


AS
AT DECEMBER 31, 2006 AND 2005


(Expressed
in Canadian Dollars)








2006
              $
            
            
            
            2005
              $A
      S S E T SCURRENT
      ASSETSCash
            
            
            531,126
            
            
            
            522,327Short-term
      investments (Note 3)
            
            
            100,000
            
            
            
            -Marketable
      securities (Note 4)
            
            
            33,000
            
            
            
            -Other
      receivables, prepaids and deposits (Note 8)
            
            
            157,318
            
            
            
            136,218Subscription
      receivable (Notes 6 and 13)
            
            
            166,250
            
            
            
            -987,694
            
            
            
            658,545MINERAL PROPERTIES AND DEFERRED
      COSTS(Note 5)
            
            
            3,356,158
            
            
            
            3,184,8444,343,852
            
            
            
            3,843,389L
      I A B I L I T I E SCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities (Note 8)
            
            
            116,963
            
            
            
            142,275FUTURE INCOME TAX LIABILITIES(Note 10)
            
            
            61,794
            
            
            
            154,881178,757
            
            
            
            297,156S
      H A R E H O L D E R S ' E Q U I T YSHARE CAPITAL(Note
      6)
            
            
            7,804,571
            
            
            
            5,854,335WARRANTS(Note
      6)
            
            
            498,025
            
            
            
            -CONTRIBUTED SURPLUS(Note 7)
            
            
            524,845
            
            
            
            433,995DEFICIT
            
            
            (4,662,346
            )
            
            
            (2,742,097
            )4,165,095
            
            
            
            3,546,2334,343,852
            
            
            
            3,843,389





COMMITMENTS(Note
5)





APPROVED
BY THE BOARD


/s/
      Nikolaos Cacos
            ,
      Director/s/
      Jerry Minni
            ,
      Director




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


-F4-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company – See Note 1)
 CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





2006
              $
            
            
            
            2005
              $
            
            
            
            2004
              $EXPENSESAccounting
      and audit
            
            
            38,756
            
            
            
            28,385
            
            
            
            26,080Corporate
      development and investor relations
            
            
            227,747
            
            
            
            252,981
            
            
            
            242,804General
      exploration
            
            
            296,810
            
            
            
            199,264
            
            
            
            18,318Legal
            
            
            28,841
            
            
            
            55,058
            
            
            
            63,058Management
      fees
            
            
            85,833
            
            
            
            73,500
            
            
            
            72,400Office
      and sundry
            
            
            122,639
            
            
            
            92,724
            
            
            
            51,173Rent
            
            
            90,099
            
            
            
            73,573
            
            
            
            29,511Salaries
            
            
            372,063
            
            
            
            294,170
            
            
            
            154,074Stock
      based compensation
            
            
            90,850
            
            
            
            52,500
            
            
            
            131,805Transfer
      agent and regulatory fees
            
            
            26,753
            
            
            
            28,052
            
            
            
            27,258Travel
            
            
            42,358
            
            
            
            37,721
            
            
            
            47,0181,422,749
            
            
            
            1,187,928
            
            
            
            863,499LOSS
      BEFORE OTHER ITEMS
            
            
            (1,422,749
            )
            
            
            (1,187,928
            )
            
            
            (863,499
            )OTHER
      EXPENSE (INCOME)Foreign
      exchange
            
            
            2,910
            
            
            
            36,624
            
            
            
            25,104Interest
      income
            
            
            (30,924
            )
            
            
            (15,001
            )
            
            
            (14,271
            )Write-off
      of mineral properties (Notes 5(b) and (d))
            
            
            525,514
            
            
            
            225,000
            
            
            
            -497,500
            
            
            
            246,623
            
            
            
            (10,833
            )LOSS
      FOR THE YEAR
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )DEFICIT
      - BEGINNING OF YEAR
            
            
            (2,742,097
            )
            
            
            (1,307,546
            )
            
            
            (433,214
            )DEFICIT
      - END OF YEAR
            
            
            (4,662,346
            )
            
            
            (2,742,097
            )
            
            
            (1,307,546
            )BASIC
      AND DILUTED LOSS PER SHARE
            
            $
            (0.10
            )
            
            $
            (0.09
            )
            
            $
            (0.07
            )WEIGHTED
      AVERAGE NUMBER OF
              COMMON
      SHARES OUTSTANDING
            
            
            19,169,121
            
            
            
            15,916,822
            
            
            
            13,192,736














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


-F5-


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company – See Note 1)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004


(Expressed
in Canadian Dollars)











2006
              $
            
            
            
            2005
              $
            
            
            
            2004
              $CASH
      PROVIDED FROM (USED FOR)OPERATING
      ACTIVITIESLoss
      for the year
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )Adjustment
      for item not affecting cashWrite-off
      of mineral properties
            
            
            525,514
            
            
            
            225,000
            
            
            
            -Stock
      based compensation
            
            
            90,850
            
            
            
            52,500
            
            
            
            131,805(1,303,885
            )
            
            
            (1,157,051
            )
            
            
            (742,527
            )Change
      in non-cash working capital balances
            
            
            (46,412
            )
            
            
            25,940
            
            
            
            (103,461
            )(1,350,297
            )
            
            
            (1,131,111
            )
            
            
            (845,988
            )FINANCING
      ACTIVITIESIssuance
      of common shares and warrants
            
            
            2,179,900
            
            
            
            1,232,199
            
            
            
            2,851,391Share
      and warrant issuance costs
            
            
            (23,889
            )
            
            
            (61,751
            )
            
            
            (210,257
            )2,156,011
            
            
            
            1,170,448
            
            
            
            2,641,134INVESTING
      ACTIVITIESExpenditures
      on mineral properties and deferred costs
            
            
            (696,915
            )
            
            
            (1,196,242
            )
            
            
            (1,230,962
            )(Increase)
      Decrease in short-term investments
            
            
            (100,000
            )
            
            
            1,000,000
            
            
            
            (1,000,000
            )Purchase
      of equipment
            
            
            -
            
            
            
            -
            
            
            
            (2,797
            )(796,915
            )
            
            
            (196,242
            )
            
            
            (2,233,759
            )(DECREASE)
      INCREASE IN CASH
              DURING THE YEAR
            
            
            8,799
            
            
            
            (156,905
            )
            
            
            (438,613
            )CASH
      - BEGINNING OF YEAR
            
            
            522,327
            
            
            
            679,232
            
            
            
            1,117,845CASH
      - END OF YEAR
            
            
            531,126
            
            
            
            522,327
            
            
            
            679,232





SUPPLEMENTARY
CASH FLOW INFORMATION


Income
      taxes paid in cash
            
            
            -
            
            
            
            -
            
            
            
            -Interest
      paid in cash
            
            
            -
            
            
            
            -
            
            
            
            -




ADDITIONAL SUPPLEMENTARY CASH FLOW
INFORMATION(Note 12)




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


-F6-


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004


(Expressed
in Canadian Dollars)





1.
            NATURE
      OF OPERATIONS AND GOING CONCERN





The
Company was incorporated on April 11, 2000 in the Province of British Columbia
and was transitioned under the Business Corporations Act (BC) on June 17,
2004.  The Company is a natural resource company engaged in the
acquisition and exploration of resource properties in the
Americas.  The Company presently has no proven or probable reserves
and on the basis of information to date, it has not yet determined whether these
properties contain economically recoverable ore
reserves.  Consequently the Company considers itself to be an
exploration stage company.





The
amounts shown as mineral property interests represent costs incurred to date,
less amounts amortized and/or written off, and do not necessarily represent
present or future values.  The underlying value of the mineral
properties and deferred costs is entirely dependent on the existence of
economically recoverable reserves, securing and maintaining title and beneficial
interest in the properties, the ability of the Company to obtain the necessary
financing to advance the properties beyond the exploration stage, and future
profitability of the properties.  The Company presently has adequate
resources to maintain its core activities for the next fiscal year but may not
have sufficient working capital to fund all its planned exploration
activities.  The Company will continue to rely on successfully
completing additional equity financing (see note 13).





