United
States Securities and Exchange Commission


Washington,
D.C. 20549





Form
20-F





(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, 2007





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, 2007.





34,506,036
Common Shares outstanding as of December 31, 2007





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











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.  Canadian law also requires disclosure of mineral resources
that equate to measured, indicated and inferred resources.  These
definitions have not been adopted for use in the United States by the Securities
and Exchange Commission (the “SEC”) under Guide 7 of the Securities Act Industry
Guides (“SEC Guide 7”).








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$0.27 (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




-3-


Mafic
            Dark
      colored, generally iron or magnesium rich, rock or
  mineral.Manifestations
      or Manifestaciones
            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$12.49) 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




-4-


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.


-5-





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.








-6-


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, 2007,
2006 and 2005, 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, 2004 and 2003 are derived from the Company’s audited financial
statements, not included herein.





The
selected financial data for the periods ended December 31, 2007, 2006 and 2005,
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, 2007, 2006 and 2005 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 cash flow from its activities to fund ongoing
activities and cash commitments.  The Company has financed its
exploration activity principally through the sale of its equity
securities.  The Company does not believe it has adequate resources to
maintain its core activities for the 12 months from January 1, 2008 to December
31, 2008, nor sufficient working capital to fund all its planned exploration
activities.  In the future, the Company will 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.





-7-


Canadian Generally Accepted
Accounting Principles





(CDN
      $)Year
      Ended December 31,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Revenue
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -General
      Corporate Expenditures
            
            
            (1,612,536
            )
            
            
            (1,125,939
            )
            
            
            (988,664
            )
            
            
            (845,181
            )
            
            
            (408,352
            )General
      Exploration Expenditures
            
            
            (522,136
            )
            
            
            (296,810
            )
            
            
            (199,264
            )
            
            
            (18,318
            )
            
            
            -Foreign
      Exchange Loss
            
            
            (21,080
            )
            
            
            (2,910
            )
            
            
            (36,624
            )
            
            
            (25,104
            )
            
            
            (896
            )Interest
      and Miscellaneous Income
            
            
            80,383
            
            
            
            30,924
            
            
            
            15,001
            
            
            
            14,271
            
            
            
            3,492Write-off
      of mineral properties
            
            
            (250,956
            )
            
            
            (525,514
            )
            
            
            (225,000
            )
            
            
            -
            
            
            
            -Net
      Loss for the year
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )
            
            
            (405,756
            )Loss
      per Share Basic and Diluted
            
            
            (0.08
            )
            
            
            (0.10
            )
            
            
            (0.09
            )
            
            
            (0.07
            )
            
            
            (0.08
            )Weighted
      Average Number
              of
      Shares Outstanding
            
            
            30,615,987
            
            
            
            19,169,121
            
            
            
            15,916,822
            
            
            
            13,192,736
            
            
            
            4,848,716Working
      Capital
            
            
            1,795,810
            
            
            
            870,731
            
            
            
            516,270
            
            
            
            1,686,120
            
            
            
            1,021,272Capital
      Assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,796
            
            
            
            -Mineral
      Properties
            
            
            4,511,362
            
            
            
            3,356,158
            
            
            
            3,184,844
            
            
            
            2,014,978
            
            
            
            684,259Long-Term
      Debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Assets
            
            
            6,387,831
            
            
            
            4,343,852
            
            
            
            3,843,389
            
            
            
            3,754,341
            
            
            
            1,820,883Net
      Assets - Shareholders' Equity
            
            
            6,250,457
            
            
            
            4,165,095
            
            
            
            3,546,233
            
            
            
            3,604,137
            
            
            
            1,705,531





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 Operations2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Loss
      for the year under Canadian GAAP
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )
            
            
            (874,332
            )
            
            
            (405,756
            )Mineral
      property and deferred exploration
              costs
      for the year, net of reversal of
              future
      income tax
            
            
            (865,548
            )
            
            
            (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
            
            
            94,716
            
            
            
            318,703
            
            
            
            -
            
            
            
            -
            
            
            
            -Loss
      for the year under US GAAP
            
            
            (3,097,157
            )
            
            
            (2,215,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )
            
            
            (582,973
            )Unrealized
      gains on available-for-sale
              securities
            
            
            14,000
            
            
            
            7,000
            
            
            
            -
            
            
            
            -
            
            
            
            -Comprehensive
      loss under US GAAP
            
            
            (3,083,157
            )
            
            
            (2,208,453
            )
            
            
            (2,385,258
            )
            
            
            (1,539,338
            )
            
            
            (582,973
            )Basic
      and diluted loss per share
              under
      US GAAP
            
            
            (0.10
            )
            
            
            (0.12
            )
            
            
            (0.15
            )
            
            
            (0.12
            )
            
            
            (0.12
            )


-8-





Consolidated
      balance sheets
            
            (CDN
      $)2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Shareholders’
      EquityBalance
      per Canadian GAAP
            
            
            6,250,457
            
            
            
            4,165,095
            
            
            
            3,546,233
            
            
            
            3,604,137
            
            
            
            1,705,531Mineral
      property and deferred exploration
              costs
      expensed net of reversal of
              future
      income tax
            
            
            (2,709,519
            )
            
            
            (1,962,047
            )
            
            
            (1,792,930
            )
            
            
            (842,223
            )
            
            
            (177,217
            )Accumulated
      other comprehensive income
            
            
            21,000
            
            
            
            7,000
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      per US GAAP
            
            
            3,561,938
            
            
            
            2,210,048
            
            
            
            1,753,303
            
            
            
            2,761,914
            
            
            
            1,528,314Mineral
      properties and deferred costsBalance
      per Canadian GAAP
            
            
            4,493,081
            
            
            
            3,356,158
            
            
            
            3,184,844
            
            
            
            2,014,978
            
            
            
            684,259Mineral
      properties and deferred costs
              expensed
      under US GAAP
            
            
            (2,747,953
            )
            
            
            (2,023,841
            )
            
            
            (1,947,811
            )
            
            
            (941,980
            )
            
            
            (177,217
            )Balance
      per US GAAP
            
            
            1,745,128
            
            
            
            1,332,317
            
            
            
            1,237,033
            
            
            
            1,072,998
            
            
            
            507,042Future income tax
      liabilitiesBalance
      per Canadian GAAP
            
            
            38,434
            
            
            
            61,794
            
            
            
            154,881
            
            
            
            99,757
            
            
            
            -Reversal
      of future income tax liability
            
            
            (38,434
            )
            
            
            (61,794
            )
            
            
            (154,881
            )
            
            
            (99,757
            )
            
            
            -Balance
      per US GAAP
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -






Consolidated
      statements of cash flows2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Operating
      ActivitiesCash
      used per Canadian GAAP
            
            
            (1,747,974
            )
            
            
            (1,350,297
            )
            
            
            (1,131,111
            )
            
            
            (845,988
            )
            
            
            (80,610
            )Mineral
      properties and deferred costs
            
            
            (1,078,239
            )
            
            
            (540,890
            )
            
            
            (950,707
            )
            
            
            (994,256
            )
            
            
            (177,217
            )Cash
      used per US GAAP
            
            
            (2,826,213
            )
            
            
            (1,891,187
            )
            
            
            (2,081,818
            )
            
            
            (1,840,244
            )
            
            
            (257,827
            )Investing
      ActivitiesCash
      used per Canadian GAAP
            
            
            (2,378,239
            )
            
            
            (796,915
            )
            
            
            (196,242
            )
            
            
            (2,233,759
            )
            
            
            (414,259
            )Mineral
      properties and deferred costs
            
            
            1,078,239
            
            
            
            540,890
            
            
            
            950,707
            
            
            
            994,256
            
            
            
            177,217Cash
      provided (used) per US GAAP
            
            
            (1,300,000
            )
            
            
            (256,025
            )
            
            
            754,465
            
            
            
            (1,239,503
            )
            
            
            (237,042
            )Financing
      activitiesCash
      provided per Canadian
              and
      US GAAP
            
            
            3,761,105
            
            
            
            2,156,011
            
            
            
            1,170,448
            
            
            
            2,641,134
            
            
            
            1,415,245





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








-9-





Exchange
Rate History





The noon
rate of exchange on May 31, 2008, reported by the United States Federal Reserve
Bank of New York for the conversion of Canadian dollars into United States
dollars was CDN$0.9938 (US$1.0062 = 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, 2007 – December 31, 2007
            0.9309January
      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
            0.7206





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
            LowMay
      2008
            1.0158
            0.9815April
      2008
            1.0179
            1.0097March
      2008
            1.0036
            0.9936February
      2008
            1.0048
            0.9965January
      2008
            0.9940
            0.9853December
      2007
            1.0010
            0.9925





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





In
September 2006, FASB issued SFAS No. 157, “Fair Value Measurement”, effective
for fiscal periods beginning after November 15, 2007.  SFAS defines fair
value, establishes a framework for measuring accepted accounting principles, and
expands disclosures about fair value measurements.  In December 2007, the
FASB issued SFAS157-b, which provided for a one year deferral of the
implementation of SFAS 157 for non-financial assets and liabilities.
 However, SFAS is still required to be adopted effective January 1, 2008
for financial assets and liabilities that are carried at fair value.  The Company is currently
reviewing the guidance to determine the potential impact, if any, on its
consolidated financial statements.





In
February 2007, FASB issued SFAS No. 159, “Fair value option for financial
assets and liabilities”which permits entities to choose to measure
various financial instruments and certain other items at fair value. We do not
expect the adoption of this Interpretation to have a significant effect on the
Company’s results of operations or financial position.





In
December 2007, the FASB issued SFAS 160 a standard on accounting for
non-controlling interests and transactions with non-controlling interest holders
in consolidated financial statements.The standard is converged
with standards issued by the Accounting Standards Board (“AcSB”) and the
International Accounting Standards Board (“IASB”) on this subject. This
statement specifies that non-controlling interests are to be treated as a
separate component of equity, not as a liability or other item outside of
equity. Because non-controlling interests are an element of equity, increases
and decreases in the parent's ownership interest that leave control intact are
accounted for as capital transactions rather than as






-10-


a step
acquisition or dilution gains or losses. The carrying amount of the
non-controlling interests is adjusted to reflect the change in ownership
interests, and any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received
is recognized directly inequity attributable to the controlling
interest.





This
standard requires net income and comprehensive income to be displayed for both
the controlling and the non-controlling interests. Additional required
disclosures and reconciliations include a separate schedule that shows the
effects of any transactions with the non-controlling interests on the equity
attributable to the controlling interest.





The
statement is effective for periods beginning on or after December 15, 2008. SFAS
160 will be applied prospectively to all non-controlling interests, including
any that arose before the effective date. The Company has not determined the
effect of the adoption of this Interpretation to the Company’s results of
operations or financial position.





In
December 2007, the FASB issued a revised standard on accounting for business
combinations, SFAS 141R. The major changes to accounting for business
combinations are summarized as follows:





§
            all
      business acquisitions would be measured at fair
  value.


§
            the
      existing definition of a business would be
  expanded.


§
            pre-acquisition
      contingencies would be measured at fair
value.


§
            most
      acquisition-related costs would be recognized as expense as incurred (they
      would no longer be part of the purchase
  consideration).


§
            obligations
      for contingent consideration would be measured and recognized at fair
      value at acquisition date (would no longer need to wait until contingency
      is settled).


§
            liabilities
      associated with restructuring or exit activities be recognized only if
      they meet the recognition criteria of SFAS 146, Accounting for Costs
      Associated with Exit  or Disposal Activities, as of the
      acquisition date.


§
            non-controlling
      interests would be measured at fair value at the date of acquisition (i.e.
      100% of the assets and liabilities would be measured at fair value even
      when an acquisition is less than
100%).


§
            goodwill,
      if any, arising on a business combination reflects the excess of the fair
      value of the acquiree, as a whole, over the net amount of the recognized
      identifiable assets acquired and liabilities assumed. Goodwill is
      allocated to the acquirer and the non-controlling
  interest.


§
            in
      accounting for business combinations achieved in stages, commonly called
      step acquisitions, the acquirer is to re-measure its pre-existing
      non-controlling equity investment in the acquiree at fair value as of the
      acquisition date and recognize any unrealized gain or loss in
      income.





The
statement is effective for periods beginning on or after December 15,
2008.  The Company does not expect the adoption of this Interpretation
to have a significant effect on the Company’s results of operations or financial
position.





Canadian
Pronouncements





Effective
January 1, 2008, new accounting standards were issued by the CICA which may
impact the Company in the future as follows:





General Standards on
Financial Statement Presentation





CICA Handbook Section 1400,General Standards
on Financial Statement Presentation, has been amended to include requirements to assess and
disclose a company’s ability to continue as a going concern. The changes
are effective for interim and annual financial statements beginning January 1,
2008. The Company does not expect the adoption of these changes to have an
impact on its financial statements.





Capital
Disclosures





CICA
Handbook Section 1535, Capital
Disclosures, establishes standards for disclosing information aboutthe Company's capital and
how it is managed. Under this standard the Company will be required to
disclosethe
following,




-11-




based on
the information provided internally to the Company's key management
personnel:





(i)
            qualitative information about its
      objectives, policies and processes for managing
      capital.


(ii)
            summary quantitative data about
      what it manages as capital.


(iii)
            whether during the period it
      complied with any externally imposed capital requirements to which
      it is
      subject.


(iv)
            when the Company has not complied
      with such externally imposed capital requirements, the consequences of such
      non-compliance.





This
standard is effective for interim and annual financial statements beginning on
January 1, 2008. The Company has not yet determined the impact of the adoption
of this change on the disclosure in its consolidated financial
statements.





Inventories





CICA Handbook Section 3031,Inventoriesprescribes the accounting treatment
for inventories and provides guidance on the determination of costs
and their subsequent recognition as an expense, including any write-down
to net realizable value. It also
provides guidance on the cost formulas that are used to assign costs to
inventories.





This
standard is effective for interim and annual financial statements beginning on
January 1, 2008. The Company does not expect the adoption of this standard to
have an impact on its consolidated financial statements.





Goodwill
and Intangible Assets





CICA
Handbook Section 3064, Goodwill and Intangible
Assets, establishes revised standards forrecognition, measurement,
presentation and disclosure of goodwill and intangible assets. Concurrent
withthe introduction
of this standard, the CICA withdrew EIC 27, Revenues and Expenses, during the
pre-operatingperiod.
As a result of the withdrawal of EIC 27, companies will no longer be able to
defer costsand
revenues incurred prior to commercial production at new mine operations. The
changes are effective forinterim and annual
financial statements beginning January 1, 2009. The Company has not yet
determined the impactof the adoption of this
change on the disclosure in its consolidated financial statements.





Financial
Instruments Disclosures





In March
2007, the CICA issued Section 3862 Financial Instruments –
Disclosures, and Section 3863 Financial Instruments –
Presentation, which together comprise a complete set of disclosure and
presentation requirements that revise and enhance current disclosure
requirements.  Section 3862, requires disclosure of additional detail by
financial asset and liability categories.  Section 3863, establishes
standards for presentation of financial instruments and non-financial
derivatives.  The standard deals with the classification of financial
instruments, from the perspective of the issuer, between liabilities and equity,
the classification of related interest, dividends, losses and gains, and the
circumstances in which financial assets and financial liabilities are offset.
These sections are effective January 1, 2008 but are not expected to have an
impact on the Company’s disclosure and presentation.





International
Financial Reporting Standards ("IFRS")





In 2006,
the Canadian Accounting Standards Board ("AcSB") published a new strategic plan
that will significantly affect financial reporting requirements for Canadian
companies.  The AcSB strategic plan outlines the convergence of Canadian
GAAP with IFRS over an expected five year transitional period.  In February
2008 the AcSB announced that the date for publicly-listed companies to use
IFRS, replacing Canadian GAAP, is for interim and annual financial statements
relating to fiscal years beginning on or after January 1, 2011.  The
transition date of January 1, 2011 will require the restatement for comparative
purposes of amounts reported by the Company for the year ended December 31,
2010.  While the Company has begun assessing the adoption of IFRS for
2011, the financial reporting impact of the transition to IFRS cannot be
reasonably estimated at this time.








-12-


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
activities (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 May
31, 2008, the Company had working capital of approximately
$250,000.  The Company does not believe it has adequate resources to
maintain its core activities for the 12 months from January 1, 2008 to December
31, 2008 or to fund all its planned exploration activities.   In
the future, the Company will 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 SEC Guide 7.  The term
“reserves” is defined in SEC 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.” SEC 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 SEC
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 Peru and
Argentina 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
Peruvian and Argentinean 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 Peru  and Argentina fail to
grow or




-13-




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




-14-




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 $0.44 to a low of $0.15
during the 12-month period ending December 31, 2007.  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.  Other than as disclosed under “Item 6. Directors, Senior
Management and Employees - Employment Agreements”, the Company has not entered
into employment agreements with any of its officers and is not expected to do so
in the foreseeable future.  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 proposed 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 proposed
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




-15-




poses the risk that the Company may enter into a
transaction on terms which could place the Company in a worse position 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, 2005, 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.