These
consolidated financial statements have been prepared on a going concern basis in
accordance with Canadian generally accepted accounting principles (“Canadian
GAAP”).  The going concern basis of presentation assumes the Company
will continue to operate for the foreseeable future and will be able to realize
its assets and discharge its liabilities and commitments in the normal course of
business.  These consolidated financial statements do not reflect
adjustments to the carrying value of assets and liabilities, the reported income
and expenses and balance sheet classifications used that would be necessary if
the going concern assumption were not appropriate.  Such adjustments
could be material.








2.           SIGNIFICANT
ACCOUNTING POLICIES





Basis
of Presentation





These
consolidated financial statements have been prepared in accordance with Canadian
GAAP.  Significant measurement differences between Canadian GAAP and
those that would be applied under United States generally accepted accounting
principles (“US GAAP”) as they affect the Company are disclosed in Note
11.





Use
of Estimates





The
preparation of financial statements in conformity with Canadian GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the period.  Significant areas requiring the use of
management estimates relate to the determination of environmental obligations,
the recoverability of mineral properties, and the assumptions used in the
determination of the fair value of stock based compensation.  Actual
results may differ from these estimates.





Principles
of Consolidation





These
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries.  The principal subsidiaries are Recursos de
los Andes S.A.C. (Peru), Amera-Chile Sociedad Contractual Minera (Chile) and
Amera Resources Inc. (US).  The Company operates in Argentina as a
registered branch.  All inter-company balances and transactions have
been eliminated.




-F7-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)




2.           SIGNIFICANT ACCOUNTING
POLICIES (continued)





Short-term
Investments





Short-term
investments include money market investments maturing between 3 and 12 months
from the date of initial investment.





Mineral
Properties and Deferred Costs





Direct
costs related to the acquisition and exploration of mineral properties held or
controlled by the Company are deferred on an individual property basis until the
viability of a property is determined.  Administration costs and
general exploration costs are expensed as incurred.  When a property
is placed in commercial production, deferred costs will be depleted using the
units-of-production method.  Management of the Company periodically
reviews the recoverability of the capitalized mineral
properties.  Management takes into consideration various information
including, but not limited to, results of exploration activities conducted to
date, estimated future metal prices, and reports and opinions of outside
geologists, mine engineers and consultants.  When it is determined
that a project or property will be abandoned then costs are written-off, or if
its carrying value has been impaired, then the costs are written down to fair
value.





Mineral
property acquisition costs include cash costs and the fair market value of
common shares, based on the trading price of the shares issued for mineral
property interests, pursuant to the terms of the related property
agreements.  Payments relating to a property acquired under an option
or joint venture agreement are made at the sole discretion of the Company, and
are recorded as mineral property acquisition costs upon payment.





The
Company accounts for foreign value added taxes paid as part of mineral
properties and deferred costs. The recovery of these taxes will commence on the
beginning of foreign commercial operations.  Should these amounts be
recovered they would be treated as a reduction in carrying costs of mineral
properties and deferred costs.





For
certain acquisitions and other payments for mineral property interests, the
Company records a future income tax liability and a corresponding adjustment to
the related asset carrying amount.





Although
the Company has taken steps to verify title to mineral properties in which it
has an interest, these procedures do not guarantee the Company's
title.  Such properties may be subject to prior agreements or
transfers and title may be affected by undetected defects.





From time
to time, the Company acquires or disposes of properties pursuant to the terms of
option agreements. Options are exercisable entirely at the discretion of the
optionee and, accordingly, are recorded as mineral property costs or recoveries
when the payments are made or received.





Asset
Retirement Obligations





Asset
retirement obligations are recognized when a legal or constructive obligation
arises.  This liability is recognized at the fair value of the asset
retirement obligation.  When the liability is initially recorded the
Company capitalizes the cost by increasing the carrying amount of the related
long-lived assets.  Over time the liability is accreted to its present
value each period, and the capitalized cost is amortized over the useful life of
the related asset.  Upon settlement of theliability, the Company may
incur a gain or loss.  As at December 31, 2006 the Company does not
have any asset retirement obligations.





-F8-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)


2.
            SIGNIFICANT ACCOUNTING
      POLICIES (continued)





Long-Lived
Assets Impairment





Long-lived
      assets are reviewed for impairment when events or changes in circumstances
      suggest their carrying value has become impaired.  Management
      considers assets to be impaired if the carrying value exceeds the
      estimated undiscounted future cash flows expected to result from the use
      of the asset and its eventual disposition.  If impairment is
      deemed to exist, the assets will be written down to fair
      value.  Fair value is generally determined using a discounted
      cash flow analysis.





Translation
of Foreign Currencies





The
Company's foreign operations are integrated and are translated using the
temporal method.  Under this method, the Company translates monetary
assets and liabilities denominated in foreign currencies at period-end
rates.  Non-monetary assets and liabilities are translated at
historical rates.  Revenues and expenses are translated at average
rates in effect during the period except for depreciation and amortization which
are translated at historical rates.  The resulting gains or losses are
reflected in operating results in the period of translation.





Fair
Values of Financial Instruments





The fair
value of the Company’s financial instruments consisting of short-term
investments, other receivables, subscription receivable and accounts payable and
accrued liabilities approximate their carrying values due to the short-term
nature of those instruments.  As of December 31, 2006, the market
value of marketable securities was $40,000.





Concentration
of Credit Risk





Financial
instruments that potentially subject the Company to a significant concentration
of credit risk consist primarily of cash, short-term investments and other
receivables.  The Company limits its exposure to credit loss by
placing its cash and short-term investments with major financial
institutions.





Income
Taxes





The
Company uses the liability method of accounting for future income
taxes.  Under this method of tax allocation, future income tax
liabilities and assets are recognized for the estimated tax consequences
attributable to differences between the amounts reported in the consolidated
financial statements and their respective tax bases, using substantively enacted
tax rates and laws that are expected to be in effect in the periods in which the
future income tax assets or liabilities are expected to be settled or
realized.  The effect of a change in income tax rates on future income
tax liabilities and assets is recognized in income in the period that the change
occurs.  Potential future income tax assets are not recognized, as
they are not considered likely to be realized.





Loss
Per Share





Loss per
share is calculated on the weighted average number of common shares issued and
outstanding during the year.  The effect of potential issuances of
shares under options and warrants would be anti-dilutive and therefore basic
earnings and diluted losses per share are the same.  Information
regarding securities that could potentially dilute basic earnings per share in
the future is presented in Note 6.


-F9-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





2.
            SIGNIFICANT ACCOUNTING
      POLICIES (continued)





Stock
Based Compensation





Stock-based
compensation is accounted for at fair value as determined by the Black-Scholes
option pricing model using amounts that are believed to approximate the
volatility of the trading price of the Company’s stock, the expected lives of
awards of stock-based compensation, the fair value of the Company’s stock and
the risk-free interest rate.  The estimated fair value of awards of
stock-based compensation is charged to expense over the vesting period, with
offsetting amounts recognized as contributed surplus.





Comparative
Figures





Certain
of the prior year comparatives have been reclassified to conform with the
current year’s presentation.








3.           
SHORT-TERM INVESTMENTS





As at
December 31, 2006, the Company held short-term investments comprised of the
following:





December
      31, 2006Maturity
            
            Principal
              $12
      month term deposit
              -
      3.7% annual interest rate
            March
      27, 2007
            
            100,000





The term
deposit is fully redeemable in full or portion at the Company’s option without
penalty.  Interest is paid on amounts redeemed subsequent to 30 days
from the date of investment.








4.           MARKETABLE
SECURITIES





At
December 31, 2006, marketable securities had a quoted market value of
$40,000.The
Company holds these marketable securities as a result of entering into an option
agreement for its Walker Lane mineral property holdings (see Note 5
(e)).








-F10-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





5.
            MINERAL
      PROPERTIES AND DEFERRED COSTS





December
      31, 2006
            
            
            December
      31, 2005Acquisition
              Costs
              $
            
            
            Exploration
              Expenditures
              $
            
            
            Total
              $
            
            
            Acquisition
              Costs
              $
            
            
            Exploration
              Expenditures
              $
            
            
            Total
              $ArgentinaMogote Property
            
            
            1,056,309
            
            
            
            1,255,195
            
            
            
            2,311,504
            
            
            
            891,062
            
            
            
            1,242,942
            
            
            
            2,134,004PeruCocha
            
            
            28,768
            
            
            
            401,918
            
            
            
            430,686
            
            
            
            10,211
            
            
            
            14,094
            
            
            
            24,305Cruz de Mayo
            
            
            99,566
            
            
            
            54,910
            
            
            
            154,476
            
            
            
            26,079
            
            
            
            27,754
            
            
            
            53,833Other
            
            
            50,664
            
            
            
            52,988
            
            
            
            103,652
            
            
            
            25,930
            
            
            
            43,251
            
            
            
            69,181Esperanza
Property
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            186,741
            
            
            
            279,615
            
            
            
            466,356USAWalker Lane,
    Nevada
            
            
            97,010
            
            
            
            21,336
            
            
            
            118,346
            
            
            
            97,010
            
            
            
            21,173
            
            
            
            118,1831,332,317
            
            
            
            1,786,347
            
            
            
            3,118,664
            
            
            
            1,237,033
            
            
            
            1,628,829
            
            
            
            2,865,862Proceeds
      on optioning of
              mineral
    properties
            
            
            (33,000
            )
            
            
            -
            
            
            
            (33,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -Foreign
      value added tax
            
            
            -
            
            
            
            208,700
            
            
            
            208,700
            
            
            
            -
            
            
            
            164,101
            
            
            
            164,101Future
      income tax
            
            
            36,540
            
            
            
            25,254
            
            
            
            61,794
            
            
            
            81,270
            
            
            
            73,611
            
            
            
            154,8811,335,857
            
            
            
            2,020,301
            
            
            
            3,356,158
            
            
            
            1,318,303
            
            
            
            1,866,541
            
            
            
            3,184,844





See attached Mineral Property Interests
and Deferred Costs Schedules.





(a)
            The
      Company has an option agreement with Golden Arrow Resources Corporation
      (“Golden Arrow”) to earn a 51% interest in eight mineral concessions,
      comprising 8,009 hectares (the “Mogote Property”), located in San Juan
      Province, Argentina.  The Company must issue a total of
      1,650,000 common shares and conduct a minimum of US $1.25 million of
      exploration expenditures, including work programs and underlying option
      payments (the final underlying option payment was paid on June 6, 2005),
      as follows:





Shares
      to
              be
      Issued
            
            Exploration
              Expenditures
              US
      $
            
            Date100,000
            
            -
            
            Issued
      in 2003100,000
            
            250,000
            
            Issued
      in 2004250,000
            
            300,000
            
            Issued
      in 2005300,000
            
            300,000
            
            Issued
      on July 7, 2006900,000
            
            400,000
            
            July
      1, 20071,650,000
            
            1,250,000





On April
8, 2004, the Company and Golden Arrow entered into a further agreement on the
Mogote property.  The Company can earn an additional 24% interest, for
a total 75% interest, after earning the initial 51% interest, by issuing 300,000
common shares (issued) and conducting an additional US $3 million of exploration
expenditures, as follows:





-F11-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





5.
            MINERAL PROPERTIES AND DEFERRED
      COSTS(continued)





US
      $
            Date1,000,000
            Completed1,000,000
            May
      30, 2006 (revised to May 30, 2007)1,000,000
            May
      30, 2007 (revised to May 30, 2008)3,000,000





The
Company records the exchange amount of the shares issued at the time of the
issuance as acquisition costs in mineral properties and deferred costs
representing the fair value of consideration given.





During
the year ended December 31, 2006, the Company and Golden Arrow revised certain
terms of option agreement, the US$1,000,000 property expenditures required by
May 30, 2006 are now extended to May 30, 2007 and the US$1,000,000 property
expenditures required by May 30, 2007 are now extended to May 30,
2008.  In return for granting of the extension, 10% of any payments in
terms of cash or stock received by the Company from a third party who enters
into an agreement regarding the Mogote property, will be paid to Golden
Arrow.





(b)
            On
      August 24, 2004 the Company entered into an option agreement with Arcturus
      Ventures Inc. (“Arcturus”) whereby it may earn up to an 80% undivided
      interest in the 3,000 hectare Esperanza Property located in northern
      Arequipa Province, Peru.  The Esperanza property carrying value
      of $511,883 was written off during the year ended December 31, 2006, and
      the Company has terminated its option agreement with
    Arcturus.





(c)
            On
      April 11, 2005 the Company entered into an option agreement whereby it may
      earn up to 100% undivided interest in the Cruz de Mayo project located in
      the southern portion of the Department of Cuzco in Peru.  To
      earn the interest in the property the Company must pay US $150,000 in
      option payments over the period of four years and incur US $1,500,000
      expenditures over the four years as
follows:





Option
      Payments
              US
      $
            Exploration
              Expenditures
              US
      $
            Date35,000
            -
            April
      11, 2005 (paid on signing)25,000
            200,000
            April
      11, 2007 (extended to June 30, 2007)40,000
            550,000
            April
      11, 200850,000
            750,000
            April
      11, 2009150,000
            1,500,000





(d)
            During
      the year ended December 31, 2006, the Company wrote off the carrying value
      of $13,631 of a property in Peru as the Company decided to drop the
      mineral claim for the property.





-F12-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





5.           MINERAL PROPERTIES AND DEFERRED COSTS(continued)





(e)
            During
      the year ending December 31, 2006, the Company optioned to Astral Mining
      Corporation (“Astral”) the Walker Lane Properties in
      Nevada.  Under the terms of the agreement, Astral may earn up to
      an 80% undivided interest in the Walker Lane Properties.  An
      initial 65% interest in the properties may be earned by incurring
      US$2,500,000 in work expenditures over four years and issuing 500,000
      common shares (100,000 shares were issued on August 4, 2006) to the
      Company.  Astral may then elect to earn an additional 15%
      interest, by issuing a further 500,000 shares and completing a bankable
      feasibility study, within three years.  The Company received
      approval from TSX Venture Exchange (TSX.V) for this
    agreement.





See Note
13.








6.           SHARE
CAPITAL





Authorized
      - unlimited common shares without par valueIssued
      - common shares
            
            Number
            
            
            
            $Balance,
      December 31, 2003
            
            
            9,086,832
            
            
            
            1,228,395Private
      placements
            
            
            4,007,000
            
            
            
            2,891,350Exercise
      of warrants
            
            
            288,750
            
            
            
            143,650Greenshoe
      option
            
            
            225,000
            
            
            
            101,250For
      agent’s fees
            
            
            55,300
            
            
            
            44,240For
      mineral properties
            
            
            425,000
            
            
            
            329,250Less
      share issue costs
            
            
            -
            
            
            
            (210,257
            )Balance,
      December 31, 2004
            
            
            14,087,882
            
            
            
            4,527,878Private
      placements
            
            
            1,650,000
            
            
            
            907,500Exercise
      of warrants
            
            
            508,248
            
            
            
            326,649Exercise
      of options
            
            
            11,000
            
            
            
            8,250For
      agent’s fees
            
            
            41,962
            
            
            
            23,078For
      mineral properties
            
            
            300,000
            
            
            
            143,500Contributed
      surplus reallocated on exercise of options
            
            
            -
            
            
            
            2,310Less
      share issue costs
            
            
            -
            
            
            
            (84,830
            )Balance,
      December 31, 2005
            
            
            16,599,092
            
            
            