-16-




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


·  $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 Peru, Argentina and the United
States.  Mineral exploration and mining activities in Peru and
Argentina 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.  Exploration 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 Peru and
Argentina 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
Peruvian and Argentine 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 South America.  The Company does
not believe that any current currency restrictions which may be imposed 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 Peru, Argentina,
Chile and the United States.





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 ranks among the top 20 gold producing
nations.





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




-17-




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 planned
work on the Peruvian properties.





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 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.





Colombia





Existing
and Probable Governmental Regulation





Mineral
exploration projects are subject to political, economic and other uncertainties,
including the risk of expropriation, nationalization, renegotiation or
nullification of existing contracts, mining licenses and permits or other
agreements, changes in laws or taxation policies, currency exchange
restrictions, changing political conditions and international monetary
fluctuations. Future government actions concerning the economy, taxation, or the
operation and regulation of nationally important facilities such as mines could
have a significant effect on our business.


-18-


In
Colombia, except for a few exceptions, the subsoils are owned by the State. The
State may authorize private parties to explore and develop mineral deposits
under concession contracts. Until 2001, they could also be developed under
Exploration and Exploitation Contracts executed with specialized agencies of the
Colombian State. However, as of 2001, Colombia’s New Mining Code
permits only concession contracts, which are awarded by a single entity and are
subject to a standard set of conditions.





A
concession grants to the concessionaire, the exclusive manner, to carry out
exploration activities in order to establish the existence of the minerals.
It covers also the right to install and build the work necessary for
an efficient exercise of the rights set forth in the Colombian Mining Code.
A concession contract is for a term that the proponent requests, up to a
maximum of thirty (30) years. Such term will start from the date of
inscription of the contract at the National Mining Register.





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 proposed 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 proposed 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 activities.  In addition,
certain types of operations require the submission and approval of environmental
impact assessments.  Environmental legislation is




-19-




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 proposed
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.





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 (the “OTCBB”), operated by the National
Association of Securities Dealers, 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 activities 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 OTCBB is not an
exchange and, because trading of securities on the OTCBB 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




-20-




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:





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




-21-




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 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 had no business assets 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 was required to
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 ($197,854) to IMA as reimbursement for all past payments made and
expenditures incurred by IMA on the Mogote Project,.  The Company also
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, a total of US$269,100.  As of December 31, 2007, the
exploration expenditures and the IMA expenditures obligation have been paid in
full and 750,000 common shares have been issued.  Having fulfilled its
obligations under the Mogote Option, the Company continues to be the operator of
the Mogote Project.





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 in the 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. The Company made the determination to not incur the requisite
exploration expenditures in 2007, and as a result, has not earned the additional
24% interest in 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.”





-22-


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.





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
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.  On June 9, 2006, the Company granted an
option (the “Astral Letter of Agreement”) on its Roy and Hills properties in
Nevada to Astral Mining Corporation (“Astral”).  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 April
11, 2005, the Company entered into an option agreement with, Carlos Martin
Thompson Palacios, for the 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 served notice that they were terminating the
option as of July 30, 2007.  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 was 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. See “Item 4.
Information on the Company - Property, Plant and Equipment”.





On
December 7, 2006, the Company executed 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 made a cash payment of US$120,000.  An initial
51% interest could be earned upon incurring US$650,000 in work expenditures and
payment of US$890,000.  During the first quarter of 2008, the Company
tested various targets at the Laguna Gold Project and determined that proceeding
was not feasible.  As a result, the Laguna Gold Project option was
terminated.  Accordingly,




-23-




costs of
approximately $575,000 were written off in the first quarter of
2008.  The Company has no further obligations under the Laguna Gold
Project option agreement.  See “Item 4. Information on the Company -
Property, Plant and Equipment”.





On June
30, 2007, the Company entered into a 50/50 joint venture with Golden Arrow to
evaluate and acquire precious and base metal properties in Colombia. The joint
venture hired an operations manager and retained contract exploration personnel.
 The joint venture is in the process of evaluating a number of
opportunities but has not acquired any mineral properties to date. Accordingly,
the Company’s proportionate share of costs incurred have been recorded as
general exploration expense.  On  May 7, 2008, the Company
gave notice that it was withdrawing from the Golden Amera  Joint
Venture Agreement and would not contribute further funds.





On  September
19, 2007, the Company entered into two option agreements with Minera Phelps
Dodge del Peru S.A.C. ("MPDP"), an indirect subsidiary of Freeport-McMoRan
Copper & Gold Inc., to earn up to a 70% undivided interest in two groups of
projects in Peru, the “Junin Projects” and the “Arequipa Project” (collectively,
the “MPDP Projects”).





In order
to earn a 70% undivided interest in the MPDP Projects, the Company must complete
US$200,000 in exploration expenditures, including 1,500 metres of drilling, in
each of the Junin and Arequipa Projects on or before September 14, 2009. MPDP
has the right to claw-back a 30% interest (for a total 60% ownership interest)
in each MPDP Project property 60 days after receiving notice that 1,500 metres
of drilling has been completed by the Company.





On
November 15, 2007, the Company signed a Letter of Intent with Victor Marcial
Garcia Garcia and his wife Elvira Carmen Maria Agois Barbier
(the “Loma Letter of Intent”) to option up to a 100% interest in the “Loma
Colorada Property” located in the Ancash Department, Peru.  Under the
terms of the Loma Letter of Intent, the Company may earn up to a 100% undivided
interest in the Loma Colorada Property by incurring US$1,400,000 in exploration
expenditures and make US$490,000 in cash payments to the vendor over a three
year period. The Company can exercise this option (i) at the beginning of the
fourth year by making a further payment of US$2,500,000 and a 1% NSR or,
alternatively, continue with the option for an additional 12-month period in
exchange for a payment of US$400,000 and incurring a further US$3,000,000 in
exploration expenditures; or (ii) at the beginning of the fifth year by making a
payment of US$200,000 and funding a pre-feasibility study; or (iii) at the end
of the fifth year by making a payment of US$5,000,000 and granting to the vendor
a 2% NSR.  Each 1% NSR can be purchased by the Company for
US$1,000,000.





On
February 1, 2008, the Company signed a Letter of Intent with Geologix
Explorations Inc. to earn up to a 70% interest in the Toro Blanco, San Felipe
and Sura Properties located in the Huancavelica Department, Peru (collectively,
the “Huancavelica Properties”).  In order to earn an initial 51%
undivided interest in the Huancavelica Properties, the Company must complete
US$3,800,000 in exploration expenditures on each of the properties, including a
minimum of $100,000 exploration commitment during the first year. The Company
may earn an additional 10% interest in each of the Huancavelica Properties by
completing a positive feasibility study on each Huancavelica Property within
three years of earning its 51% interest. A further 9% interest may be earned by
the Company by placing the Huancavelica Property into commercial production
within six years of earning its initial interest, for an aggregate 70% interest
in the Huancavelica Property.





To date,
the Company has raised $12,605,538 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.





Effective
September 13, 2006, the Company received clearance for trading on the OTCBB
under the symbol “AJRSF”.





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
$1,406,160, $729,828 and $1,394,866,  and capital assets of $Nil, $Nil
and $Nil for the fiscal years ended December 31, 2007, 2006 and 2005,
respectively.





-24-


In fiscal
2007 the Company wrote off property costs for its Cruz de Mayo property in Peru
in the amount of $250,956.  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.”  In the first quarter of fiscal 2008 the Company
terminated its option on the Laguna Gold Project and as a result the Company
wrote off costs of approximately $845,000.





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, 2008, 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 2005, 2006 and 2007
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 SEC Guide 7.  Since March 2003, the Company has entered
into a number of agreements to acquire interests in resource properties located
in Argentina, Peru and Nevada, United States.  In addition, during
2004, the Company 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
are being held by the Company’s wholly owned Chilean subsidiary, Amera Resources
Chile Sociedad Contractual Minera.  See “Item
4.  Information on the Company - History and Development of the
Company” and “Item 4. Property, Plant and Equipment - Principal Properties -
Mogote Project”.





Exploration
Expenditures





During
fiscal 2007, the Company incurred $569,051 (including $333,000 which is
attributed to 900,000 shares issued by the Company) for mineral property
acquisition costs and incurred $837,109 for exploration costs on its mineral
property interests.





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





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





-25-


Organizational
Structure





As of the
date of this annual report, the Company has four wholly-owned
subsidiaries:





(i)           Recursos
de los Andes S.A.C., a Peruvian company, which became active in December 2004.
Recursos de los Andes S.A.C. was formed to hold the Company’s interests in its
Peruvian properties.  The Company indirectly owns all of the
outstanding voting and equity interests in Recursos de los Andes S.A.C. through
Amera Resources (BVI) Inc.





(ii)           Amera
Resources (US) Inc., a Nevada (U.S.) corporation, which was incorporated on
February 2, 2005.  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.





(iii)           Amera
Resources Chile Sociedad Contractual Minera, a Chilean company, which 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.





(iv)           Amera
Resources (BVI) Inc, a British Virgin Islands company which was formed on
January 10, 2007. The Company owns all of the outstanding voting and equity
interests  in Amera Resources (BVI) Inc.





The
Company is also a 50% shareholder in Golden Amera Resources Inc. (BVI) (“Golden
Amera”), incorporated in the British Virgin Islands on January 30,
2007.  Golden Amera has established a branch in Colombia that conducts
exploration activities in that country.  In May 2008, the Company
withdrew from the Golden Amera joint venture.





Amera
Argentina was formed as a branch to operate in Argentina.





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













-26-


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.





Effective
January 1, 2005, the Company entered into an agreement with Grosso Group
Management Ltd. (the “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 and claims 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 May 31, 2008, the Company has not established that
its option interests or its mineral claims have any known or proven
reserves.





This
accounting treatment is different under US GAAP, under which the Company would
expense the exploration costs relating to unproven mineral claims as
incurred.  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.





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 Mogote
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 Mogote 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




-27-




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:














Mineral Titles Included in
Mogote Property





The
Mogote Property consists of one cateo and ten minas on the Argentinian side of
the border. In 2004, the Company staked a number of claims adjoining the
northwestern part of the Mogote Property on the Chilean side of the
border.  The combined claims total 9,619 hectares.





CLAIM
      NAME & COUNTRY
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECT-ARES
            OWNER
            EXPIRY
      DATE
            WORK/PAYMENT
      REQUIREDMogotes
              (Argentina)
            338579-R-92
            CATEO
            2348
            IMAUSA
            N/A
            $2000
      Argentinean Pesos
              payment
      after
              concession
      grantedADELA
      # 1
              (Argentina)
            125-098-A-2000
            MINA
            2000
            IMAUSA
            N/A
            $12,000
      Argentinean Pesos per
              yearMOGOTES
      NORTE
              (Argentina)
            520-0275-V-097
            MINA
            1650
            IMAUSA
            N/A
            $12,000
      Argentinean Pesos per
              yearMOGOTES
      SUR
              (Argentina)
            520-0274-V-97
            MINA
            2100
            IMAUSA
            N/A
            $12,000
      Argentinean Pesos per
              year




-28-






CLAIM
      NAME & COUNTRY
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECT-ARES
            OWNER
            EXPIRY
      DATE
            WORK/PAYMENT
      REQUIRED


MOGOTES
      1
              (Argentina)
            156.277-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year
              CanonMOGOTES
      6
              (Argentina)
            156.282-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year
              CanonMOGOTES
      7
              (Argentina)
            156.283-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year
              CanonMOGOTES
      9
              (Argentina)
            156.285-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year CanonMOGOTES
      14
              (Argentina)
            156.290-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year
              canonMOGOTES
      4
              (Argentina)
            156.280-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year
              CanonMOGOTES
      5
              (Argentina)
            156.281-S-76
            MINA
            54
            IMAUSA
            N/A
            $480
      Argentinean Pesos per year canonTronquito
      1
              (Chile)
            03203-4809-9
            Manifestación
            50
            Amera
      Chile
            N/A
            $180,000
      Chilean Pesos  per year canonTronquito
      2
              (Chile)
            03203-4810-2
            Manifestación
            100
            Amera
      Chile
            N/A
            $350,000
      Chilean Pesos per year canonTronquito
      3
              (Chile)
            03203-4811-0
            Manifestación
            63
            Amera
      Chile
            N/A
            $210,000
      Chilean Pesos per year canonTronquito
      4
              (Chile)
            03203-4812-9
            Manifestación
            80
            Amera
      Chile
            N/A
            $280,000
      Chilean Pesos per year canonTronquito
      5
              (Chile)
            03203-4813-7
            Manifestación
            50
            Amera
      Chile
            N/A
            $180,000
      Chilean Pesos  per year canonTronquito
      6
              (Chile)
            03203-4814-5
            Manifestación
            300
            Amera
      Chile
            N/A
            $1,000,000
      Chilean Pesos  per year canonTronquito
      Tres
              (Chile)
            842
            Pedimento
      Petition
            300
            Ámera
      Chile
            N/A
            $210,000
      Chilean Pesos per year canon





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





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.





The
Company has a 51% interest in the Mogote Property. The Mogote Property is
comprised of eight mineral concessions, comprising 8,009 hectares and is located
in San Juan Province, Argentina.  As of December 31, 2007, the Company
had expended $1,389,309 in acquisition costs and $1,259,140 in exploration
expenses on the Mogote Property.





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 anomalous
copper




-29-




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
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 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 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.





Drillhole
            Total
      Depth
              (metres)
            From
              (metres)
            To
              (metres)
            Interval
              (metres)
            Gold
              (ppm)
              (LWA)
            Silver
              (ppm)
              (LWA)
            Copper
              (%)
              (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




-30-




coextensive
with 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 areas of potassic-altered intrusive
porphyries within the Filo Este and Filo Central anomalies, defined by strong
magnetics, 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:





Drillhole
            Zone
            Total
      Depth
              (metres)
            From
              (metres)
            To
              (metres)
            Interval
              (metres)
            Gold
      (ppm)
              (LWA)
            Silver
              (ppm)
              (LWA)
            Copper
      (%)
              (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.





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.  Assays for the
drilling program were performed by Alex Stewart Labs, Mendoza, Argentina, an
assay service provider.  No exploration work was carried out on the
Mogote Property in 2006 or 2007.  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 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.   As a result, the Company wrote off




-31-




$225,000
during 2005 in connection with the Chubut Properties, which represented the fair
value of the Company’s shares issued upon acquisition of the Chubut
Properties.  The Company continues to hold legal title to the Chubut
Properties.





The
Company found no “reserves” on the Chubut Properties, as that term is defined in
SEC Guide 7.





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 “Cocha
Property”).  The Company was formally granted the concession titles to
the Cocha Property by the Peruvian government on March 20, 2006 and April 10,
2006, and now holds its 100% interest in the Cocha Property through its
wholly-owned Peruvian subsidiary Recursos de los Andes S.A.C.  In
2007, the Cocha Property was expanded to 7,060 hectares by staking additional
open ground.





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:


-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 4,818m).  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.





-33-











Mineral
Tenure





The Cocha Property
consists of eight concessions covering7,060 hectares.  The
concessions are described in the following table.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDCocha
      1
            01-03261-05
            Concession
            873.5567
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      2
            01-03262-05
            Concession
            986.4438
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      3
            01-03263-05
            Concession
            500
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      4
            01-04495-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      5
            01-04497-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      6
            01-04496-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      7
            01-04498-06
            Concession
            1000
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearCocha
      8
            01-04494-06
            Concession
            700
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per year





History





The Cocha
project has a very limited history of previous exploration and mining. At the
time of staking by the Company, 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 in the Central Cocha trend where
copper-silver mineralization was first encountered, 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.





2005
Cocha Property Rock Sampling Results


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




-34-




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.  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 or Central Cocha. To date,
314 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.





The 2006
surface exploration program identified a new silver-copper soil anomaly in the
southwestern portion of the Cocha Property.  The South Cocha Trend
soil anomaly (“SCT”) 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 Central Cocha Discovery Outcrop Trend. A total of 446 soils have
been collected to date on the SCT.





A 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 the Phase I drill program are
provided in the table below.