            5,854,335Private
      placements
            
            
            3,647,000
            
            
            
            1,629,450Warrants
      valuation
            
            
            -
            
            
            
            (503,765
            )Exercise
      of warrants
            
            
            1,194,500
            
            
            
            716,700For
      agent’s fees
            
            
            8,000
            
            
            
            2,800For
      mineral properties
            
            
            300,000
            
            
            
            126,000Less
      share issue costs
            
            
            -
            
            
            
            (20,949
            )Balance,
      December 31, 2006
            
            
            21,748,592
            
            
            
            7,804,571







-F13-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





6.           SHARE CAPITAL(continued)





(a)
            During
      the year ended December 31, 2006, the Company
  completed:





i)
            a
      private placement financing of 1,412,000 units at $0.60 per unit, for
      gross proceeds of $847,200.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $0.65 per share on or before January 30,
      2008.  The fair value assigned to the warrants was $352,012 net
      of issue costs of $6,675.  The warrants were valued using the
      Black-Scholes Pricing Model at $0.25 per warrant on the following
      assumptions: dividend yield 0%, risk-free rate 4.0%, expected volatility
      115% and expected life of 12
months.





ii)
            a
      private placement financing of 2,235,000 units at $0.35 per unit, for
      gross proceeds of $782,250.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $0.45 per share on or before December 8, 2008.  In
      addition, the Company issued 48,000 Agent's Warrants at $0.45 and 8,000
      Agent's Units at $0.35 per Unit as a Corporate Finance
      Fee.  There were also cash commissions and administration fees
      paid of $14,000.





The fair value of warrants and agent’s
warrants were as follows:




1)
              value
      assigned to 2,235,000 warrants was $142,378, net of issue costs of
      $2,670





2)
            value
      assigned to the 48,000 agent’s warrants and the 8,000 warrants granted as
      a component of the agent’s units was
$3,635





The
Black-Scholes Pricing Model was used to value the warrants and agent’s warrants.
The warrants and agents warrant’s were valued at $0.07 based on the following
assumptions: dividend yield 0%, risk-free rate 4.0%, expected volatility 66% and
expected life of 12 months.





At
December 31, 2006, the Company has recorded a subscription receivable balance of
$166,250 relating to proceeds from this private placement which had not been
received at year end.  These proceeds were received in January 2007
(see Note 13 below).





(b)
            During
      the year ended December 31, 2005, the Company completed a private
      placement of 1,650,000 units at $0.55 per unit, for gross proceeds of
      $907,500.  Each unit consisted of one common share and one half
      non-transferable share purchase warrant.  Each whole warrant
      entitles the holder to purchase a common share for $0.60 per share on or
      before March 18, 2006.  The Company also issued 66,750 Agent's
      Warrants at $0.60 and 14,962 Agent's Units at $0.55 per Unit and 27,000
      Units at $0.55 per Unit as a Corporate Finance Fee.  There were
      also cash commissions and administration fees paid of
    $61,751.





The
Company applied the residual approach and allocated the total proceeds to the
common shares and $nil to the attached warrants.





-F14-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)


6.           SHARE CAPITAL(continued)





(c)
            During
      the year ended December 31, 2004, the
Company:





i)
            completed
      a private placement financing of 1,257,000 units at $0.55 per unit, for
      gross proceeds of $691,350.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $0.67 per share on or before January 20, 2005.  As at
      December 31, 2003, $658,350 had been received by the Company on account of
      the private placement and had been recorded as share subscriptions
      received;





ii)
            completed
      a private placement financing of 2,750,000 units at $0.80 per unit, for
      gross proceeds of $2,200,000.  Each unit comprised one common
      share and one non-transferable share purchase warrant.  Each
      warrant entitles the holder to purchase one additional common share at a
      price of $1.00 per share for a period of one year from date of issue and
      at $1.20 per share for a period of two years from date of
      issue.  In connection with the private placement the Company
      paid cash commissions and finder’s fees totalling $96,560, issued 55,300
      units on the same terms and basis as the private placement, and issued
      168,000 warrants.  Each warrant entitles the holder to purchase
      one common share of the Company at $0.90 per share on or before March 31,
      2006;





iii)
            issued
      225,000 units on the exercise of a greenshoe option, which has been
      granted under the Company’s initial public offering, at $0.45 per unit,
      for $101,250.  Each unit comprised one common share and
      one-transferable share purchase warrant.  Two warrants entitle
      the agent to purchase one additional common share, at a price of $0.50 per
      share, on or before September 1, 2004.  During the year ended
      December 31, 2004, the warrants expired without
  exercise.





(d)           Stock
options and stock based compensation




The
Company has established a rolling stock option plan (the "Plan"), in which the
maximum number of common shares which can be reserved for issuance under the
Plan is 10% of the issued and outstanding shares of the Company. The exercise
price of the options is set at the Company's closing share price on the grant
date, less allowable discounts in accordance with the policies of the TSX
Venture Exchange.  The stock options granted during 2006 are subject
to a four month hold period and exercisable for a period of five
years.  A summary of the Company’s outstanding options at December 31,
2006, 2005 and 2004 and the changes for the years ending on those dates is
presented below:








-F15-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)


6.           SHARE CAPITAL(continued)





(d)           Stock
options and stock based compensation (continued)





2006
            
            2005
            
            2004Options
              Outstanding
              and
              Exercisable
            
            Weighted
              Average
              Exercise
              Price
              $
            
            Options
              Outstanding
              and
              Exercisable
            
            Weighted
              Average
              Exercise
              Price
              $
            
            Options
              Outstanding
              and
              Exercisable
            
            Weighted
              Average
              Exercise
              Price
              $Balance,
              Beginning
      of year
            1,504,500
            
            0.70
            
            1,354,500
            
            0.70
            
            900,000
            
            0.60Granted
            415,000
            
            0.60
            
            250,000
            
            0.75
            
            454,500
            
            0.90Exercised
            -
            
            -
            
            (11,000)
            
            0.75
            
            -
            
            -Cancelled
            (75,000)
            
            0.75
            
            (89,000)
            
            0.75
            
            -
            
            -Forfeited
            (20,000)
            
            0.60
            
            -
            
            -
            
            -
            
            -Balance,
      end of year
            1,824,500
            
            0.68
            
            1,504,500
            
            0.70
            
            1,354,500
            
            0.70





Stock
options outstanding and exercisable at December 31, 2006, are as
follows:





Number
      of Options
              Outstanding
      and
              Exercisable
            Exercise
      Price
            Expiry
      Date900,000
            $0.60
            December
      12, 2008454,500
            $0.90
            April
      2, 200975,000
            $0.75
            March
      21, 2010395,000
            $0.60
            July
      11, 20111,824,500





During
fiscal 2006, the Company granted stock options at $0.60 per share to its
directors, employees and consultants to acquire 415,000 common shares (2005 -
250,000;  2004 - 454,500) and recorded stock based compensation
expense of $90,850 (2005 - $52,500, 2004 - $131,805).  The fair value
of stock options granted is estimated on the dates of grants using the
Black-Scholes Option Pricing Model with the following assumptions used for the
grants made during the year:





2006
            2005
            2004Risk-free
      interest rate
            4.00%
            3.10%
            2.18%Estimated
      volatility
            97%
            75%
            36%Expected
      life
            2.5
      years
            2.5
      years
            2.5
      yearsExpected
      dividend yield
            0%
            0%
            0%





The
weighted average fair value per share of stock options, calculated using the
Black-Scholes Option Pricing Model, granted during the year was $0.23 per share
(2005 - $0.21; 2004 - $0.29).  Option pricing models require the use
of estimates and assumptions including the expected volatility. Changes in the
underlying assumptions can materially affect the fair value estimates and,
therefore, existing models do not necessarily provide reliable measure of the
fair value of the Company’s stock options.





-F16-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)


6.           SHARE CAPITAL(continued)





(e)
            Warrants





A continuity summary of warrant equity
is presented below:




$Balance,
      December 31, 2005
            
            
            -Warrant valuation from private
      placement warrants granted
            
            
            503,765Warrant valuation from agent’s
      warrants granted
            
            
            3,635Warrant issue
      costs
            
            
            (9,375
            )Balance,
      December 31, 2006
            
            
            498,025





A
      summary of the number of common shares reserved pursuant to the Company’s
      outstanding warrants and agents warrants outstanding at December 31, 2006,
      2005 and 2004 and the changes for the years ending on those dates is as
      follows:





2006
              Number
            
            
            2005
              Number
            
            
            2004
              NumberBalance,
      beginning of year
            
            
            3,687,783
            
            
            
            4,230,300
            
            
            
            965,000Issued
            
            
            3,703,000
            
            
            
            912,731
            
            
            
            4,342,800Exercised
            
            
            (1,194,500
            )
            
            
            (508,248
            )
            
            
            (288,750
            )Expired
            
            
            (2,493,283
            )
            
            
            (947,000
            )
            
            
            (788,750
            )Balance,
      end of year
            
            
            3,703,000
            
            
            
            3,687,783
            
            
            
            4,230,300





During
the year ended December 31, 2006 the Company requested and was granted
permission by the TSXV to amend the exercise price for 2,750,000 of $1.20
warrants with March 24, 2006 and March 31, 2006 expiry
dates.  The amended price was $0.60 per warrant.  There was
no extension to the term of the warrants.





Common
shares reserved pursuant to warrants and agent warrants outstanding at December
31, 2006 are as follows:





Number
            
            Exercise
      Price
              $
            
            Expiry
      Date1,412,000
            
            0.65
            
            January
      30, 20082,291,000
            
            0.45
            
            December
      8, 20083,703,000








-F17-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)


7.           CONTRIBUTED
SURPLUS





A continuity summary of contributed
surplus is presented below:




$Balance,
      December 31, 2003
            
            
            252,000Contributed Surplus as a
      result of stock options granted
            
            
            131,805Balance,
      December 31, 2004
            
            
            383,805Contributed Surplus as a
      result of stock options granted
            
            
            52,500Contributed Surplus
      reallocated on exercise of stock options
            
            
            (2,310
            )Balance,
      December 31, 2005
            
            
            433,995Contributed Surplus as a
      result of stock options granted
            
            
            95,450Contributed Surplus reversed
      as a result of stock options forfeited
            
            
            (4,600
            )Balance,
      December 31, 2006
            
            
            524,845








8.           RELATED
PARTY TRANSACTIONS





Effective
      January 1, 2005, the Company engaged Grosso Group Management Ltd.,
      (“Grosso Group”) to provide services and facilities to the
      Company.  The Grosso Group is a private company equally owned by
      the Company, IMA Exploration Inc. (IMA), Golden Arrow, Gold Point Energy
      Corp and Astral.  The Grosso Group provides its shareholder
      companies with geological,corporate
      development, administrative and management services on a cost recovery
      basis.





During
      the year ended December 31, 2006, the Company incurred fees of $533,469
      (2005 - $377,410) to the Grosso Group: $480,545 (2005 - $290,858) was paid
      in twelve monthly payments and $52,924 (2005 - $86,552) is included in
      accounts payable as a result of a review of the allocation of the Grosso
      Group costs to the member companies for the year.   In
      addition, included in other receivables, prepaids and deposits is a
      $95,000 (2005 - $95,000) deposit to the Grosso Group for the purchase of
      equipment and leasehold improvements and for operating working
      capital.





Effective
January 2, 2004, the Company entered into an agreement with the President of the
Company for his services.  Under the agreement the President was paid
$6,125 per month.  On April 15, 2006, the agreement was modified so
that the monthly fee was payable to a private company controlled by the
President and on May 1, 2006 the monthly fee increased to
$7,292.  During the year ended December 31, 2006, the Company paid
$85,833 (2005 - $73,500; 2004 - $72,400) to the President or to the private
company controlled by the President.  The agreement also provides
that, in the event the services are terminated without cause or upon a change in
control of the Company, a termination payment would include eighteen months of
compensation plus a bonus amount agreed to by the parties.  During the
year the Company paid $Nil (2005 - $4,298; 2004 - $540) for consulting services
performed by a former director of the Company.





Prior to
the signing of the Administrative Services Agreement with the Grosso Group in
2005 the Company shared office facilities with IMA.  During the year
ended December 31, 2004, the Company was charged $108,390 by IMA for shared rent
and administration costs.  During the year ended December 31, 2004,
the Company paid $111,000 for professional fees (including a $25,000 relocation
allowance), billed by an officer of the Company.  Of this amount
$42,000 was reimbursed by IMA as an allocation of the professional
services.





All of
the related party transactions and balances in these consolidated financial
statements arose in the normal course of operations and are measured at the
exchange amount, which is the amount of consideration established and agreed to
by the related parties.




-F18-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)
  9.           SEGMENTED
INFORMATION





The
Company is primarily involved in mineral exploration activities in Argentina,
Peru and the USA.  The Company is in the exploration stage and,
accordingly, has no reportable segment revenues or operating revenues for the
years ended December 31, 2006 and 2005.





The
Company’s total assets are segmented geographically as follows:





December
      31, 2006Corporate
              Canada
              $
            
            Argentina
              $
            
            Peru
              $
            
            USA
              $
            
            Total
              $Current
      assets
            923,326
            
            714
            
            63,654
            
            -
            
            987,694Mineral
      properties and
              deferred
      costs
            -
            
            2,450,504
            
            774,353
            
            131,301
            
            3,356,158923,326
            
            2,451,218
            
            838,007
            
            131,301
            
            4,343,852





December
      31, 2005Corporate
              Canada
              $
            
            Argentina
              $
            
            Peru
              $
            
            USA
              $
            
            Total
              $Current
      assets
            572,465
            
            54,120
            
            31,960
            
            -
            
            658,545Mineral
      properties and
              deferred
      costs
            -
            
            2,270,735
            
            731,983
            
            182,126
            
            3,184,844572,465
            
            2,324,855
            
            763,943
            
            182,126
            
            3,843,389








10.
            INCOME
      TAXES





The
recovery of income taxes shown in the consolidated statements of operations and
deficit differs from the amounts obtained by applying statutory rates to the
loss before provision for income taxes due to the following:


2006
              $
            
            
            
            2005
              $
            
            
            
            2004
              $Statutory
      tax rate
            
            
            34.12
            %
            
            
            34.12
            %
            
            
            35.62
            %Loss
      for the year
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )Provision
      for income taxes based on statutory
              Canadian
      combined federal and provincial
              income
      tax rates
            
            
            (655,189
            )
            
            
            (489,469
            )
            
            
            (311,137
            )Differences
      in foreign tax rates
            
            
            30,315
            
            
            
            (7,210
            )
            
            
            (1,170
            )Non-deductible
      items
            
            
            228,677
            
            
            
            -
            
            
            
            -Losses
      for which an income tax benefit
              has
      not been recognized
            
            
            396,197
            
            
            
            496,679
            
            
            
            312,307-
            
            
            
            -
            
            
            
            -


-F19-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





10.
            INCOME TAXES(continued)





The
significant components of the Company’s future tax assets are as
follows:





2006
              $
            
            
            
            2005
              $Future
      income tax assetsShare
      and warrant issuance costs
            
            
            60,826
            
            
            
            95,867Resource
      deductions
            
            
            84,526
            
            
            
            -Operating
      loss carryforward
            
            
            1,113,246
            
            
            
            659,0441,258,598
            
            
            
            754,911Valuation
      allowance for future tax assets
            
            
            (1,258,598
            )
            
            
            (754,911
            )-
            
            
            
            -





The
realization of income tax benefits related to these potential tax deductions is
uncertain and cannot be viewed as more likely than not.  Accordingly,
no future income tax assets have been recognized for accounting purposes in 2006
and 2005.