2006
Cocha Phase I Drilling Results


Drill
      Hole
            Azimuth
            Inclination
            Total
              Depth
      (m)
            From
              (m)
            To
              (m)
            Interval
              (m)
            Cu
              (%)
            Ag
              (ppm)
            Mo
              (ppm)
            Pb
              (%)
            Zn
              (%)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
            
            
            
            
            0.40




-35-




Drill
      Hole
            Azimuth
            Inclination
            Total
              Depth
      (m)
            From
              (m)
            To
              (m)
            Interval
              (m)
            Cu
              (%)
            Ag
              (ppm)
            Mo
              (ppm)
            Pb
              (%)
            Zn
              (%)


COCHA-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.





2007 Exploration
Program





Surface
exploration carried out in 2007 over the entire Cocha Property lead to the
identification of three new mineralized zones and a number of additional
showings.  Two of the zones, North Cocha and South Cocha, host
copper-silver mineralization, similar to the Discovery Outcrop Trend at Central
Cocha, while the East Cocha Zone is characterized by gold-silver-copper
mineralization.  Rock chip sample results from the 2007 program are
tabulated below.





2007
Cocha Property Rock Chip Sampling Results


Zone
            Length
      (m)
            Cu
      (%)
            Ag
      (ppm)
            Au
      (ppm)North
      Cocha
            0.5
            2.65
            8.9
            *South
      Cocha
            10.0
            0.80
            8.9
            *South
      Cocha
            0.40
            2.80
            105
            *East
      Cocha
            0.7
            3.1
            53.4
            6.97East
      Cocha
            0.6
            3.68
            16.2
            22.00East
      Cocha
            1.2
            2.30
            8.2
            4.58East
      Cocha
            1.0
            3.57
            95.7
            8.56East
      Cocha
            1.9
            2.70
            60.0
            3.13


* Results
not reported





The North
Cocha copper-silver target is located 1.8km northwest of the Central Cocha
Target. A number of historical surface workings occur in areas of stratabound
copper-silver mineralization and occur over a strike length of 800m mainly
within five oxidized domains which vary between 90 and 200m in strike with
widths between 15 and 20m.





The South
Cocha copper-silver target is located 3.5km south of Central Cocha. The area
also has a number of small underground workings believed to date back to the
1960s.  The Southern Cocha Zone is traceable for over 900m of strike
and varies from 3 to 20m in width with anomalous mineralization over up to 150m
width.





The East
Cocha gold-silver-copper target is located 4.5km southeast of Central Cocha.
Numerous old workings exist in the area, some of which are also believed to date
back to the 1960s. The high gold values combined with reconnaissance




-36-


geologic
mapping outline a bonanza gold target over widths up to 2m that intermittently
outcrops over 600m of strike length and potentially extends up to
2km.





A 2,000m
Phase II drill program began during the fourth quarter of 2007 and aimed at
further delineating the Central Cocha target (Discovery Outcrop) and to test the
South Cocha target.  Nine drill holes totaling 1,321m were completed
at the Central Cocha Zone before drilling paused.  Highlights from
these drill holes are provided in the table below.





2007
Cocha Property Phase II Drillling Results


Drill
      Hole
            From
      (m)
            To
      (m)
            Interval
      (m)
            Copper
      (%)
            Silver
      (ppm)CO-07-12
            25.70
            28.70
            3.00
            0.27
            6.6CO-07-12
            86.95
            101.25
            14.30
            0.21
            3.5CO-07-13
            45.70
            48.20
            2.50
            0.22
            3.3CO-07-14
            44.50
            46.00
            1.50
            1.29
            40.3CO-07-14
            66.20
            66.80
            0.60
            0.91
            2.1CO-07-15
            78.15
            83.30
            5.15
            0.16
            3.3CO-07-15
            119.65
            122.08
            2.43
            0.17
            5.9CO-07-16
            55.90
            56.30
            0.40
            0.18
            0.8CO-07-17
            71.80
            101.50
            29.70
            0.27
            2.8CO-07-18
            nilCO-07-19
            nilCO-07-20
            8.00
            13.05
            5.05
            0.92
            11.3CO-07-20
            23.46
            39.13
            15.67
            2.52
            41.7CO-07-20
            39.13
            48.18
            9.05
            0.42
            6.3.CO-07-20
            54.37
            92.30
            37.93
            3.61
            38.2





The Phase
II drill program demonstrates the complex nature of the stratabound
copper-silver mineralization at Central Cocha and the lenticular shape of the
mineralized bodies.  To date, six diamond drill holes (CO-06-01,
CO-06-02, CO-06-03, CO-07-12, CO-07-17 and CO-07-20) have been drilled along a
single northeast-oriented fence to outline the geometric shape and size of the
"Discovery Outcrop" area of the Central Cocha Zone. Results delineate a
mineralized body that dips 60 degrees northeast, has an average true width of
22m, a down-dip length of 100m and is closed off 100m along strike to both the
northwest and southeast by barren drill holes. The vertical depth of the body
extends to 100m depth from surface. In addition, three smaller and lower-grade
lenticular mineralized bodies were identified in the hangingwall by the Phase II
drilling.





Drill
holes CO-07-13, CO-07-14, CO-07-15, CO-07-16, CO-07-18 and CO-07-19 were drilled
to the northwest of the Discovery Outcrop, extending the tested segment of the
zone a further 600m to the northwest. Drilling to date has tested the Central
Cocha Zone, defined by copper-silver soil anomalies and outcropping
mineralization, along 1km of strike length. Further drilling along the Central
Cocha Zone will determine the actual strike length of the high-grade mineralized
body.





The Phase
I drilling program was carried out by the Peruvian drilling company Geotecnia
Peruana S.R.L.  Phase II Drilling was carried out by Pac Rim Drilling
of Peru. Drill core was cut on site using a rock saw or 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 Quality Assurance/Quality Control
(“QA/QC”) involving the use of standard samples has been incorporated into the
sampling regime for the project.





The
Company is carrying out IP geophysical studies to define outcropping targets at
depth.  Phase II drilling program will resume once additional
permitting, road and drill pad construction have been completed.





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





Analyses
for the samples from the Cocha Property were performed by ALS Chemex
Laboratories (“ALS Chemex”) in Lima, Peru and North Vancouver, Canada.All core samples were
analyzed in Lima, Peru using Atomic Absorption




-37-




Spectrometry
(“AAS”) and Inductively Coupled Plasma (“ICP”) methods. Additional standard pulp
samples were included with the sample submittals for QA/QC purposes and show
consistent comparison. Check analysis of the mineralization from the Discovery
Outcrop Zone in hole CO-07-20 was performed by Acme Analytical Laboratories of
Vancouver, Canada, with results comparing favorably to those from ALS Chemex.
The 2005 and 2006 work programs were carried out under the direction of Piotr
Lutynski, M.Sc., P.Eng., and reviewed by Dr. David A. Terry, P.Geo., both
Qualified Persons.  The 2007 work program was reviewed by Peter
Ellsworth, Licensed Geologist, Vice President Exploration for the Company and a
Qualified Person.





MPDP Groups of Projects,
Department of Junin, Huancavelica, Arequipa, Cuzco and Puno,
Peru





On  September
19, 2007, the Company entered into two option agreements with Minera Phelps
Dodge del Peru S.A.C. ("MPDP"), an indirect subsidiary of Freeport-McMoRan
Copper & Gold Inc., to earn up to a 70% undivided interest in two groups of
projects in Peru, the “Junin Projects” and the “Arequipa Project” (collectively,
the “MPDP Projects”).





In order
to earn a 70% undivided interest in the MPDP Projects, the Company must complete
US$200,000 in exploration expenditures, including 1,500 metres of drilling, in
each of the Junin and Arequipa Projects on or before September 14, 2009. MPDP
has the right to claw-back a 30% interest (for a total 60% ownership interest)
in each MPDP Project property 60 days after receiving notice that 1,500 metres
of drilling has been completed by the Company.





The Junin
Projects are located in the Junin and Huancavelica Departments, central Peru and
includes the Huari (4,000 ha), Ocoro (2,000 ha), Rosas Pampa (1,500 ha) and
Cinta Verde (2,000 ha) claim groups.  The Arequipa Project is located
in the Arequipa, Cuzco and Puno Departments of southern Peru and includes the
Humaro (1,400ha) and the Quisco (3,300 ha) claim groups.





Location and
Access





The Junin
Projects are located in proximity to the Cocha Property in central Peru, between
the Cordillera Oriental and the Occidental flank of the Sub Andean zone.The Huari Prospect is
located 1 km southeast of the Cocha claim block and 30 km east of Huancayo,
Ocoro is 20km east of Pampas, Cinta Verde is 25 km west of Churcampa (Cobriza)
and Rosapampas is 50 km NE of Huancayo.  The map showing the location
of these projects can be found in the Cocha Property section
above.  The projects are road accessible from Huancayo using a 4x4
vehicle and reported travel times are: 2 hours to Huari, 2.5 hours to Ocoro and
3 hours to Cinta Verde.





The
Arequipa Project is located in southern Peru at about 150km north of
Arequipa.  The following map identifies the location of the
claims:





-38-








Mineral
Tenure





The
following tables describe the tenure of the six claim groups comprising the MPDP
Projects.





Cinta
Verde Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDUCHUY
      CRUZ
            010042707
            Concession
            100
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCINTA
      VERDE 1
            010476106
            Concession
            800
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCINTA
      VERDE 2
            010476206
            Concession
            300
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCINTA
      VERDE 3
            010532406
            Concession
            200
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCINTA
      VERDE 4
            010532506
            Concession
            400
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCINTA
      VERDE 5
            010532606
            Concession
            200
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





Rosas
Pampa Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDROSAS
      1
            010476306
            Concession
            600
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveROSAS
      2
            010476406
            Concession
            500
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveROSAS
      3
            010476506
            Concession
            400
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





-39-


Ocoro
Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDOCORO
      1
            010475806
            Concession
            500
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveOCORO
      2
            010475906
            Concession
            1000
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveOCORO
      3
            010476006
            Concession
            500
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





Huari
Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDCHUQUITURA
      1
            010264106
            Concession
            1000
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      2
            010264206
            Concession
            200
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      3
            010264306
            Concession
            200
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      4
            010265206
            Concession
            800
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      5
            010265306
            Concession
            600
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      6
            010283806
            Concession
            300
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      7
            010476606
            Concession
            600
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      8
            010042807
            Concession
            100
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      9
            010043007
            Concession
            100
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveCHUQUITURA
      10
            010042907
            Concession
            100
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





Humaro
Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDHUMARO
      1
            01-02513-07
            Concession
            600
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveHUMARO
      2
            01-02514-07
            Concession
            400
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveHUMARO
      3
            01-03530-07
            Concession
            400
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





Quisco
Claim Group


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDQUISCO
      1
            01-03001-07
            Concession
            900
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveQUISCO
      2
            010-3002-07
            Concession
            800
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveQUISCO
      3
            01-03003-07
            Concession
            800
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement aboveQUISCO
      4
            01-03449-07
            Concession
            800
            Minera
      Phelps Dodge del Perú S.A.C.
            N/A
            See
      terms of option agreement above





Exploration
History





The Huari
property is the most advanced MPDP project of the Junin group.  MPDP
has identified 20 sediment-hosted copper-silver showings on the property and has
collected 280 rock samples.  Four main zones of interest are
identified: Puru Puru NW, Puru Puru SE, Llaulli, and Añas.  Puru Puru
NW, the most advanced prospect, hosts a mineralized zone extending over 200m in
length and striking beneath soil cover, with widths between 15 and
30m.





-40-


On the
Arequipa Project, previous work by MPDP over the past several years focused on
the Humaro claim block where reconnaissance geologic mapping and rock sampling
identified a zone with anomalous copper mineralization, mostly as oxides, over
an area of 2 km by 0.4 km. The target is a buried copper porphyry stock beneath
the copper mineralized veinlet system on surface.





The
Company is planning a program to evaluate the properties during
2008.  The Company has not found any “reserves” on the MPDP Projects,
as that term is defined in SEC Guide 7.





Acero Copper-Gold Project,
Department of Cuzco, Peru





Location and
Access





The
“Acero Property” is comprised of 1,700 hectare 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 Acero Property location map is below:











Mineral
Tenure





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





-41-


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 (see 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.





In 2005,
the Company performed preliminary mapping, rock and silt sampling focused on the
eastern portion of the property.  Tabulated preliminary sample results
from surface sampling of the Acero Property are presented below.  No
work was carried out on the Acero Property in 2006 or 2007.





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
            3Chip
            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
            46




-42-




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


Panel
            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 SEC Guide 7.





The
Company intends to conduct 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 Acero 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 Cuzco, Peru





Location and
Access





The
“Fuyani Property” is located 40km north of Santo Tomas in the Department of
Cuzco, 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 location map for the Fuyani Property can be viewed under
the Acero Property section above.





Mineral
Tenure





The
Fuyani Property is comprised of 1,000 hectares, acquired by staking in
2006.  It consists of a single concession.  The Fuyani
Property 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





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 SEC Guide 7. Only four rock samples have been collected from the
Fuyani Property to date.  No work was carried out on the Fuyani
Property in 2007.  In 2008, the Company is planning a surface
exploration program to evaluate the Fuyani Property and to identify
targets.





-43-




Korimarca Property,
Department of Cuzco, Peru





Location and
Access





The
“Korimarca Property” is located 20 km north of Santo Tomas in the department of
Cuzco, Peru.  The location map for the Korimarca Property can be
viewed under the Acero Property section above.





Mineral
Tenure





The
Korimarca Property is comprised of three mineral concessions totaling 900
hectares.  The mineral tenure is detailed in the table
below.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDKorimarca
            010-2565-04
            Concession
            500
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearKorimarca
      I
            010-0430-05
            Concession
            100
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per yearKorimarca
      II
            010-0429-05
            Concession
            300
            Recursos
      de los Andes S.A.C
            N/A
            US$3
      per Hectare per year





Exploration and Proposed
Program





To date
very limited surface work has been carried out on the Korimarca
Property.





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





The
Company is planning a comprehensive surface exploration program to fully
evaluate the Korimarca Property.  Prior to commencing work an
agreement must be reached with the local community concerning access to the
Korimarca Property. To date no agreement is in place.





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 Property 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:





-44-








Mineral
Tenure





In June
2006, the Company was granted the 5,600 hectare Mitu concessions.  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
            999.8448
            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 SEC Guide 7.




-45-


Sediment-hosted
copper-silver mineralization occurs in the clastic Mitu Formation at, or close
to, its upper contact with the Pucara limestone. 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.





In
January 2008, additional geologic mapping along with rock and soil sampling was
carried out on the property to further define drill targets. Work focused on an
area covering four discrete stratabound copper-silver mantos (0.45 m to 0.78 m
thick) within a 250m thick package of Permian-aged Mitu Formation sandstone and
limestone that has been traced for 1200m along strike. Mineralization comprising
chalcopyrite-chalcocite-malachite-azurite-broncantite is associated with
grey-carbonaceous chlorite-altered sandstone and forms millimetre-scale lenses
with calcite-pyrite-quartz gangue.





A total
of 15 rock outcrop samples and 51 soil samples were collected.  Rock
channel samples collected from mineralized mantos and adjacent wall rock are
presented as weighted averages in the table below.





Sample
      #
            Description
            Width
              (m)
            Cu
              (ppm)
            Ag
              (ppm)
            Average
      GradeWidth
      (m)
            Cu
      (%)
            Ag
      (ppm)426562
            Hanging
      wall
            0.70
            797
            4.7426563
            Manto
            0.20
            71,600
            534.0
            1.50
            1.10
            74.0426564
            Footwall
            0.60
            2,720
            1.6426565
            Footwall
            0.75
            2,520
            0.4426566
            Manto
            0.75
            63,300
            336.0
            1.72
            2.91
            146.8426567
            Hanging
      wall
            0.22
            2,960
            0.6426568
            Footwall
            1.00
            6,120
            9.2426569
            Manto
            0.50
            67,700
            144.0
            2.50
            1.73
            32.8426570
            Hanging
      wall
            1.00
            3,340
            0.7426571
            Footwall
            1.15
            8,620
            16.3426572
            Manto
            0.80
            27,700
            84.5
            2.55
            1.26
            33.9426573
            Hanging
      wall
            0.60
            212
            0.2426574
            Footwall
            1.00
            4,050
            4.7426575
            Manto
            0.50
            68,000
            262.0
            2.50
            1.53
            54.4426576
            Hanging
      wall
            1.00
            254
            0.3





Conceptual
targets at Mitu include the convergence or thickening of the four mantos
down-dip of the surface outcroppings. To test this hypothesis, 200 m spaced
pole-dipole IPand
magnetics ground surveys are being carried out over the down dip extension of
the mineralized horizons to generate drill target.  Permitting is
underway for a phase I drill program planned for later in 2008.





Analytical
determinations were conducted by ALS Chemex, using gold fire assay with atomic
absorption finish and ICP for multielement analyses. Work on the Mitu Property
was carried out under the direction of Peter C. Ellsworth, M.Sc., Licensed
Geologist, Qualified Person, and Vice President Exploration for the
Company.





Laguna Gold Property,
Department of Pasco, Peru





On May
22, 2007, the Company signed a contract 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”).  See “Item 4. Information on the Company – History
and Development of the Company”.





-46-


In early
2008, the Company carried out a 9-hole diamond drill program testing the
geochemical/geophysical targets on the optioned portion of the Laguna
property.  In all cases the bedrock was reached and no significant zones of
alteration or mineralization were identified in the target areas.  During
the first quarter of 2008, the Laguna Gold option was terminatedand the costs
of approximately $845,000 incurred were written off.





The
Company identified no “reserves” on the Laguna Gold Property, as that term is
defined in SEC Guide 7.





Loma Colorada, Ancash
Department





On
October 25, 2007, the Company signed the Loma Letter of Intent with to option up
to a 100% interest in the Loma Colorada Property located in the Ancash
Department, Peru.  See “Item 4. Information on the Company – History
and Development of the Company”  Under the terms of the Loma Letter of
Intent, the Company may earn up to a 100% undivided interest in the Loma
Colorada property by incurring US$1,400,000 in exploration expenditures and
making US$490,000 in cash payments to the vendor over a three year period. The
Company can exercise this option (i) at the beginning of the fourth year by
making a further payment of US$2,500,000 and a 1% Net Smelter Revenue (“NSR”)
or, alternatively, continue with the option for an additional 12-month period in
exchange for a payment of US$400,000 and incurring a further US$3,000,000 in
exploration expenditures; or (ii) at the beginning of the fifth year by making a
payment of US$200,000 and funding a pre-feasibility study; or (iii) at the end
of the fifth year by making a payment of US$5,000,000 and granting to the vendor
a 2% NSR.  Each 1% NSR can be purchased by the Company for
US$1,000,000.





Location and
Access:





The Loma
Colorada Property is located 430km northwest of Lim, Peru in the coastal
department of Ancash (see the location map below).  Access is by road
up to the nearby village of Quihuay, which is an eight hour drive from Lima, and
by mule or horse to the target area.  The terrain is rugged and the
climb from the village takes about one hour and a half.  Elevation is
between 1,050m and 2,100m above sea level.  Exploration can be carried
out year around. The following map identifies the location of the Loma Colorada
Property:





-47-








Mineral
Tenure





The Loma
Colorada Property consists of three mineral concessions covering 1,100
hectares.  Titles for the Loma Colorada Property are detailed
below.





CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDLA
      ALTAMIRANTA
            01-02416-05
            Concession
            300
            Víctor
      Marcial Garcia Garcia
            N/A
            See
      terms of the letter of intent belowNUESTRA
      SEÑORA DE ATOCHA
            01-01504-04
            Concession
            600
            Victor
      Marcial Garcia Garcia
            N/A
            See
      terms of the letter of intent belowTIERRA
      FIRME
            01-02417-05
            Concession
            200
            Victor
      Marcial Garcia Garcia
            N/A
            See
      terms of the letter of intent below








-48-





Exploration History and
Proposed Program





The Loma
Colorada Property is situated within the Andean-Pacific copper-molybdenum
porphyry belt.  The mineral claims encompass a disseminated
copper-gold target extending approximately 1,500m east-west by 1,200m
north-south.





The
Company acquired a geochemical database for the property that includes gold and
ICP multielement analyses of 315 surface rock chip, channel and colluvium
composite samples collected across the Loma Colorada claim block. Rock samples
were collected throughout the intrusive stocks and surrounding altered country
rock. The results show consistently anomalous copper values along with elevated
gold, silver, arsenic, molybdenum, lead and zinc. Due diligence sampling carried
out by the Company confirm analyses reported in the property database. Basic
statistics from the rock sample database are shown below:





Au
      (ppm)
            Ag
      (ppm)
            As
      (ppm)
            Cu
      (ppm)
            Mo
      (ppm)
            Pb
      (ppm)
            Zn
      (ppm)Samples
            315
            315
            314
            315
            315
            315
            315Average
            0.022
            1.01
            297
            717
            83
            132
            159Minimum
            <0.005
            <0.5
            <5
            29
            <1
            <2
            3Maximum
            0.902
            44.4
            9990
            10,700
            450
            5480
            6740





The
distribution and consistently elevated copper values combined with the style of
alteration and mineralization indicate the Loma Colorada property is a large
tonnage porphyry copper exploration target. Higher grade supergene and primary
sulfide zones will be targeted at depth.





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





The
Company plans to aggressively explore the entire intrusive
body.  Exploration will start by constructing a four kilometre road,
followed by dozer trenching, channel sampling, detailed geologic mapping,
induced polarization (IP) studies and drilling. This work is planned to be
carried out during Q3 and Q4 of 2008.





Check
Samples were analyzed by ALS Chemex. Peter C. Ellsworth, Licensed Geologist,
Vice President Exploration and a Qualified Person, has reviewed the analytical
data on the Loma Colorada Property and has collected the check samples referred
to above.





Toro Blanco, San Felipe and
Sura Properties, Huancavelica Department, Peru





On
February 1, 2008, the Company signed a Letter of Intent with Geologix
Explorations Inc. to earn up to a 70% interest in the Huancavelica Properties
(comprised of the Toro Blanco, San Felipe and Sura Properties) located in the
Huancavelica Department, Peru.  The Toro Blanco, San Felipe and Sura
Properties are all situated within the Southern Peru Epithermal Gold-Silver Belt
that hosts the Liam, Santa Rosa, Orcopampa and Rescatada deposits.





In order
to earn an initial 51% undivided interest in these projects, the Company must
complete US$3,800,000 in exploration expenditures on each of the Huancavelica
Properties, including a minimum of $100,000 exploration commitment during the
first year. The Company may earn an additional 10% interest in each of these
properties by completing a positive feasibility study on each property within
three years of earning its 51% interest. A further 9% interest may be earned by
the Company by placing the property into commercial production within six years
of earning its initial interest, for an aggregate 70% interest in the
property.





If the
Company does not complete a positive feasibility study by the third anniversary,
Geologix may elect to become operator and if it completes a positive feasibility
study within two years, Geologix may earn an additional 11% interest and if it
places the property into commercial production, an additional 10% for an
aggregate 70% interest in the property.





Location and
Access





The Toro
Blanco Property is located in the Andean highlands in Huancavelica Department,
250 kilometres southeast of Lima.  The Toro Blanco Property is
uninhabited and is only utilized for seasonal grazing. Some permanent residents
live




-49-




within a
few kilometres of the Toro Blanco Property.  The Toro Blanco Property
can be reached by the paved Libertador Highway and good quality dirt roads. The
core of the Toro Blanco Property is only accessible by foot or
horseback.





The San
Felipe Property is located in Huancavelica Department approximately 200
kilometres southeast of Lima and 60 kilometres northeast of the village of
Huaytara.  San Felipe Property is uninhabited and is only utilized for
seasonal grazing. The heart of the San Felipe Property can be reached by paved
highway and improved dirt roads.





The Sura
Property is located in Huancavelica Department approximately 200 kilometres
southeast of Lima, and 50 kilometres east of the village of Huaytara, a local
source of supplies and accommodations. The Sura Property is uninhabited and is
only used for seasonal grazing.  The paved Libertador Highway (Pisco
-- Ayacucho) provides good access to the Sura Property. Local dirt roads allow
vehicle travel to the core of the Sura Property.





Mineral
Tenure





The
Huancavelica Properties include five concessions totaling 3,200
hectares.  The mineral tenure of each property is detailed on the
following tables.





Sura
Property Mineral Tenure


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDTAMBO
      NUEVO 5
            01-00106-04
            Concession
            1000
            Geologix
      (Peru) S.A.
            N/A
            See
      terms of the letter of intent belowTAMBO
      NUEVO 6
            01-00107-04
            Concession
            500
            Geologix
      (Peru) S.A.
            N/A
            See
      terms of the letter of intent belowTAMBO
      NUEVO 13
            01-00920-04
            Concession
            400
            Geologix
      (Peru) S.A.
            N/A
            See
      terms of the letter of intent below





San
Felipe Property Mineral Tenure


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDTAMBO
      NUEVO 4
            01-00094-04
            Concession
            400
            Geologix
      (Peru) S.A.
            N/A
            See
      terms of the letter of intent below





Toro
Blanco Property Mineral Tenure


CLAIM
      NAME
            CLAIM
      NUMBER
            CLAIM
      TYPE
            HECTARES
            OWNER
            EXPIRY
      DATE
            PAYMENT/WORK
      REQUIREDTAMBO
      NUEVO 15
            01-02803-04
            Concession
            900
            Geologix
      (Peru) S.A.
            N/A
            See
      terms of the letter of intent below





Exploration History and
Proposed Program





The
Company has not found any “reserves” on the Toro Blanco, San Felipe and Sura
Properties, as that term is defined in SEC Guide 7.





Toro
Blanco Property





Evidence
of both high and low sulfidation gold mineralization is present on the Toro
Blanco Property where vuggy silica and quartz stockwork yield anomalous gold
values. A total of 255 rock samples and 550 soil samples have been collected to
date by Geologix defining a 1km by 1.5km gold-in-soil anomaly. PIMA clay mineral
surveys, multi-element geochemistry and regional geologic mapping suggest a high
sulfidation system with low sulfidation overprint. The primary target is a
high-temperature zone of epithermal mineralization at a shallow depth beneath
the surface. Detailed geologic mapping, induced polarization geophysical studies
(IP) and trenching will be used to delineate drill targets.





San
Felipe Property





On the
San Felipe Property, epithermal veins and silicification within a volcanic dome
have been identified by Geologix work. A total of 201 rock samples and 229 soil
samples have been collected to date. Gold values are associated with




-50-




anomalous
epithermal pathfinder elements arsenic-antimony-mercury. The primary exploration
targets on San Felipe are high sulfidation mantos and low sulfidation veins. The
Company plans detailed geologic mapping and IP geophysical surveys to delineate
drill targets.





Sura
Property





The Sura
Property covers a 300m by 550m gold-in-soil anomaly. A larger but more poorly
defined gold-in-soil anomaly extends 1.5km by 300m. A total of 160 rock samples
and 180 soil samples have been collected from the property to date. Additional
soil sampling is planned as well as geologic mapping and induced polarization
(IP) surveying to outline high sulfidation bulk mineable gold
targets.





Cruz de Mayo Property,
Department of Cuzco, Peru





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”).  The Company also acquired, by direct
staking, 2,200 hectares of adjacent land.  Effective July 30, 2007 the
Company terminated the option.  Accordingly, the Company has
written-off $250,956 of costs capitalized to the property to date.





The
Company identified no “reserves” on the Cruz de Mayo Property, as that term is
defined in SEC Guide 7.





Nevada
USA





Roy and Hills,
Properties





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 the Company and Quitclaim Deeds were
filed with the Bureau of Land Management on June 1, 2005. On June 9, 2006, the
Company entered into the Astral Letter of Agreement, whereby it granted an
option on its Roy and Hills Claims to Astral. 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.





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:


-51-








Mineral
Tenure





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 are 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.





-52-


On the
Roy property a gold-silver epithermal system is hosted within an alteration zone
that outcrops over a 2.25 square kilometre area. The Hills property is located
7km to the northwest of the Roy property and hosts a prospective silver-gold
epithermal system within a 1km by 500m alteration area.





A 7-hole
1,000m Phase I drill program started in January of 2007 on the Roy and Hills
gold projects with results reported on May 18, 2007.  Results from the
program include 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.  Astral is currently carrying out additional fieldwork
on the property to evaluate the potential of a follow –up drill
program.





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





The Roy
and Hills drilling program was carried out under the supervision of John Rice,
C.P.G., a Qualified Person.  All analytical work for the Roy and Hills
drilling program was performed by American Assay Laboratories Inc., an
analytical services provider located in Sparks, Nevada.  The technical
information above has also been reviewed by Dr. David A. Terry, P.Geo., a
director of the Company and  a Qualified Person.





Colombia





Effective
January 30, 2007, the Company entered into a 50/50 joint venture with Golden
Arrow to evaluate and acquire precious and base metal properties in Colombia.
The joint venture has hired an operations manager and retained contract
exploration personnel.  In addition, the joint venture is in the
process of evaluating a number of opportunities but has not acquired any mineral
properties to date.  In May 2008, the Company withdrew from the Golden
Amera Inc. Joint Venture.





Plan
of Operation and Exploration Budget





As of May
31, 2008, the Company had working capital of approximately
$250,000.





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 2008 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.  The first part of a Phase II
drill program comprising 1,321m in nine drill holes was completed during the
fourth quarter of 2007 on the Central Cocha (Discovery Outcrop)
target.  In the first quarter of 2008 a ground magnetics and IP survey
is being carried out on the Central, East and South Cocha targets to assist in
delineating drill targets – the budget for this program is
$100,000.  Continuation of the Phase II drill program will take place
once additional permitting, road and drill pad construction have been completed
– the budget for this program is $450,000.





The
Company is planning to construct a 4km road to access the mineralized zone on
the Loma Colorada Property, facilitating ground magnetics and IP geophysical
surveying and bulldozer trenching prior to drill-testing by year
end.  The budget for this work is $400,000.





The
Company is planning to carry out ground magnetic and IP geophysical surveys in
addition to surface sampling and trenching on the Huancavelica Properties – the
three properties have a total budget of $200,000.





-53-


During
the first quarter of 2008, the Company carried out a 9-hole diamond drill
program testing the geochemical/geophysical targets on the optioned portion of
the Laguna Gold Property.  In all cases the bedrock was reached and no
significant zones of alteration or mineralization were identified in the target
areas.  As a result, the option has been dropped in the first quarter
of 2008.  The Company estimates that $845,000 has been spent to date
on the optioned portion of the Laguna Gold Property.





On the
Mitu Property a ground magnetics and IP geophysical survey was carried out over
the target area in the first quarter of 2008 at a cost of $50,000.  No
further work is planned for 2008.





A total
of $50,000 has been budgeted to advance other properties the Company currently
has in its portfolio through surface exploration programs for the remainder of
2008.





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 2008 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.  The Company has budgeted $400,000 for
these activities during fiscal 2008.  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 2008
year.





Location
            January-May
            June-December
            TotalCocha
            Cu-Ag
            Peru
            $100,000
            $450,000
            $550,000Laguna
            Au
            Peru
            $470,000
            $20,000
            490,000Loma
      Colorada
            Cu-Au-Mo
            Peru
            $25,000
            $400,000
            $425,000Geologix
      Properties
            Au
            Peru
            $20,000
            $200,000
            220,000Other
      Peru Properties
            
            Peru
            $20,000
            $50,000
            $70,000Peru
      Generative and Acquisitions
            
            Peru
            $50,000
            $250,000
            $300,000Colombia
            
            
            $100,000
            -
            $100,000Canon
      Payments
            
            Peru
            -
            $232,000
            $232,000Total
            
            
            $785,000
            $1,602,000
            $2,387,000





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, 2007, 2006 and 2005 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




-54-




noted in
Note 11 of the Company’s audited financial statements for the years ended
December 31, 2007, 2006 and 2005 which are included herein.  The noon
rate of exchange on May 31, 2008, reported by the United States Federal Reserve
Bank of New York, for the conversion of Canadian dollars into United States
dollars was CDN$0.9938 (US$1.0062 = CDN$1.00). 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 OTCBB 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 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 $300,000 for fiscal 2008 for generative
exploration program.





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.  During 2007
the Company staked or optioned Loma Colorada, the Junin properties and the Huari
property.  See “Item 4. Information on the Company - Property, Plant
and Equipment - Other Properties.”





Results
of Operations





Fiscal
Year Ended December 31, 2007 Compared to Fiscal Year Ended December 31,
2006





For the
year ended December 31, 2007, the Company reported a net loss of $2,326,325
($0.08 per share), an increase in loss of $406,076 from the $1,920,249 ($0.10
per share) for the year ended December 31, 2006.





A total
of $2,134,672 of general and administrative costs were incurred for the year
ended December 31, 2007, compared to $1,422,749 for the year ended December 31,
2006.  Significant expenditures were incurred in the following
categories:





-
            Corporate
      development and investor relations costs of $320,774, compared to $227,747
      during 2006, mainly due to increased costs associated with advertising and
      attendance at investor conferences, which were partially offset by reduced
      external public relations advisory services fees paid in
    2007.


-
            General
      exploration increased to $522,136 in 2007 from $296,810 in 2006 as the
      Company continues to expense costs associated with exploration that are
      not related to specific projects or properties.  The costs
      primarily relate to the Company’s exploration activities in Peru and
      Colombia.