Future
Income Tax Liabilities





For
certain acquisitions and other payments for mineral property interests, the
Company records a future income tax liability and a corresponding adjustment to
the related asset carrying amount.  During the year ended December 31,
2006, the Company recorded a reduction of future income tax liability of $93,087
(2005 – increase of $55,124) and a corresponding adjustment to mineral
properties.





2006
              $
            
            
            
            2005
              $Future
      Income Tax Liabilities
            
            
            61,794
            
            
            
            154,881





The
Company has Canadian non-capital loss carryforwards of $3,153,016 that may be
available for tax purposes.  The losses expire as
follows:





Expiry
      Date
            $2007
            1,0842008
            1162009
            26,2582010
            195,8572014
            852,5552015
            978,6272016
            1,098,5193,153,016





-F20-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)




11.
            DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES





(a)
            The
      financial statements of the Company have been prepared in accordance with
      Canadian GAAP which differ in certain material respects from US
      GAAP.  Material differences between Canadian and US GAAP and
      their effect on the Company’s financial statements are summarized in the
      tables below.




2006
              $
              Restated
            
            
            2005
              $
              RestatedConsolidated
      balance sheetsMineral
      properties and deferred costsBalance
      per Canadian GAAP
            
            
            3,356,158
            
            
            
            3,184,844Exploration
      expenditures under
              U.S.
      GAAP (i)
            
            
            (2,023,841
            )
            
            
            (1,947,811
            )Balance
      per US GAAP
            
            
            1,332,317
            
            
            
            1,237,033Future
      income tax liabilitiesBalance
      per Canadian GAAP
            
            
            61,794
            
            
            
            154,881Reversal
      of future income tax liability (i)
            
            
            (61,794
            )
            
            
            (154,881
            )Balance
      per US GAAP
            
            
            -
            
            
            
            -Shareholders'
      equityBalance
      per Canadian GAAP
            
            
            4,165,095
            
            
            
            3,546,233Exploration
      expenditures (i)
            
            
            (2,023,841
            )
            
            
            (1,947,811
            )Reversal
      of future income tax liability (i)
            
            
            61,794
            
            
            
            154,881Accumulated
      other comprehensive income (ii)
            
            
            7,000
            
            
            
            -Balance
      per US GAAP
            
            
            2,210,048
            
            
            
            1,753,303








2006
              $
              Restated
            
            
            2005
              $
              Restated
            
            
            2004
              $
              RestatedConsolidated
      statements of operationsLoss
      for the year under Canadian GAAP
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )Exploration
      expenditures for the year (i)
            
            
            (520,820
            )
            
            
            (1,005,831
            )
            
            
            (764,763
            )Future
      income tax liability (i)
            
            
            (93,087
            )
            
            
            55,124
            
            
            
            99,757Exploration
      expenditures written off during the year which would have been expensed in
      the year incurred (i)
            
            
            318,703
            
            
            
            -
            
            
            
            -Loss
      for the year under US GAAP
            
            
            (2,125,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )Unrealized
      gains on available-for-sale securities (ii)
            
            
            7,000
            
            
            
            -
            
            
            
            -Comprehensive
      loss (iii)
            
            
            (2,208,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )Basic
      and diluted loss per share under US GAAP
            
            $
            (0.12
            )
            
            $
            (0.15
            )
            
            $
            (0.12
            )Weighted
      average number of common shares outstanding
            
            
            19,169,121
            
            
            
            15,916,822
            
            
            
            13,192,736








-F21-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





11.
            DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)








2006
              $
              Restated
            
            2005
              $
              Restated
            
            2004
              $
              RestatedConsolidated
      statements of cash flowsOperating
      activitiesCash
      used per Canadian GAAP
            (1,350,297)
            
            (1,131,111)
            
            (845,988)Exploration
      expenditures (i)
            (540,890)
            
            (950,707)
            
            (994,256)Cash
      used per US GAAP
            (1,891,187)
            
            (2,081,818)
            
            (1,840,244)Investing
      activitiesCash
      used per Canadian GAAP
            (796,915)
            
            (196,242)
            
            (2,233,759)Exploration
      expenditures (i)
            540,890
            
            950,707
            
            994,256Cash
      provided (used) per US GAAP
            (256,025)
            
            754,465
            
            (1,239,503)





Restatement





The
Company concluded that the reconciliation to U.S. GAAP in the financial
statements at December 31, 2006, should be restated to capitalize certain
acquisition costs for mineral properties. This adjustment is reflected in the
Canadian to U.S. GAAP reconciled statements of operations, balance sheets, and
statements of cash flows above.  The Company concluded that the
amendment was material to the 2006 U.S. GAAP reconciliation note and has,
accordingly restated the reconciliation.





The
following table summarizes the changes as a result of the
restatement:





2006
              $
            
            2005
              $
            
            2004
              $Originally
      Reported
            
            Amount
      of Change
            
            Restated
      Amount
            
            Originally
      Reported
            
            Amount
      of Change
            
            Restated
      Amount
            
            Originally
      Reported
            
            Amount
      of Change
            
            Restated
      AmountIncrease
      (decrease) in:Consolidated
      balance sheetsExploration
      expenditures per U.S. GAAP
            
            -
            
            1,332,317
            
            1,332,317
            
            -
            
            1,237,033
            
            1,237,033
            
            -
            
            1,072,998
            
            1,072,998Shareholders’
      equity per U.S. GAAP
            
            877,731
            
            1,332,317
            
            2,210,048
            
            516,270
            
            1,237,033
            
            1,753,303
            
            1,688,916
            
            1,072,998
            
            2,761,914Consolidated
      statements of operationsComprehensive
      loss (iii) per U.S. GAAP
            
            (2,177,650
            )
            (30,803
            )
            (2,208,453
            )
            (2,549,293
            )
            164,035
            
            (2,385,258
            )
            (2,105,294
            )
            565,956
            
            (1,539,338
            )Basic
      and diluted loss per share
            
            (0.11
            )
            (0.01
            )
            (0.12
            )
            (0.16
            )
            0.01
            
            (0.15
            )
            (0.16
            )
            0.04
            
            (0.12
            )Consolidated
      statements of cash flowsOperating
      cashflows
            
            (2,047,212
            )
            156,025
            
            (1,891,187
            )
            (2,327,353
            )
            245,535
            
            (2,081,818
            )
            (2,076,950
            )
            236,706
            
            (1,840,244
            )Investing
      activities
            
            (100,000
            )
            (156,025
            )
            (256,025
            )
            1,000,000
            
            (245,535
            )
            754,465
            
            (1,002,797
            )
            (236,706
            )
            (1,239,503
            )





-F22-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





11.
            DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
      (continued)





(i)
            Mineral
      properties, deferred costs and exploration
  expenditures





Exploration
expenditures are accounted for in accordance with Canadian GAAP as disclosed in
Note 5.  Under US GAAP, we previously expensed acquisition
expenditures, however we are now capitalizing acquisition expenditures, in
accordance with EITF 04-02. The Company has determined for US GAAP purposes to
expense the exploration costs relating to unproven mineral claims as incurred
and in addition has a related income tax recovery.  In addition, US
GAAP requires that development costs not be capitalized until a positive
feasibility study is completed.  The capitalized costs of such claims
would then be measured, on a periodic basis, to ensure that the carrying value
can be recovered on an undiscounted cash flow basis. If the carrying value
cannot be recovered on this basis, the mineral claims would be written down to
net recoverable value on a discounted cash flow basis.





ii)
            Marketable
      securities





For the
2006 fiscal year, the Company's marketable securities were classified as
available-for-sale investments under US GAAP and carried at the lower of cost
and market value for Canadian GAAP purposes.  Such investments are not
held principally for the purpose of selling in the near term and, for US GAAP
purposes, must have holding gains and losses reported as a separate component of
shareholders’ equity until realized or until an other than temporary impairment
in value occurs.