-
            Office
      and sundry expenses increased by $76,228 to $198,998 in 2007 from $122,639
      in 2006 as a result of increased activity levels in 2007.  The
      office and sundry expense is primarily comprised of an allocation of fees
      from the Grosso Group.


-
            Stock-based
      compensation of $296,581 is the estimated fair value of 1,987,500 stock
      options granted to employees, directors and consultants during
      2007.  Stock-based compensation of $90,850 was recorded in the
      year ended December 31, 2006.  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.





-55-


-
            Travel
      expenses increased $88,787 to $131,145 in 2007 from $42,358 in 2006 as a
      result of increased exploration related travel as well as increased travel
      to investor conferences.


-
            Interest
      income increased to $80,383 in 2007 from $30,924 in 2006 as a result of
      the Company holding more short-term
investments


-
            The
      write-off of mineral properties in 2007 consists of the $250,956 write-off
      of the Cruz de Mayo property.  The Company terminated its option
      agreement for the Cruz de Mayo project in July 2007.  The 2006
      write-off is primarily a result of the Company terminating its option on
      the Esperanza property in Peru.





During
the year ended December 31, 2007 the Company capitalized $338,491 of
expenditures on the Mogote property in Argentina. Of these expenditures,
$333,000 represents the fair value of 900,000 shares of the Company issued to
fulfil its final obligations under the option agreement to earn a 51% interest
in the property.  In addition, the Company capitalized $679,471 of
expenditures on the Cocha Property, $252,581 on the Laguna Property and $47,875
on the Mitu property in Peru.





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.








-56-





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.





A total
of $1,187,928 of general and administrative costs was 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, are  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.





Liquidity
and Capital Resources





The
Company’s cash position at December 31, 2007 was $166,018, a decrease of
$365,108 from $531,126 at December 31, 2006. Short-term investments balance
increased to $1,400,000 at December 31, 2007 from $100,000 at December 31,
2006.  Total assets increased to $6,369,550 at December 31, 2007 from
$4,343,852 at December 31, 2006.  This increase is mainly as a result
of exploration expenditures incurred in 2007 which were capitalized to the
Company’s mineral properties and deferred costs and an increase in short-term
investments.





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, 2007, the Company earned interest income of $80,383, an
increase of $49,459 from the year ended December 31, 2006 as a result of
increased funds on deposit.





The
Company has financed its exploration activity through the sale of its equity
securities.  During the year ended December 31, 2007, the Company
completed:





i)
            A
      private placement financing of 11,700,000 units at $0.35 per unit, for
      gross proceeds of $4,095,000.  Each unit comprised one common
      share and one half common share purchase warrant.  Each full
      warrant entitles the holder to purchase one additional common share at a
      price of $0.45 per share for two years from the close of




-57-


financing.  In
      addition, the Company issued 930,800 Agent's Warrants and 157,444 agent’s
      units.  Each agent’s unit entitles the holder to acquire one
      common share and one half common share purchase warrant.  Each
      full agent’s warrant is exercisable for one share at a price of $0.45, for
      a period of two years from the close of the
financing.





The
Company received a $Nil (2006 - $716,700) from the exercises of warrants and
$Nil (2006 - $Nil) from the exercise of stock options during 2007.  As
at May 31, 2008, the Company had working capital of approximately
$250,000.





To date,
the Company has not generated any cash flow from its activities to fund ongoing
activities and cash commitments.  The Company has financed its
exploration activity principally through the sale of its equity
securities.  The Company does not believe it has adequate resources to
maintain its core activities for the 12 months from January 1, 2008 to December
31, 2008 nor sufficient working capital to fund all its planned exploration
activities.   In the future, the Company will 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.





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, 2007.





-58-


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
      41
            President
      and Director of the Company.
            April
      2000JOSEPH
      GROSSO
              Chairman
      and Director
              (resident
      of Burnaby, BC, Canada)
              Age
      70
            Director,
      President and CEO of IMA Exploration Inc. since February
    1990.
            February
      2004JERRY
      A. MINNI
              Director
              (resident
      of West Vancouver, BC, Canada)
              Age
      48
            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
      42
            Businessman/Consultant.
      President of Matalia Investments Ltd. since  Oct. 1993 to the
      present and President & CEO of Bon Terra Resources Inc since May 2007
      to present.
            August
      2002ARTHUR
      LANG
              CFO
              (resident
      of Vancouver, BC, Canada)
              Age
      64
            Chief
      Financial Officer of the Company.  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
      2005PETER
      ELLSWORTH
              VP
      Exploration
              (resident
      Missoula, Montana, USA)
              Age
      46
            VP,
      Exploration of the Company since joining the Company in July
      2007.  President of Ellsworth Geological, PC since
      1992.
            December
      2007LINDA
      MCCLUSKY
              Secretary
              (resident
      of Vancouver, BC, Canada)
              Age
      65
            Corporate
      Secretary for Grosso Group Management Ltd. since October
      2005.  From 1999 to October 2005, corporate paralegal for
      Imperial Parking Canada Corporation.
            June
      2007




-59-
 
 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
              Director
              (resident
      of Maple Ridge, BC, Canada)
              Age
      42
            VP
      Exploration for the Company from March 2004 to December
      2007.  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
            VP
      - March 2004 to Dec. 2007
              Director
      – December 2007GERALD
      CARLSON
              Director
              (resident
      of West Vancouver, BC, Canada)
              Age
      62
            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 activities.  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.





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





-60-





The
following table identifies, as of May 31, 2008, 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 presentBlue
      Sky Uranium Corp
            Uranium
      Exploration
            Director
            November
      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 presentJerry
      Minni
            Raytec
      Metals Corp.
            Food
      Equipment Manufacturer
            Director
            February
      1992 to presentPresident
            February
      1992 to presentMantra
      Mining Inc.(formerly Global Sortweb)
            Software
      Development
            Director
      & CFO
            July
      1998 to presentAvantec
      Technologies Inc.
            Chemical
      Equipment
            Director
            June
      1999 to presentRomulus
      Resources Ltd.
            Resource
      Company
            Director
            November
      2005 to presentWeststar
      Resources Corp.
            Mineral
      Exploration
            Director
      & CFO
            June
      2005 to presentIMA
      Exploration Inc.
            Mineral
      Exploration
            Director
            December
      2007 to presentGerald
      G. Carlson
            Copper
      Ridge Explorations
            Mineral
      Exploration
            President/Director
            March
      1999 to presentGolden
      Aria Corp.
            Oil
      & Gas Exploration
            Director
            March
      2005 to presentAlmaden  Minerals
      Ltd.
            Mineral
      Exploration
            Director
            July
      1998 to presentTarsis
      Capital Corp.
            Mineral
      Exploration
            Director
            July
      2007 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
      & Tourism Consulting
            President
            October
      1993 to presentBonTerra
      Resources Inc.
            Mineral
      Exploration
            President
      & CEO
            May
      2007 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 presentBlue
      Sky Uranium Corp.
            Uranium
      Exploration
            CFO
            May
      2007 to presentLinda
      McClusky
            IMA
      Exploration Inc.
            Mineral
      Exploration
            Corp.
      Sec.
            December
      2007 to presentAstral
      Mining Corporation
            Mineral
      Exploration
            Corp.
      Sec.
            March
      2007 to presentBlue
      Sky Uranium Corp.
            Uranium
      Exploration
            Corp.
      Sec.
            May
      2007 to presentGolden
      Arrow Resources Corp.
            Mineral
      Exploration
            Corp.
      Sec.
            June
      2007 to presentPeter
      Ellsworth
            Ellsworth
      Geological P.C.
            Geological
      Contracting
            President
            1992
      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.”





-61-





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”), Blue Sky Uranium Corp (“Blue Sky”) and
Astral Mining Corporation (“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, 2007, the Company incurred
fees of $540,402 (2006 - $533,469) to the Grosso Group: $585,385(2006 -
$480,545) was paid in twelve monthly payments and $44,983 (2006 - $52,924
included in accounts payable) is included in accounts receivable 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 (2006 - $95,000) deposit to the Grosso Group for the
purchase of equipment and leasehold improvements and for operating working
capital.  See “Item 7.  Major Shareholders and Related Party
Transactions - Related Party Transactions - Conflicts of Interest.”





The
President of the Company provides his services on a full-time basis under a
contract with a private company controlled by the President for an annual fee of
$87,500.  During the fiscal 2007, the Company paid $87,500 (2006 -
$85,833) 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.  See “Item
7.  Major Shareholders and Related Party Transactions - Related Party
Transactions - Conflicts of Interest.”





Effective
May 1, 2007, the Company entered into an agreement with IMA to pay a monthly fee
for the services provided by IMA’s Chief Executive Officer who is a director of
the Company.  The agreement may be terminated at any time by the
Company upon 30 days written notice.  For the fiscal 2007, the Company
paid $6,667 to IMA for the services. See “Item 7.  Major Shareholders
and Related Party Transactions - Related Party Transactions - Conflicts of
Interest.”





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, 2007,
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, 2007, 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, 2007, 2006 and 2005(to the extent
required by the Regulations) in respect of the Named Executive
Officer:





-62-







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
            2007
              2006
              2005
            87,500
              85,833
              73,500
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            287,500
              75,000
              Nil
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            Nil
              Nil
              NilArthur
      Lang
              CFO
            2007
              2006
              2005
            26,535(2)
              15,223(3)
              13,4024)
            Nil
              Nil
              Nil
            Nil
              Nil
              Nil
            80,000
              30,000
              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 2007, Mr. Lang’s total compensation from the Grosso Group was
      $150,000 of which $26,535 was allocated to the Company as part of the
      Grosso Group fees for the year.


(3)
            During
      the year 2006, Mr. Lang’s total compensation from 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.


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





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, 2007 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
            287,500
              
              80,000
            14%
              
              4%
            $0.40
              
              $0.40
            $0.35
              
              $0.35
            July
      27, 2012
              
              July
      27, 2012





(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





-63-


The
following table sets forth details of all exercises of stock options during the
financial year ended December 31, 2007 by the Named Executive Officer(s), and
the financial year end value of unexercised options on an aggregated
basis:





Name
            Securities
      Acquired on Exercise(1)
              (#)
            Aggregate
      Value
              Realized(2)
              ($)
            Unexercised
      Options at Financial Year End(3)
              Exercisable/Unexercisable
              (#)
            Value
      of Unexercised in the Money Options at Financial Year End(3)(4)
              Exercisable/Unexercisable
              ($)Nikolaos
      Cacos
            Nil
            Nil
            537,500/
      NA
            Nil/
      NAArthur
      Lang
            Nil
            Nil
            110,000/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, 2007 of $0.18
      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
            525,000
            26%
            0.40
            0.35
            July
      27, 2012




(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.





-64-


The
following table sets forth details of all exercises of stock options during the
financial year ended December 31, 2007 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
            1,065,000/
      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, 2007 of $0.18
      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, 2007, the Company paid
$87,500 (2006 - $85,833; 2005 - $73,500) 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.





Effective
August 11, 2007, the Grosso Group entered into an agreement with the Peter
Ellsworth, Vice President of Exploration for his services on behalf of the
companies to which Grosso Group provides its services, including the
Company.  Under the agreement Mr. Ellsworth will be paid US$650 per
day, of which a portion is billed to the Company. During the year ended December
31, 2007, the Company paid $48,805 in connection with Mr. Ellsworth’s services.
Mr. Ellsworth was also granted 175,000 stock options of the Company at a price
$0.40. 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 one month’s consulting fee of compensation.





Effective
May 1, 2007, the Company entered into an agreement with IMA Exploration Inc.
(“IMA”) to pay a monthly fee for the services provided by IMA’s Chief Executive
Officer, Joseph Grosso, who is a director of the Company.  The
agreement may be terminated at any time by the Company upon 30 days written
notice.  For fiscal 2007, the Company paid $6,667 to IMA for these
services.





Dr. David
Terry, formerly Vice President,
Exploration for the Company became a director in December 2007,provides
his services as part of the Company’s agreement with the Grosso
Group.  Dr. Terry has entered into an agreement with the Grosso
Group.  Prior to January 1, 2005, Dr. 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.”  During the year ended December 31, 2007 Dr. Terry’s
total compensation from the Grosso Group was $175,000 of which $46,135 was
allocated to the Company as part of the Grosso Group fees.





Mr.
Arthur Lang, Chief Financial Officer for the Company, provides his services as
part of the Company’s agreement




-65-




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.”  During the year ended
December 31, 2007 Mr. Lang’s total compensation from the Grosso Group was
$150,000 of which $25,535 was allocated to the Company as part of the Grosso
Group fees.





Mrs.
Linda McClusky provides executive services to the Company as an employee of the
Grosso Group. Mrs. McClusky was appointed Corporate Secretary effective June 6,
2007. During the year ended December 31, 2007, Mrs. McClusky’s total
compensation from the Grosso Group was $67,000 of which $15,582 was allocated to
the Company as part of the Grosso Group fees.





Other
than the Company’s agreement s with Mr. Cacos and Mr. Ellsworth, 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 the Grosso Group to provide services and
facilities to the Company.  The formal Administration Services
Agreement was approved by the directors and by the TSX-V on May 19,
2005.





The
Grosso Group is a private company which is owned by the Company, Golden Arrow,
IMA,  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, 2007, the Company incurred fees of $540,402 (2006 -
$533,469; 2005 - $377,410) to the Grosso Group: $585,385 (2006 - $480,545; 2005
- $290,858) was paid in twelve monthly payments and $44,983 (2006 - $52,924;
2005 - $86,552 included in accounts payable) is included in accounts receivable
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 deposit (2006 - $95,000) 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
Grosso Group’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 in
Argentina, Colombia and Peru.





The members of the board of directors of the Grosso
Group are appointed by the shareholder companies, with each shareholder company
appointingone of its directors to serve as
a director of the Grosso Group.  As ofMay31, 2008, the directors of the Grosso Group are Nikolaos Cacos,Joseph Grosso, Arthur Lang,
SeanHurd andManfred 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 Arrow and an officer of
Astraland Blue Sky.Nikolaos
Cacos is a director of Blue Sky, an officer ofIMA, a director and officer of Golden Arrow and a




-66-


director and officer of the Company.  Mr. Hurd
is an officer and director of Blue Skyandan officer of IMAand Golden
Arrow.  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 ofcompanies 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.





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, 2007, the Company directly employed Nikolaos Cacos and indirectly
employed approximately 24 employees (2006 – 24; 2005 – 20 employees) through the
Administration Services Agreement with the Grosso Group, including corporate,
accounting, geological and administrative services. The Company has 12 employees
(2006 – 5 full-time employees; 2005 – one part-time employee) in its Lima, Peru
office and two employees in its Colombia 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.”





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 May 31,
2008:




Title
      of Class
              Name
      of Owner
              Shares
      and Rights Beneficially
                Owned
      or Controlled
              Percent
      of ClassCommon
      Stock
              Nikolaos
      Cacos
              1,559,913(1)
              4.1%Common
      Stock
              Joseph
      Grosso
              1,340,257(2)
              3.5%Common
      Stock
              Robert
      Coltura
              114,332(3)
              0.3%Common
      Stock
              Jerry
      Minni
              234,549(4)
              0.6%Common
      Stock
              Gerald
      Carlson
              150,000(5)
              0.4%
  -67-
 
  Title
      of Class
                Name
      of Owner
                Shares
      and Rights Beneficially
                  Owned
      or Controlled
                Percent
      of Class
 Common
      Stock
              David
      A. Terry
              300,000(6)
              0.8%Common Stock
              Arthur Lang
              115,000(7)
              0.3%Common Stock
              Peter
      Ellsworth
              175,000(8)
              0.5%Common
      Stock
              Linda
      McClusky
              40,000(9)
              0.1%TOTAL
              
              3,423,974
              15.8%


NOTES:


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 May 31, 2008, 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 37,826,036 shares of common stock
outstanding as of May 31, 2008.





(1)
            Includes
      the following shares, options and warrants held by Mr. Cacos and Aspasia
      Cacos (Mr. Cacos’ wife):


a.
            221,636
      shares held by Mr. Cacos;


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


c.
            409,277
      shares held by NAC Investments Inc.


d.
            Options
      held by Mr. Cacos to acquire 537,500
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 $0.45 per share,
      exercisable until December  8,
2008;


g.
            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.”


(2)
            Includes
      the following shares and options held by Mr. Grosso and Evelyn Grosso (Mr.
      Grosso’s wife):


a.
            829,257
      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 400,000
shares;


d.
            Options
      held by Mrs. Grosso to acquire 55,000
shares;


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


(3)
            Includes
      the following shares, options and warrants held by Mr. Coltura and Betty
      Coltura (Mr. Coltura’s wife):


a.
            14,332
      shares held by Mr. Coltura;


b.
            7,500
      shares held by Mrs. Coltura;


c.
            Options
      held by Mr. Coltura to acquire 75,000
shares;


d.
            Warrants
      held by Mr. Coltura to acquire 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.”