(iii)
            Other
      Comprehensive Income





US GAAP
requires that a statement of comprehensive income be displayed with the same
prominence as other financial statements and that the aggregate amount of
comprehensive income, excluding the deficit, be disclosed separately in
shareholders’ equity.  Comprehensive income, which incorporates the
net loss, includes all changes in shareholders’ equity during a period except
those resulting from investments by and distributions to
owners.  Effective January 1, 2007, the Company will be required to
disclose comprehensive income under Canadian GAAP.





(iv)         Income
Tax





Under
Canadian GAAP, future income tax assets are calculated based on enacted or
substantially enacted tax rates applicable to future years.  Under US
GAAP, only enacted rates are used in the calculation of deferred income
taxes.  This difference in GAAP did not have any effect on the
financial position or results of operations of the Company for the years ended
December 31, 2006, 2005 and 2004.











-F23-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)




11.
            DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
      (continued)





(b)
            Recent
      Accounting Pronouncements





Financial
Instruments





On
January 27, 2005, the CICA issued Section 3855 of the Handbook titled “Financial
Instruments - Recognition and Measurement”.  It expands Handbook
section 3860, “Financial Instruments - Disclosure and Presentation” by
prescribing when a financial instrument is to be recognized on the balance sheet
and at what amount.  It also specifies how financial instrument gains
and losses are to be presented.  All financial instruments will be
required to be classified into various categories.  Held to maturity
investments loans and receivables are measured at amortized cost with
amortization of premium or discounts and losses and impairment included in
current period interest income or expense.  Held for trading financial
assets and liabilities are measured at fair market value with all gains and
losses included in net income in the period in which they arise.  All
available for sale financial assets are measured at fair market value with
revaluation gains and losses included in other comprehensive income until the
asset is removed from the balance sheet except that other than temporary losses
due to impairment are included in net income.  All other financial
liabilities are to be carried at amortized cost.  This new Handbook
section will bring Canadian GAAP more in line with US GAAP.  The
mandatory effective date is for fiscal years beginning on or after October 1,
2006, with optional early recognition for fiscal years beginning on or after
December 31, 2004.  At present, the Company's most significant
financial instruments are cash, short-term investments, other receivables and
accounts payable.  The Company will adopt this Handbook section in its
fiscal 2007 year.  The Company is currently reviewing the section to
determine the potential impact, if any, on its consolidated financial
statements.





Hedge
Accounting





Handbook
Section 3865, “Hedges” provides alternative treatments to Handbook Section 3855
for entities which choose to designate qualifying transactions as hedges for
accounting purposes.  The effective date of this section is for fiscal
years beginning on or after October 1, 2006.  The Company does not
currently have any hedging relationships.





Comprehensive
Income





Handbook
Section 1530, “Comprehensive Income”, introduces a requirement to temporarily
present certain gains and losses outside of income.  Section 1530
defines comprehensive income as a change in value of net assets that is not due
to owner activities.  Assets that are classified as available for sale
will have revaluation gains and losses included in other comprehensive income
until the asset is removed from the balance sheet.





At
present, the Company has investments in shares of arm's length corporations that
may be classified as available for sale investments.  The Company
would be required to recognize unrealized gains and losses on such securities
and include these amounts in comprehensive income.  The effective date
of this section is for fiscal years beginning on or after October 1,
2006.  Implementation of this section will more closely align Canadian
GAAP with US GAAP.








-F24-
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)





11.
            DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)





Accounting for Uncertainty in Income
Taxes





In July
2006, the Financial Accounting Standards Board (FASB) issued FIN 48, Accounting
for Uncertainty in Income Taxes, an Interpretation of FASB Statement
109.  This Interpretation applies to all tax positions related to
income taxes subject to SFAS 109, Accounting for Income Taxes.  FIN 48
uses a two-step approach for evaluating tax positions.  The first
step, recognition, occurs when an enterprise concludes that a tax position,
based solely on its technical merits, is more likely than not to be sustained
upon examination.  The second step, measurement, is only addressed if
the recognition threshold is met; under this step, the tax benefit is measured
as the largest amount of the benefit, determined on a cumulative probability
basis, that is more likely than not to be realized upon
settlement.  FIN 48’s use of the term “more likely than not”
represents a greater than 50 percent likelihood of occurrence.





The
cumulative effect of applying the provisions of this Interpretation shall be
reported as an adjustment to the opening balance of retained earnings for fiscal
year in which the enterprise adopts the Interpretation.  FIN 48 is
effective for fiscal years beginning after December 15, 2006.  Earlier
application is permitted if the reporting enterprise has not publicly issued
financial statements, including interim financial statements, for that fiscal
year.  Accordingly, the Company will adopt the provisions of this
Interpretation in its fiscal 2007 year.  The Company is currently
reviewing the provisions to determine the potential impact, if any, on its
consolidated financial statements.





Fair
Value Measurements





In
September 2006, FASB issued SFAS No. 157, “Fair Value Measurements”, which
establishes a framework for measuring fair value. It also expands disclosures
about fair value measurements and is effective for the first quarter of 2008.
The Company is currently reviewing the guidance to determine the potential
impact, if any, on its consolidated financial statements.








-F25-


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 (Expressed
in Canadian Dollars)




12.           SUPPLEMENTARY
CASH FLOW INFORMATION





Non-cash
investing and financing activities were conducted by the Company during the
years ended December 31, 2006, 2005, and 2004 as follows:




2006
              $
            
            
            
            2005
              $
            
            
            
            2004
              $Investing
      activitiesExpenditures
      on mineral property interests and
              deferred
      costs
            
            
            (126,000
            )
            
            
            (143,500
            )
            
            
            (329,250
            )Shares
      issued for mineral properties
            
            
            126,000
            
            
            
            143,500
            
            
            
            329,250Proceeds
      on the optioning of mineral properties
            
            
            33,000
            
            
            
            -
            
            
            
            -Investment
      in marketable securities
            
            
            (33,000
            )
            
            
            -
            
            
            
            --
            
            
            
            -
            
            
            
            -





Financing
      activitiesShare
      and warrant issuance costs
            
            
            (6,435
            )
            
            
            (23,078
            )
            
            
            (44,240
            )Warrants
            
            
            3,635
            
            
            
            -
            
            
            
            -Shares
      issued for payment of agent’s fees
            
            
            2,800
            
            
            
            23,078
            
            
            
            44,240-
            
            
            
            -
            
            
            
            -








13.
            SUBSEQUENT
      EVENTS





Subsequent
to December 31, 2006:





(a)
            the
      Company completed a brokered financing of 11,700,000 units at a price of
      $0.35, for total proceeds of $4,095,000. Each unit consists of one common
      share and one half common share purchase warrant. Each full warrant will
      entitle the holder thereof to purchase one additional common share in the
      capital of the Company for a period of 2 years at $0.45 per share.
      Additionally, once the resale restrictions on the shares have expired, and
      upon the Company’s shares trading at or above a weighted average trading
      price of $0.75 for 20 consecutive trading days, the Company may give
      notice that the warrants will expire 30 days from the date of providing
      such notice.





The
      Agents were paid a commission of 7.5% cash and 8% Agents' Warrants. The
      Agents' Warrants will be exercisable into one common share at a price of
      $0.45 per warrant, for a period of 2 years. The Agents' Warrants will not
      be subject to early expiry.





(b)
            the
      Company signed a letter of intent with Chancadora Centauro S.A.C. to enter
      into an option agreement to acquire up to a 90% interest in the 11,184
      hectare Laguna Gold Project in the Pasco Department of west central
      Peru.  Under the terms of the letter of intent, an initial 51%
      interest may be earned by incurring US$650,000 in work expenditures and
      US$900,000 in option payments over 2 years.  The Company may
      then elect to earn an additional 39% interest, by making a further
      US$4,000,000 in option payments and completing a bankable feasibility
      study, within seven years after the exercise of the initial
      option.  The letter of intent provides for a 90 day legal and
      technical due diligence period.