(4)
            Includes
      the following shares, options and warrants held by Mr.
    Minni:


a.
            44,549
      shares held by Mr. Minni;


b.
            190,000
      options; and


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


(5)
            Includes
      50,000 shares held by Dr. Carlson and options held by Dr. 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.”


(6)
            Includes
      20,000 shares held by Dr. Terry, options to acquire 250,000 shares and
      warrants to acquire 30,000 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
      5,000 shares held by Mr. Lang and options to acquire 110,000 shares. See
      “Item 6. Directors, Senior Management and Employees – Options, Warrants
      and Other Rights to Acquire
Securities.”


(8)
            Includes
      options held by Ellsworth Geological to acquire 175,000
      shares.


(9)
            Includes
      10,000 shares held by Ms. McClusky and options to acquire 25,000 shares
      and warrants to acquire 5,000 shares at a price of $0.45 per share,
      exercisable until April 19, 2009.





-68-


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





Options,
Warrants and Other Rights to Acquire Securities





As of May
31, 2008, the Company had granted a number of stock options and issued a number
of warrants pursuant to which up to 14,363,123 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 5, 2007, 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.





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 TSX-V
requires that the Company’s shareholders approve the Stock Option Plan
annually.





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.





-69-


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.





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.





As of May
31, 2008, an aggregate of 3,287,000 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 DateGerry
      Carlson
            Director
            25,000
              25,000
              100,000
            0.60
              0.45
              0.40
            Dec
      12, 2008
              Apr.
      2, 2009
              Jul.
      27, 2012Nick
      DeMare
            Consultant
            50,000
              25,000
            0.60
              0.90
            Dec
      12, 2008
              Apr
      2, 2009Nikolaos
      Cacos
            Director
            125,000
              50,000
              75,000
              287,500
            0.60
              0.90
              0.60
              0.40
            Dec
      12, 2008
              Apr,
      2, 2009
              Jul.
      11, 2011
              Jul.
      27, 2012Art
      Lang
            Officer
            30,000
              80,000
            0.60
              0.40
            Jul.
      11, 2011
              Jul.
      27, 2012Sean
      Hurd
            Consultant
            100,000
              30,000
              50,000
              70,000
            0.60
              0.60
              0.90
              0.40
            Dec
      12, 2008
              Jul.
      11, 2011
              Apr.
      2, 2009
              Jul.
      27, 2012Steve
      Phillips
            Consultant
            75,000
              25,000
            0.60
              0.90
            Dec
      12, 2008
              Apr.
      2, 2009William
      Lee
            Consultant
            25,000
            0.60
            Dec
      12, 2008Joseph
      Grosso
            Director
            100,000
              85,000
              65,000
              150,000
            0.60
              0.90
              0.60
              0.45
            Dec
      12, 2008
              Apr.
      2, 2009
              Jul.
      11, 2011
              Jul.
      27, 2012Carlo
      Timossi
            Consultant
            50,000
            0.60
            Dec
      12, 2008Evelyn
      Grosso
            Consultant
            55,000
            0.60
            Dec
      12, 2008Robert
      Coltura
            Director
            50,000
              25,000
            0.60
              0.45
            Dec
      12, 2008
              Jul.
      27, 2012Jerry
      Minni
            Director
            50,000
              40,000
              100,000
            0.60
              0.60
              0.45
            Dec
      12, 2008
              Jul.11,
      2011
              Jul.
      27, 2012




-70-


Optionee
            Nature
              of Option(1)
            No.
      of
              Options
            Exercise
              Price/Share
              $
            Expiry
Date


Louis
      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
            Director
            60,000
              40,000
              150,000
            0.90
              0.75
              0.45
            Apr
      2, 2009
              Mar.
      21, 2010
              Jul.
      27, 2012Diane
      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, 2011Michael
      Clark
            Consultant
            20,000
            0.29
            Oct.
      2, 2012Bruce
      Korhonen
            Consultant
            50,000
            0.40
            Jul.
      27, 2012Isabel
      Chiarantano
            Consultant
            47,500
            0.40
            Jul.
      27, 2012Ellsworth
      Geological (Peter Ellsworth)
            Officer
            175,000
            0.40
            Jul.
      27, 2012Bruno
      Faccin
            Consultant
            90,000
            0.40
            Jul.
      27, 2012Maria
      Ledezma
            Consultant
            25,000
            0.40
            Jul.
      27, 2012J.
      Alexander Mason
            Consultant
            50,000
            0.40
            May
      22, 201225,000
            0.40
            Jul.27,
      2012Linda
      McClusky
            Officer
            25,000
            0.40
            Jul.
      27, 2012Michael
      Baybak
            Consultant
            135,000
            0.35
            Aug.
      1, 2010George
      Duggan
            Consultant
            45,000
            0.35
            Aug.
      1, 2010Christina
      Balys
            Consultant
            5,000
            0.20
            Apr.
      7, 2013TOTAL:
            
            3,287,000


(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 May
31, 2008, the directors and officers of the Company, as a group (nine persons),
held options to purchase 1,682,000 shares of the Company’s common stock,
including options held by their spouses.





Warrants





As of May
31, 2008, there were non-transferable common share purchase warrants exercisable
for the purchase of 11,076,123 common shares, 2,291,000 of which expire on
December 8, 2008 and may be exercised at $0.45 per share  and
5,562,560 which expire on April 19, 2009 and may be exercised at $0.45 per share
and 1,296,963 which expire on April 12, 2009 and may be exercised at $0.45 per
share and 1,660,000 which expire on April 30, 2010 and may be exercised at $0.18
per share and 265,600 which expire on April 30, 2010 and may be exercised at
$0.18 per share.





As of May
31, 2008, the directors and officers of the Company, as a group (nine persons),
held warrants to purchase 409,500 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.





-71-


Item
7.  Major Shareholders and Related Party
Transactions.





Major
Shareholders





To the
best of the Company’s knowledge, no person owns five percent (5%) or more of the
Company's outstanding shares as of May 31, 2008.





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 IPO
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 May
31, 2008, 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 May 31, 2008.  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, 2007 through the date of this filing,
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)
            The
      Company has exercised its option agreement with Golden Arrow, a publicly
      traded company with common management and directors, and has earned a 51%
      interest in eight mineral concessions, comprising 8,009 hectares (the
      “Mogote Property”), located in San Juan Province,
      Argentina.  The Company has issued a total of 1,650,000 common
      shares and incurred a minimum of US $1.25 million of exploration
      expenditures, to fulfil the requirements to earn this 51%
      interest.





On May
14, 2007, the Company gave notice to Golden Arrow that it would not proceed with
the additional expenditures required in order to earn an additional 24%
interest.





-72-


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)
            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, 2007, the Company paid $87,500 (2006 - $85,833; 2005 -
      $73,500) to the President or to the private company controlled by 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.





3)
            The
      following table provides a listing of the offerings and private placements
      conducted by the Company, during the period from January 1, 2007 through
      May 31, 2008, 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 – 11,700,000 units, announced March 12, 2007
            
            0.35
            0.40Each
      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 two years after closing of the financing at
      a purchase price of $0.45.Robert
      Coltura
            15,000Linda
      McClusky
            5,000Total
            20,000


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





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





5)
            The
      Grosso Group is a private company which is owned by the Company, Golden Arrow, IMA, 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, 2007, the
      Company incurred fees of $540,402 (2006 - $533,469) to the Grosso Group:
      $585,385 (2006 - $480,545) was paid in twelve monthly payments and $44,983
      (2006 - $52,924 included in accounts payable) is included in accounts
      receivable 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 deposit
      (2005 - $95,000) 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.





6)
            Effective
      January 30, 2007, the Company entered into a 50/50 joint venture with
      Golden Arrow to evaluate and acquire precious and base metal properties in
      Colombia.  In May 2008, the Company withdrew from the Golden
      Amera Inc. Joint Venture.





-73-


7)
            Effective
      August 11, 2007, the Grosso Group entered into an agreement with the Peter
      Ellsworth, Vice President of Exploration for his services on behalf of the
      companies to which Grosso Group provides its services, including the
      Company.  Under the agreement Mr. Ellsworth will be paid US$650
      per day, of which a portion is billed to the Company.  Mr.
      Ellsworth was also granted 175,000 stock options of the Company at a price
      $0.40. 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 one months consulting fee of
      compensation





8)
            Effective
      May 1, 2007, the Company entered into an agreement with IMA to pay a
      monthly fee for the services provided by IMA’s Chief Executive Officer,
      Joseph Grosso, who is a director of the Company.  The agreement
      may be terminated at any time by the Company upon 30 days written
      notice.  In fiscal 2007, the Company paid $6,667 to IMA for
      these services.





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, 2007, 2006, 2005,
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.





Item
8.  Financial Information.


Description
            
            PageConsolidated
      Financial Statements and other financial information
              for
      the Years Ended December 31, 2007, 2006 and 2005
            
            F-1
      - F-34





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.





-74-


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, 2007
            9,553,800
            
            0.44
            
            0.15December
      31, 2006
            9,473,300
            
            0.73
            
            0.32December
      31, 2005
            12,673,600
            
            0.94
            
            0.35




Sales
      Price ($)Quarter
      Ended
            Volume
            
            High
            
            LowMarch
      31, 2008
            6,441,200
            
            0.39
            
            0.16December
      31, 2007
            3,897,700
            
            0.37
            
            0.15September
      30, 2007
            1,646,200
            
            0.38
            
            0.18June
      30, 2007
            2,120,800
            
            0.43
            
            0.35March
      31, 2007
            1,889,100
            
            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
            
            0.32





Sales
      Price ($)Month
      Ended
            Volume
            
            High
            
            LowMay
      31, 2008
            1,062,100
            
            0.21
            
            0.12April
      30, 2008
            767,200
            
            0.20
            
            0.12March
      31, 2008
            515,500
            
            0.27
            
            0.17February
      29, 2008
            1,427,900
            
            0.27
            
            0.16January
      31, 2008
            4,497,800
            
            0.39
            
            0.16December
      31, 2007
            1,034,900
            
            0.24
            
            0.15








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 OTCBB, 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.




-75-




Closing
      Sales Price (US $)Year
      Ended
            Volume
            
            High
            
            LowDecember
      31, 2007
            2,121,400
            
            0.51
            
            0.14December
      31, 2006
            684,750
            
            0.73
            
            0.28December
      31, 2005
            365,910
            
            0.76
            
            0.30




Closing
      Sales Price (US $)Quarter
      Ended
            Volume
            
            High
            
            LowMarch
      31, 2008
            611,700
            
            0.37
            
            0.15December
      31, 2007
            1,612,600
            
            0.51
            
            0.14September
      30, 2007
            235,500
            
            0.40
            
            0.21June
      30, 2007
            187,800
            
            0.39
            
            0.32March
      31, 2007
            85,500
            
            0.36
            
            0.29December
      31, 2006
            195,900
            
            0.38
            
            0.28September
      30, 2006
            155,200
            
            0.48
            
            0.43June
      30, 2006
            181,750
            
            0.70
            
            0.32




Closing
      Sales Price (US $)Month
      Ended
            Volume
            
            High
            
            LowMay
      31, 2008
            212,100
            
            0.19
            
            0.10April
      30, 2008
            118,500
            
            0.19
            
            0.13March
      31, 2008
            73,500
            
            0.27
            
            0.16February
      29, 2008
            221,200
            
            0.27
            
            0.16January
      31, 2008
            317,000
            
            0.37
            
            0.15December
      31, 2007
            471,900
            
            0.25
            
            0.14





Registration,
Transfer and Par Value





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





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 filing of this annual
report:





1.
            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




-76-




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.





2.
            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.  The Letter of Agreement
      was approved by the TSX-V, and Astral issued the first 100,000 shares to
      the Company on August 4, 2006.





3.
            Effective January 30, 2007, the
      Company entered into a 50/50 joint venture with Golden Arrow to evaluate
      and acquire precious and base metal properties in Colombia.  In
      May 2008, the Company withdrew from the Golden Amera Inc. joint
      venture.





4.
            On
      January 18, 2007, the Company signed a letter of intent to enter into an
      option agreement to acquire up to a 90% interest in the 11,250 hectare
      Laguna Gold Project in the Pasco Department of west central
      Peru.  The letter of intent was finalized in a definitive
      contract effective May 22, 2007. Under the terms of the contract, the
      Company could have earned an initial 51% interest by incurring US$650,000
      in work expenditures and US$900,000 in option payments.  During
      the first quarter of 2008, the Company terminated the
    option.





5.
            Effective
      May 1, 2007, the Company entered into an agreement with IMA to pay a
      monthly fee for the services provided by IMA’s Chief Executive Officer,
      Joseph Grosso, who is a director of the Company.  The agreement
      may be terminated at any time by the Company upon 30 days written
      notice.





6.
            Effective
      August 11, 2007, the Grosso Group entered into an agreement with the Peter
      Ellsworth, Vice President of Exploration for his services on behalf of the
      companies to which Grosso Group provides its services, including the
      Company.  Under the agreement Mr. Ellsworth will be paid US$650
      per day, of which a portion is billed to the Company.  During
      the year ended December 31, 2007, the Company paid $48,805 in connection
      with Mr. Ellsworth’s services. Mr. Ellsworth was also granted 175,000
      stock options of the Company at a price $0.40. 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 one
      months consulting fee of
compensation.





7.
            On
      September 19, 2007, the Company entered into two option agreements with
      Minera Phelps Dodge del Peru S.A.C. ("MPDP"), an indirect subsidiary of
      Freeport-McMoRan Copper & Gold Inc., to earn up to a 70% undivided
      interest in five exploration properties in Peru.  Four of these
      projects are located in the Junin and Huancavelica Departments, central
      Peru and one is located in the Arequipa Department of southern Peru. In
      order to earn a 70% undivided interest in these projects, the Company must
      complete US$200,000 in exploration expenditures, including 1,500 metres of
      drilling, in each of the Junin group and Arequipa group of projects on or
      before September 14, 2009. MPDP has the right to claw-back a 30% interest
      (for a total 60% ownership interest) in each property 60 days after
      receiving notice that 1,500 metres of drilling has been
      completed.  No amounts have been capitalized to mineral
      properties and deferred costs during
2007.





8.
            On
      October 25, 2007, the Company executed a Letter of Intent with Victor
      Marcial Garcia Garcia and his wife Elvira Carmen Maria AgoisBarbierto option up to a
      100% interest in the Loma Colorada porphyry copper-gold
      property.  This 1,100 hectare project is located in Ancash
      department, 430 km northwest of Lima, Peru.  Under the terms of
      this Letter of Intent, the Company may earn up to a 100% undivided
      interest in the Loma Colorada property by incurring US$1,400,000 in
      exploration expenditures and making US$490,000 in cash payments to the
      vendor over a three year period. The Company can exercise this option (i)
      on or before the fourth anniversary year by making a further payment of
      US$2,500,000 and a 1% NSR or, alternatively, continue with the option for
      an additional 12-month period in exchange for a payment of US$400,000 and
      incurring a further US$3,000,000 in exploration expenditures; or (ii) at
      the beginning of the fifth anniversary the Company may continue with the
      option for up to a final 12-month period by making a payment of US$200,000
      and funding a pre-feasibility study; or (iii) at the end of the fifth year
      by making a payment of US$5,000,000 and





-77-


9.
            On
      February 1, 2008, the Company signed a Letter of Intent with Geologix
      Explorations Inc. to earn up to a 70% interest in the Toro Blanco, San
      Felipe and Sura Properties located in the Huancavelica Department, Peru
      (collectively, the “Huancavelica Properties”).  In order to earn
      an initial 51% undivided interest in the Huancavelica Properties, the
      Company must complete US$3,800,000 in exploration expenditures on each of
      the properties, including a minimum of $100,000 exploration commitment
      during the first year. The Company may earn an additional 10% interest in
      each of the Huancavelica Properties by completing a positive feasibility
      study on each Huancavelica Property within three years of earning its 51%
      interest. A further 9% interest may be earned by the Company by placing
      the Huancavelica Property into commercial production within six years of
      earning its initial interest, for an aggregate 70% interest in the
      Huancavelica Property.




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




-78-




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 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




-79-




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 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




-80-




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. 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




-81-


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.








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
15T.   Controls and Procedures.





(a)           Disclosure
Controls and Procedures





Disclosure
controls and procedures, as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act"), are controls and other procedures of
the Company that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Act is accumulated and communicated to the
Company’s management, including its Chief Executive Officer and Chief
Financial Officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.  As required by
Rule 13a-15 under the Exchange Act, the Company carried out an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures as of December 31, 2007, being the date of the Company’s most
recently completed fiscal year end. This evaluation was carried out under the
supervision and with the participation of the Company’s management, including
Mr. Nikolaos Cacos, the Company’s Chief Executive Officer, and Mr. Arthur Lang, the Company’s Chief
Financial Officer.





Based
upon that evaluation, Messrs. Cacos and Lang concluded that as of December 31,
2007, the Company’s disclosure




-82-




controls
and procedures were effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is accumulated and communicated to the Company’s management, including its
Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure and is recorded, processed, summarized and
reported within the periods specified by the SEC’s rules and forms.





(b)           Management’s
Annual Report on Internal Control over Financial Reporting





The
Company’s board of directors and audit committee are responsible for
establishing and maintaining adequate internal control over financial
reporting.  The Company’s internal control system was designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation and fair presentation of its consolidated financial
statements for external purposes in accordance with generally accepted
accounting principles.





The
Company’s Chief Executive Officer, Mr. Nikolaos Cacos, and the
Company’s Chief Financial Officer, Mr. Arthur Lang, assessed the
effectiveness of the Company’s internal control over financial reporting (as
defined in Rule 13a-15(f) and Rule 15d-(f) promulgated under the Exchange Act)
as of December 31, 2007.





In making
this assessment, the criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) was used.  Based on this assessment, Messrs. Cacos
and Lang concluded that, as of December 31, 2007, the Company’s internal control
over financial reporting is effective based on those
criteria.  Notwithstanding the foregoing, all internal control
systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective may not prevent or detect misstatements
and can provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management’s report in this annual report.




(c)           Changes
in Internal Control over Financial Reporting





During
the period covered by this annual report, 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:





·
            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;




-83-




·
            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, 2007, the Company’s principal accountant is
expected to bill approximately $40,000, and for the fiscal year ended December
31, 2006, the Company’s principal accountant billed approximately $35,000 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 $Nil amounts for the fiscal years
ended December 31, 2007 and 2006, 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, 2007 and 2006, respectively, for tax services
performed.




Other
Accounting Fees





The
Company’s principal accountant billed $Nil and $Nil for the fiscal years ended
December 31, 2007 and 2006, 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.








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





Not
applicable.





-84-
 
 PART
III








Item
17.  Financial Statements.


PageAudited
      Financial Statements for the Years
              Ended
      December 31, 2007, 2006 and 2005
            
            F-1
      – F34








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
            Stock
      Option Plan dated April 13, 2004 (1)4.2
            Agreement
      with Nikolaos Cacos dated January 2, 2004 (1)4.3
            Form
      of Agreement with the Grosso Group Management Ltd., effective January 1,
      2005 (2)4.4
            Amendment
      to consulting agreement with Nikolaos Cacos dated April 12, 2006
      (3)4.5
            Letter
      of Intent between the Company and Astral Mining Corporation dated June 9,
      2006 (3)4.6
            Letter
      of Intent between the Company and Chancadora Centauro
      S.A.C  dated December 7, 20064.7
            Letter
      Agreement for Services with IMA Exploration for Joseph Grosso effective
      May 1, 20074.8
            Joint
      Venture Agreement between the Company and Golden Arrow dated June 30,
      20074.9
            Consulting
      Agreement between Ellsworth Geological, PC and Grosso Group Management
      Ltd. dated July 12, 2007, effective August 11, 20074.10
            Option
      Agreement with Minera Phelps dated September 19, 20074.11
            Option
      Agreement with Minera Phelps dated September 19, 20074.12
            Letter
      of Intent between the Company and Victor Marcial Garcia Garcia and Elvira
      Carmen Maria Agois Barbier, dated October 25, 20074.13
            Letter
      of Intent between the Company and Geologix Explorations Inc. dated
      February 1, 20088.1
            List
      of Subsidiaries12.1
            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.


-85-


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 30, 2008
              By:
              /s/ Nikolaos
      CacosNikolaos
      Cacos, President and Director


-86-





















AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)





CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE
YEARS ENDED


DECEMBER
31, 2007, 2006 AND 2005





(Expressed
in Canadian Dollars)













































































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 LLP, 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














April 22,
2008























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, 2007 and 2006
and the consolidated statements of operations and deficit, comprehensive loss,
shareholders’ equity and cash flows for each of the years in the three-year
period ended December 31, 2007. 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 audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit
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 consolidated financial position of the Company as at December 31, 2007 and
2006 and the consolidated results of its operations and its cash flows for each
of the years in the three-year period ended December 31, 2007 in conformity with
Canadian generally accepted accounting principles.










Vancouver,
Canada,


April 23,
2008.








COMMENTS
BY AUDITORS FOR U.S. READERS ON CANADA


–
U.S. REPORTING CONFLICT





In the
United States, reporting standards for auditors require the addition of an
explanatory paragraph, following the opinion paragraph, when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company’s ability to continue as a going concern, such as those described in
Note 1 to the consolidated financial statements. Our report to the shareholders
dated April 23, 2008 is expressed in accordance with Canadian reporting
standards which do not permit a reference to such events and conditions in the
auditors’ report when these are adequately disclosed in the financial
statements.









Vancouver,
Canada,
 April 23,
2008.







AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
BALANCE SHEETS


(See
Note 1 – Nature of Operations and Going Concern)


DECEMBER
31, 2007 AND 2006


(Expressed
in Canadian Dollars)





2007
              $
            
            
            
            2006
              $A
      S S E T SCURRENT
      ASSETSCash
            
            
            166,018
            
            
            
            531,126Short-term
      investments (Note 3)
            
            
            1,400,000
            
            
            
            100,000Marketable
      securities (Note 4)
            
            
            54,000
            
            
            
            33,000Other
      receivables, prepaids and deposits (Note 8)
            
            
            256,451
            
            
            
            157,318Subscription
      receivable (Note 6)
            
            
            -
            
            
            
            166,2501,876,469
            
            
            
            987,694MINERAL PROPERTIES AND DEFERRED
      COSTS(Notes 5 and 13 (iii))
            
            
            4,493,081
            
            
            
            3,356,1586,369,550
            
            
            
            4,343,852L
      I A B I L I T I E SCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities (Note 8)
            
            
            80,659
            
            
            
            116,963FUTURE INCOME TAX LIABILITIES(Note 10)
            
            
            38,434
            
            
            
            61,794119,093
            
            
            
            178,757S
      H A R E H O L D E R S ' E Q U I T YSHARE CAPITAL(Note
      6)
            
            
            11,487,909
            
            
            
            7,804,571WARRANTS(Note
      6)
            
            
            908,793
            
            
            
            498,025CONTRIBUTED SURPLUS(Note 7)
            
            
            821,426
            
            
            
            524,845ACCUMULATED OTHER COMPREHENSIVE
      INCOME(Note 2)
            
            
            21,000
            
            
            
            -DEFICIT
            
            
            (6,988,671
            )
            
            
            (4,662,346
            )6,250,457
            
            
            
            4,165,0956,369,550
            
            
            
            4,343,852


COMMITMENTS(Note
5)


SUBSEQUENT EVENTS (Note
13)





APPROVED
BY THE BOARD


/s/ Nikolaos
      Cacos, Director/s/ Jerry
      Minni, Director
  The accompanying notes are an
integral part of these consolidated financial statements.
  F-4


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT


FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005


(Expressed
in Canadian Dollars)





2007
              $
            
            
            
            2006
              $
            
            
            
            2005
              $EXPENSESAccounting
      and audit
            
            
            45,448
            
            
            
            38,756
            
            
            
            28,385Corporate
      development and investor relations
            
            
            320,774
            
            
            
            227,747
            
            
            
            252,981General
      exploration
            
            
            522,136
            
            
            
            296,810
            
            
            
            199,264Legal
      and professional fees
            
            
            55,621
            
            
            
            28,841
            
            
            
            55,058Management
      fees
            
            
            94,167
            
            
            
            85,833
            
            
            
            73,500Office
      and sundry
            
            
            198,998
            
            
            
            122,639
            
            
            
            92,724Rent
            
            
            78,122
            
            
            
            90,099
            
            
            
            73,573Salaries
            
            
            368,660
            
            
            
            372,063
            
            
            
            294,170Stock-based
      compensation
            
            
            296,581
            
            
            
            90,850
            
            
            
            52,500Transfer
      agent and regulatory fees
            
            
            23,020
            
            
            
            26,753
            
            
            
            28,052Travel
            
            
            131,145
            
            
            
            42,358
            
            
            
            37,7212,134,672
            
            
            
            1,422,749
            
            
            
            1,187,928LOSS
      BEFORE OTHER ITEMS
            
            
            (2,134,672
            )
            
            
            (1,422,749
            )
            
            
            (1,187,928
            )OTHER
      INCOME (EXPENSE)Foreign
      exchange
            
            
            (21,080
            )
            
            
            (2,910
            )
            
            
            (36,624
            )Interest
      income
            
            
            80,383
            
            
            
            30,924
            
            
            
            15,001Write-off
      of mineral properties (Note 5)
            
            
            (250,956
            )
            
            
            (525,514
            )
            
            
            (225,000
            )(191,653
            )
            
            
            (497,500
            )
            
            
            (246,623
            )LOSS
      FOR THE YEAR
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )DEFICIT
      - BEGINNING OF YEAR
            
            
            (4,662,346
            )
            
            
            (2,742,097
            )
            
            
            (1,307,546
            )DEFICIT
      - END OF YEAR
            
            
            (6,988,671
            )
            
            
            (4,662,346
            )
            
            
            (2,742,097
            )BASIC
      AND DILUTED LOSS PER SHARE
            
            $
            (0.08
            )
            
            $
            (0.10
            )
            
            $
            (0.09
            )WEIGHTED
      AVERAGE NUMBER OF
              COMMON
      SHARES OUTSTANDING
            
            
            30,615,987
            
            
            
            19,169,121
            
            
            
            15,916,822







CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS


2007
              $
            
            
            
            2006
              $
            
            
            
            2005
              $LOSS
      FOR THE YEAR
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )OTHER
      COMPREHENSIVE INCOMEUnrealized gain on
      available-for-sale marketable securities
            
            
            14,000
            
            
            
            -
            
            
            
            -TOTAL
      COMPREHENSIVE LOSS
            
            
            (2,312,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )




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




F-5


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006 and 2005


(Expressed
in Canadian Dollars)











2007
              $
            
            
            
            2006
              $
            
            
            
            2005
              $CASH
      PROVIDED FROM (USED FOR)OPERATING
      ACTIVITIESLoss
      for the year
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )Adjustment
      for items not affecting cashWrite-off
      of mineral properties
            
            
            250,956
            
            
            
            525,514
            
            
            
            225,000Stock-based
      compensation
            
            
            296,581
            
            
            
            90,850
            
            
            
            52,500(1,778,788
            )
            
            
            (1,303,885
            )
            
            
            (1,157,051
            )Change
      in non-cash working capital balances
            
            
            30,814
            
            
            
            (46,412
            )
            
            
            25,940(1,747,974
            )
            
            
            (1,350,297
            )
            
            
            (1,131,111
            )FINANCING
      ACTIVITIESIssuance
      of common shares and warrants
            
            
            4,095,000
            
            
            
            2,179,900
            
            
            
            1,232,199Share
      and warrant issuance costs
            
            
            (333,895
            )
            
            
            (23,889
            )
            
            
            (61,751
            )3,761,105
            
            
            
            2,156,011
            
            
            
            1,170,448INVESTING
      ACTIVITIESExpenditures
      on mineral properties and deferred costs
            
            
            (1,078,239
            )
            
            
            (696,915
            )
            
            
            (1,196,242
            )Decrease
      (increase) in short-term investments
            
            
            (1,300,000
            )
            
            
            (100,000
            )
            
            
            1,000,000(2,378,239
            )
            
            
            (796,915
            )
            
            
            (196,242
            )INCREASE
      (DECREASE) IN CASH
              DURING THE YEAR
            
            
            (365,108
            )
            
            
            8,799
            
            
            
            (156,905
            )CASH
      - BEGINNING OF YEAR
            
            
            531,126
            
            
            
            522,327
            
            
            
            679,232CASH
      - END OF YEAR
            
            
            166,018
            
            
            
            531,126
            
            
            
            522,327







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.




F-6





AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


FOR
THE YEARS ENDED DECEMBER 31, 2007 and 2006


(Expressed
in Canadian Dollars)








2007
              $
            
            
            
            2006
              $SHARE
      CAPITALBalance at beginning of
      year
            
            
            7,804,571
            
            
            
            5,854,335Private
    placement
            
            
            4,095,000
            
            
            
            1,629,450Warrant
    valuation
            
            
            (368,550
            )
            
            
            (503,765
            )Exercise of
      warrants
            
            
            -
            
            
            
            716,700Shares issued for payment of
      agent’s fees
            
            
            49,141
            
            
            
            2,800Shares issued for mineral
      properties
            
            
            333,000
            
            
            
            126,000Share issue
    costs
            
            
            (425,253
            )
            
            
            (20,949
            )Balance at end of
      year
            
            
            11,487,909
            
            
            
            7,804,571WARRANTSBalance at beginning of
      year
            
            
            498,025
            
            
            
            -Warrant valuation from private
      placement warrants
            
            
            368,550
            
            
            
            503,765Warrant valuation from agent’s
      warrants
            
            
            84,276
            
            
            
            -Warrant issue
      costs
            
            
            (42,058
            )
            
            
            (5,740
            )Balance at end of
      year
            
            
            908,793
            
            
            
            498,025CONTRIBUTED
      SURPLUSBalance at beginning of
      year
            
            
            524,845
            
            
            
            433,995Contributed surplus as a
      result of stock options granted
            
            
            296,581
            
            
            
            90,850Balance at end of
      year
            
            
            821,426
            
            
            
            524,845DEFICITBalance at beginning of
      year
            
            
            (4,662,346
            )
            
            
            (2,742,097
            )Loss for the
    year
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )Balance at end of
      year
            
            
            (6,988,671
            )
            
            
            (4,662,346
            )ACCUMULATED
      OTHER COMPREHENSIVE INCOMEBalance at beginning of
      year
            
            
            -
            
            
            
            -Transition adjustment –
      marketable securities (Note 2)
            
            
            7,000
            
            
            
            -Net unrealized gain on
      available-for-sale marketable securities
            
            
            14,000
            
            
            
            -Balance at end of
      year
            
            
            21,000
            
            
            
            -TOTAL
      SHAREHOLDERS’ EQUITY
            
            
            6,250,457
            
            
            
            4,165,095




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


F-7


AMERA
RESOURCES CORPORATION


(An
Exploration Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005


(Expressed
in Canadian Dollars)





1.
            NATURE
      OF OPERATIONS AND GOING CONCERN





Amera
Resources Corporation (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 of its planned exploration
activities.  The Company will continue to rely on successfully
completing additional equity financing.





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. The Company has incurred significant losses and negative cash flow
from operations since inception.  The Company has funded operations
through equity financings and without additional future financings there is
substantial doubt concerning the Company’s ability to continue as a going
concern.  Management intends to raise further financing in the
future.  There can be no assurance that future financing can be
successfully concluded. 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.








F-8


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





2.           SIGNIFICANT ACCOUNTING
POLICIES (continued)





Principles
of Consolidation





These
consolidated financial statements include the accounts of the Company and its
subsidiaries.  The principal subsidiaries are Recursos de los Andes
S.A.C. (Peru) (100%), Amera-Chile Sociedad Contractual Minera (Chile) (100%),
Amera Resources Inc. (US) (100%) and Golden Amera Resources Inc. (Colombia)
(50%). The Company consolidates Golden Amera Resources Inc. using the
proportionate consolidation method. The Company operates in Argentina as a
registered branch.  All inter-company balances and transactions have
been eliminated.





Cash and Cash Equivalents





Cash and
cash equivalents include cash and money market investments, maturing less than 3
months from the date of initial investment.





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, 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.




F-9
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)


2.
            SIGNIFICANT ACCOUNTING
      POLICIES (continued)





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, 2007, the Company does not
have any asset retirement obligations.





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, 2007, the market
value of marketable securities was $54,000.





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.





Interest
Income





The
Company records interest on an accrual basis.





F-10


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





2.
            SIGNIFICANT ACCOUNTING
      POLICIES (continued)





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 based on the weighted average number of common shares issued
and outstanding during the year.  The Company follows the treasury
stock method in the calculation of diluted earnings per share. Under the
treasury stock method, the weighted average number of common shares outstanding
used for the calculation of diluted loss per share assumes that the proceeds to
be received on the exercise of dilutive stock options and warrants are used to
repurchase common shares at the average market price during the
period.  Since theCompany has losses, the
exercise of outstanding stock options and warrants has not been included in this
calculation as it would beantidilutive.  Information
regarding securities that could potentially dilute basic earnings per share in
the future is presented in Note 6.