(c)
            the
      Company received the subscription receivable balance of $166,250 relating
      to proceeds from a private placement which was outstanding as at December
      31, 2006.


-F26-


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
SCHEDULE OF


MINERAL
PROPERTY INTERESTS AND DEFERRED COSTS


FOR
THE YEAR ENDED DECEMBER 31, 2006


(Expressed
in Canadian Dollars)














Argentina
            
            
            Peru
            
            
            USAMogote
              $
            
            
            Esperanza
              $
            
            
            Korimarca
              $
            
            
            Cruz
      de Mayo
              $
            
            
            Cocha
              $
            
            
            Other
              $
            
            
            Walker
              Lane,
      Nevada
              $
            
            
            Total
              $Balance,
              beginning of
    year
            
            
            2,270,734
            
            
            
            563,613
            
            
            
            32,125
            
            
            
            61,585
            
            
            
            27,917
            
            
            
            46,744
            
            
            
            182,126
            
            
            
            3,184,844Expenditures
      during the yearAcquisition
    costs
            
            
            165,247
            
            
            
            20,070
            
            
            
            1,696
            
            
            
            73,487
            
            
            
            18,557
            
            
            
            23,038
            
            
            
            -
            
            
            
            302,095Assays
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            42,288
            
            
            
            -
            
            
            
            65
            
            
            
            42,353Communications
            
            
            4,268
            
            
            
            -
            
            
            
            11
            
            
            
            350
            
            
            
            4,214
            
            
            
            456
            
            
            
            -
            
            
            
            9,299Drilling
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            139,493
            
            
            
            -
            
            
            
            -
            
            
            
            139,493Geophysics
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Office
            
            
            2,556
            
            
            
            97
            
            
            
            -
            
            
            
            12
            
            
            
            19,989
            
            
            
            2,332
            
            
            
            -
            
            
            
            24,986Salaries and
      contractors
            
            
            5,429
            
            
            
            3,311
            
            
            
            1,378
            
            
            
            23,527
            
            
            
            113,125
            
            
            
            13,141
            
            
            
            97
            
            
            
            160,008Supplies and
      equipment
            
            
            -
            
            
            
            94
            
            
            
            36
            
            
            
            115
            
            
            
            13,372
            
            
            
            545
            
            
            
            -
            
            
            
            14,162Transportation
            
            
            -
            
            
            
            807
            
            
            
            171
            
            
            
            3,152
            
            
            
            54,728
            
            
            
            3,367
            
            
            
            -
            
            
            
            62,225Imagery and base
      maps
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            615
            
            
            
            1,931
            
            
            
            -
            
            
            
            2,546Foreign value added
      tax
            
            
            2,270
            
            
            
            2,088
            
            
            
            365
            
            
            
            11,132
            
            
            
            44,788
            
            
            
            5,105
            
            
            
            -
            
            
            
            65,748179,770
            
            
            
            26,467
            
            
            
            3,657
            
            
            
            111,775
            
            
            
            451,169
            
            
            
            49,915
            
            
            
            162
            
            
            
            822,915Proceeds
      on the optioning
              of
      mineral properties
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (33,000
            )
            
            
            (33,000
            )Future
      income tax (Note 10)
            
            
            -
            
            
            
            (78,197
            )
            
            
            (76
            )
            
            
            (1,059
            )
            
            
            6,963
            
            
            
            (2,731
            )
            
            
            (17,987
            )
            
            
            (93,087
            )Write-off
      of mineral
              properties
            
            
            -
            
            
            
            (511,883
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (13,631
            )
            
            
            -
            
            
            
            (525,514
            )Balance,
      end of year
            
            
            2,450,504
            
            
            
            -
            
            
            
            35,706
            
            
            
            172,301
            
            
            
            486,049
            
            
            
            80,297
            
            
            
            131,301
            
            
            
            3,356,158








-F27-


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
SCHEDULE OF


MINERAL
PROPERTY INTERESTS AND DEFERRED COSTS


FOR
THE YEAR ENDED DECEMBER 31, 2005


(Expressed
in Canadian Dollars)














Argentina
            
            
            Peru
            
            
            USAMogote
              $
            
            
            Chubut
              Properties
              $
            
            
            Esperanza
              $
            
            
            Korimarca
              $
            
            
            Cruz
      de Mayo
              $
            
            
            Cocha
              $
            
            
            Other
              $
            
            
            Walker
              Lane,
      Nevada
              $
            
            
            Total
              $Balance,
              beginning of year
            
            
            1,468,904
            
            
            
            225,000
            
            
            
            200,999
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            120,075
            
            
            
            2,014,978Expenditures
      during the yearAcquisition
      costs
            
            
            223,365
            
            
            
            -
            
            
            
            83,744
            
            
            
            11,844
            
            
            
            26,079
            
            
            
            10,211
            
            
            
            14,086
            
            
            
            19,706
            
            
            
            389,035Assays
            
            
            31,687
            
            
            
            -
            
            
            
            6,361
            
            
            
            -
            
            
            
            803
            
            
            
            3,020
            
            
            
            1,415
            
            
            
            198
            
            
            
            43,484Communications
            
            
            4,057
            
            
            
            -
            
            
            
            2,659
            
            
            
            -
            
            
            
            48
            
            
            
            -
            
            
            
            252
            
            
            
            -
            
            
            
            7,016Drilling
            
            
            312,063
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            312,063Geophysics
            
            
            -
            
            
            
            -
            
            
            
            35,490
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9,368
            
            
            
            44,858Office
            
            
            11,885
            
            
            
            -
            
            
            
            8,662
            
            
            
            550
            
            
            
            1,861
            
            
            
            412
            
            
            
            125
            
            
            
            -
            
            
            
            23,495Salaries and
      contractors
            
            
            113,166
            
            
            
            -
            
            
            
            130,272
            
            
            
            6,754
            
            
            
            18,347
            
            
            
            6,545
            
            
            
            20,612
            
            
            
            11,607
            
            
            
            307,303Supplies and
      equipment
            
            
            3,276
            
            
            
            -
            
            
            
            24,389
            
            
            
            2,527
            
            
            
            1,752
            
            
            
            1,178
            
            
            
            536
            
            
            
            -
            
            
            
            33,658Transportation
            
            
            59,177
            
            
            
            -
            
            
            
            26,592
            
            
            
            8,056
            
            
            
            1,954
            
            
            
            1,591
            
            
            
            2,424
            
            
            
            -
            
            
            
            99,794Imagery and base
      maps
            
            
            -
            
            
            
            -
            
            
            
            4,174
            
            
            
            -
            
            
            
            2,989
            
            
            
            1,348
            
            
            
            -
            
            
            
            -
            
            
            
            8,511Foreign value added
      tax
            
            
            43,154
            
            
            
            -
            
            
            
            19,059
            
            
            
            1,956
            
            
            
            1,615
            
            
            
            1,350
            
            
            
            3,391
            
            
            
            -
            
            
            
            70,525801,830
            
            
            
            -
            
            
            
            341,402
            
            
            
            31,687
            
            
            
            55,448
            
            
            
            25,655
            
            
            
            42,841
            
            
            
            40,879
            
            
            
            1,339,742Future
      income tax (Note 10)
            
            
            -
            
            
            
            -
            
            
            
            21,212
            
            
            
            438
            
            
            
            6,137
            
            
            
            2,262
            
            
            
            3,903
            
            
            
            21,172
            
            
            
            55,124Write-off
      of mineral
              properties
            
            
            -
            
            
            
            (225,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (225,000
            )Balance,
      end of year
            
            
            2,270,734
            
            
            
            -
            
            
            
            563,613
            
            
            
            32,125
            
            
            
            61,585
            
            
            
            27,917
            
            
            
            46,744
            
            
            
            182,126
            
            
            
            3,184,844