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.  Stock options
granted to employees, consultants and directors vest immediately and have a
four-month hold period.  A stock option is considered forfeited by an
employee or consultant 30 days after termination and is considered forfeited by
a director 60 days after termination.





New
Accounting Policies





Effective
January 1, 2007, the Company adopted the following new accounting standards
issued by the Canadian Institute of Chartered Accountants (“CICA”).





(a)
            Section
      3855, Financial
      Instruments – Recognition and Measurementand Section 3861, Financial Instruments –
      Disclosure and Presentation,prescribe the criteria for recognition
      and presentation of financial instruments on the balance sheet and the
      measurement of financial instruments according to prescribed
      classifications. These sections also address how financial instruments are
      measured subsequent to initial recognition and how the gains and losses
      are recognized.





F-11


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




2.           SIGNIFICANT ACCOUNTING POLICIES(continued)





The
Company is required to designate its financial instruments into one of the
following five categories: held for trading; available-for-sale; held to
maturity; loans and receivables; and other financial liabilities. All financial
instruments are to be initially measured at fair value. Financial instruments
classified as held for trading or available-for-sale are subsequently measured
at fair value with any change in fair value recorded in net earnings and other
comprehensive income, respectively. All other financial instruments are
subsequently measured at amortized cost.





The
Company has designated its financial instruments as follows:




(i)
            Cash
      and short-term investments are classified as “Available-for-sale”.Due to their short-term nature, their carrying value is equal
      to their fair value.  The classification did not have a material
      impact on the financial statements.




(ii)
            Marketable
      securities are classified as “Available-for-sale”.  The
      fair value is obtained by reference to the closing bid price on the
      balance sheet date.  The classification resulted in a $21,000
      adjustment for the unrealized gain on marketable
    securities.




(iii)
            Amounts
      receivable, prepaids and deposits are classified as “Loans and Receivables”.These financial assets are recorded at values that approximate
      their amortized cost using the effective interest method. The
      classification did not have a material impact on the financial
      statements.




(iv)
            Accounts
      payable and accrued liabilities are classified as “Other Financial
      Liabilities”. These financial liabilities are recorded at values
      that approximate their amortized cost using the effective interest method.
      The classification did not have a material impact on the financial
      statements.







(b)
            Section
      1530, Comprehensive
      Income,introduces a new financial statement “Statement of
      Comprehensive Income” and provides guidance for the reporting and display
      of other comprehensive income. Comprehensive income represents the change
      in equity of an enterprise during a period from transactions and other
      events arising from non-owner sources including gains and losses arising
      on translation of self-sustaining foreign operations, gains and losses
      from changes in fair value of available-for-sale financial assets and
      changes in the fair value of the effective portion of cash flow hedging
      instruments.





As a
result of adopting Sections 3855 and 1530, a transition adjustment of $7,000 was
recorded as an increase to opening accumulated other comprehensive income to
recognize the unrealized gain on marketable securities held by the Company on
January 1, 2007 and designated as available-for-sale. For the year ended
December 31, 2007 the Company recorded a $14,000 gain to other comprehensive
income to recognize an unrealized gain on marketable securities.





(c)
            Section
      3865, Hedgesspecifies the criteria under which hedge accounting may be applied,
      how hedge accounting should be performed under permitted hedging
      strategies and the required disclosures. This standard did not have an
      impact on the Company for the years ended December 31, 2007 and
      2006.








F-12


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





2.           SIGNIFICANT ACCOUNTING POLICIES(continued)





(d)
            Effective
      January 1, 2007, the Company adopted the revised CICA Handbook Section
      1506, Accounting
      Changes, which requires that: (a) a voluntary change in accounting
      principles can be made if, and only if, the changes result in more
      reliable and relevant information, (b) changes in accounting policies are
      accompanied with disclosures of prior period amounts and justification for
      the change and (c) for changes in estimates, the nature and amount of the
      change should be disclosed. The Company has not made any voluntary change
      in accounting principles since the adoption of the revised
      standard.





Effective
January 1, 2008, new accounting standards were issued by the CICA which may
impact the Company in the future as follows:





General Standards on
Financial Statement Presentation





CICA Handbook Section 1400,General Standards
on Financial Statement Presentation, has been amended


to include requirements to assess and
disclose a company’s ability to continue as a going concern.
The


changes
are effective for interim and annual financial statements beginning January 1,
2008. The Company does not expect the adoption of these changes to have an
impact on its financial statements.





Capital
Disclosures





CICA
Handbook Section 1535, Capital
Disclosures, establishes standards for disclosing information aboutthe Company's capital and
how it is managed. Under this standard the Company will be required to
disclosethe
following, based on the information provided internally to the Company's key
management personnel:





(i)
            qualitative information about its
      objectives, policies and processes for managing
      capital.


(ii)
            summary quantitative data about
      what it manages as capital.


(iii)
            whether during the period it
      complied with any externally imposed capital requirements to which
      it is
      subject.


(iv)
            when the Company has not complied
      with such externally imposed capital requirements, the consequences of such
      non-compliance.





This
standard is effective for interim and annual financial statements beginning on
January 1, 2008. The Company has not yet determined the impact of the adoption
of this change on the disclosure in its consolidated financial
statements.





Inventories





CICA Handbook Section 3031,Inventoriesprescribes the accounting treatment
for inventories and provides guidance on the determination of costs
and their subsequent recognition as an expense, including any write-down
to net realizable value. It also
provides guidance on the cost formulas that are used to assign costs to
inventories.





This
standard is effective for interim and annual financial statements beginning on
January 1, 2008. The Company does not expect the adoption of this standard to
have an impact on its consolidated financial statements.





F-13


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





2.           SIGNIFICANT ACCOUNTING POLICIES(continued)





Goodwill
and Intangible Assets





CICA
Handbook Section 3064, Goodwill and Intangible
Assets, establishes revised standards forrecognition, measurement,
presentation and disclosure of goodwill and intangible assets. Concurrent
withthe introduction
of this standard, the CICA withdrew EIC 27, Revenues and Expenses, during the
pre-operatingperiod.
As a result of the withdrawal of EIC 27, companies will no longer be able to
defer costsand
revenues incurred prior to commercial production at new mine operations. The
changes are effective forinterim and annual
financial statements beginning January 1, 2009. The Company has not yet
determined the impactof the adoption of this
change on the disclosure in its consolidated financial statements.





Financial
Instruments Disclosures





In
      March 2007, the CICA issued Section 3862 Financial Instruments –
      Disclosures, and Section 3863 Financial Instruments –
      Presentation, which together comprise a complete set of disclosure
      and presentation requirements that revise and enhance current disclosure
      requirements.  Section 3862, requires disclosure of additional detail
      by financial asset and liability categories.  Section 3863,
      establishes standards for presentation of financial instruments and
      non-financial derivatives.  The standard deals with the
      classification of financial instruments, from the perspective of the
      issuer, between liabilities and equity, the classification of related
      interest, dividends, losses and gains, and the circumstances in which
      financial assets and financial liabilities are offset. These sections are
      effective January 1, 2008 but are not expected to have an impact on the
      Company’s disclosure and
presentation.





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, 2007 and 2006, the Company held short-term investments comprised of
the following:





December
      31, 2007Maturity
            
            Fair
      Value
              $12
      month term deposit
              -
      4.45% annual interest rate
            August
      13, 2008
            
            1,400,000





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





The term
deposit is redeemable in full or in part at the Company’s option without
penalty.  Interest is paid on amounts redeemed subsequent to 30 days
from the date of investment. The principal and interest are unconditionally
guaranteed by the Bank of Montreal.





F-14
 
 AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)


4.           MARKETABLE
SECURITIES





At
December 31, 2007, the Company held 100,000 common shares of Astral Mining
Corporation (“Astral”) which had a quoted market value of $54,000 (December 31,
2006 - $40,000).The Company has
designated its marketable securities as financial assets available-for-sale and
accordingly, changes to their fair value are recorded in other comprehensive
income in the period they occur (see Note 2). 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)).





5.
            MINERAL
      PROPERTIES AND DEFERRED COSTS





December
      31, 2007
            
            
            December
      31, 2006Acquisition
              Costs
              $
            
            
            Exploration
              Expenditures
              $
            
            
            Total
              $
            
            
            Acquisition
              Costs
              $
            
            
            Exploration
              Expenditures
              $
            
            
            Total
              $ArgentinaMogote Property
            
            
            1,389,309
            
            
            
            1,259,140
            
            
            
            2,648,449
            
            
            
            1,056,309
            
            
            
            1,255,195
            
            
            
            2,311,504PeruCocha
            
            
            28,768
            
            
            
            890,051
            
            
            
            918,819
            
            
            
            28,768
            
            
            
            401,918
            
            
            
            430,686Cruz de Mayo
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            99,566
            
            
            
            54,910
            
            
            
            154,476Laguna
            
            
            179,377
            
            
            
            78,973
            
            
            
            258,350
            
            
            
            -
            
            
            
            5,769
            
            
            
            5,769Mitu
            
            
            -
            
            
            
            42,753
            
            
            
            42,753
            
            
            
            -
            
            
            
            8,360
            
            
            
            8,360Other
            
            
            50,664
            
            
            
            45,388
            
            
            
            96,052
            
            
            
            50,664
            
            
            
            38,859
            
            
            
            89,523USAWalker Lane,
    Nevada
            
            
            97,010
            
            
            
            21,336
            
            
            
            118,346
            
            
            
            97,010
            
            
            
            21,336
            
            
            
            118,3461,745,128
            
            
            
            2,337,641
            
            
            
            4,082,769
            
            
            
            1,332,317
            
            
            
            1,786,347
            
            
            
            3,118,664Proceeds
      on optioning of
              mineral
    properties
            
            
            (33,000
            )
            
            
            -
            
            
            
            (33,000
            )
            
            
            (33,000
            )
            
            
            -
            
            
            
            (33,000
            )Foreign
      value added tax
            
            
            -
            
            
            
            404,878
            
            
            
            404,878
            
            
            
            -
            
            
            
            208,700
            
            
            
            208,700Future
      income tax
            
            
            21,810
            
            
            
            16,624
            
            
            
            38,434
            
            
            
            36,540
            
            
            
            25,254
            
            
            
            61,7941,733,938
            
            
            
            2,759,143
            
            
            
            4,493,081
            
            
            
            1,335,857
            
            
            
            2,020,301
            
            
            
            3,356,158





See attached Mineral Property Interests
and Deferred Costs Schedules.





(a)
            Mogote
      Property





The
      Company has exercised its option agreement with Golden Arrow Resources
      Corporation (“Golden Arrow”), a publicly traded company with common
      management and directors, and has earned a 51% interest in eight mineral
      concessions, comprising 8,009 hectares (the “Mogote Property”), located in
      San Juan Province, Argentina.  The Company has issued a total of
      1,650,000 common shares and incurred a minimum of US $1.25 million of
      exploration expenditures to fulfil the requirements to earn this 51%
      interest.





On May
14, 2007, the Company gave notice to Golden Arrow that it would not proceed with
the additional expenditures required in order to earn an additional 24%
interest.





F-15


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)








5.
            MINERAL PROPERTIES AND DEFERRED
      COSTS(continued)





(b)
            Cocha
      Property





The Cocha
property is located in the Department of Junin, Peru approximately 23km east of
the city of Huancayo and 220km east of Lima.  Staked in 2006, the
Cocha property was expanded from 2,400 to 7,060 hectares in 2007.  The
Company holds a 100% interest in the property.





(c)
            Cruz
      de Mayo Project





On
      April 11, 2005, the Company entered into an option agreement to earn up to
      a 100% undivided interest in the 800 hectare Cruz de Mayo project located
      in the southern portion of the Department of Cuzco in Peru.  In
      addition, the Company has staked 2,200 hectares of property contiguous to
      the optioned claims.  Effective July 30, 2007, the Company
      terminated the option.  Accordingly, the Company has written off
      $250,956 of costs capitalized to the property to
  date.





(d)         Laguna
Project





On
January 18, 2007, the Company signed a letter of intent to enter into an option
agreement to acquire up to a 90% interest in the 11,250 hectare Laguna Gold
Project in the Pasco Department of west central Peru.  The letter of
intent was finalized in a definitive contract effective May 22, 2007. Under the
terms of the contract, the Company may earn an initial 51% interest by incurring
US $650,000 in work expenditures and US $900,000 in option payments as
follows:





Option
      Payments
              US
      $
            Exploration
              Expenditures
              US
      $
            Date120,000
            -
            May
      22, 2007 (paid on signing)280,000
            250,000
            May
      22, 2008500,000
            400,000
            May
      22, 2009900,000
            650,000





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.  Subsequent to year end, the Company terminated the option
(See Note 13(iii)).





(e)           Walker
Lane Properties





On June
9, 2006, the Company optioned the Walker Lane Properties in Nevada to
Astral.  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  to the
Company (100,000 shares were received on August 4, 2006).  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.








F-16


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)







5.
            MINERAL PROPERTIES AND DEFERRED
      COSTS(continued)





(f)           
Junin and Humaro Properties





On
October 1, 2007, the Company entered into two option agreements with Minera
Phelps Dodge del Peru S.A.C. ("MPDP"), an indirect subsidiary of
Freeport-McMoRan Copper & Gold Inc., to earn up to a 70% undivided interest
in five exploration properties in Peru.  Four of these projects are
located in the Junin and Huancavelica Departments, central Peru and one is
located in the Arequipa Department of southern Peru.





In order
to earn a 70% undivided interest in these projects, the Company must complete US
$200,000 in exploration expenditures, including 1,500 metres of drilling, in
each of the Junin group and Arequipa group of projects on or before September
14, 2009. MPDP has the right to claw-back a 30% interest (for a total 60%
ownership interest) in each property 60 days after receiving notice that 1,500
metres of drilling has been completed.  No amounts have been
capitalized to mineral properties and deferred costs during 2007.





(g)          Loma
Colorada Property





On
November 15, 2007, the Company announced that it signed a Letter of Intent to
option up to a 100% interest in the Loma Colorada porphyry copper-gold
property.  This 1,100 hectare project is located in Ancash Department,
430 km northwest of Lima, Peru.




Under the
terms of this Letter of Intent, the Company may earn up to a 100% undivided
interest in the Loma Colorada Property by incurring US $1,400,000 in exploration
expenditures and making US $490,000 in cash payments to the vendor over a three
year period. The Company can exercise this option (i) on or before the fourth
anniversary year by making a further payment of US $2,500,000 and a 1% NSR or,
alternatively, continue with the option for an additional 12-month period in
exchange for a payment of US $400,000 and incurring a further US $3,000,000 in
exploration expenditures; or (ii) at the beginning of the fifth anniversary the
Company may continue with the option for up to a final 12-month period by making
a payment of US $200,000 and funding a pre-feasibility study; or (iii) at the
end of the fifth year by making a payment of US $5,000,000 and granting to the
vendor a 2% NSR.  Each 1% NSR can be purchased by the Company for US
$1,000,000.  No amounts have been capitalized to mineral properties
and deferred costs during 2007.













F-17


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




5.
            MINERAL PROPERTIES AND DEFERRED
      COSTS(continued)





(h)         Golden
Amera Resources Inc. Joint Venture





On June
30, 2007, the Company entered into a 50/50 joint venture with Golden Arrow to
evaluate and acquire precious and base metal properties in Colombia. The joint
venture has hired an operations manager and retained contract exploration
personnel.  In addition, the joint venture is in the process of evaluating
a number of opportunities but has not acquired any mineral properties to date,
accordingly the Company’s proportionate share of costs incurred have been
recorded as general exploration expense.   The Company’s 50%
interest is summarized as follows:





2007
              $Statement
      of OperationsGeneral
      exploration
            
            
            138,190Office
      and sundry
            
            
            980Foreign
      exchange
            
            
            2,261Net
      loss
            
            
            141,431Cashflow
      StatementCash
      from operating activities
            
            
            7,183Cash
      used in investing activities
            
            
            -Cash
      from financing activities
            
            
            13,750Increase
      in cash from operations
            
            
            20,933Balance
      SheetCash
            
            
            20,933Advances
            
            
            17,286Total
      Assets
            
            
            38,219Liabilities
      and Shareholders’ EquityAccounts
      payable
            
            
            12,012Shareholders’
      equity
            
            
            26,207Total
      Liabilities and Shareholders’ Equity
            
            
            38,219










F-18


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





6.           SHARE
CAPITAL





Authorized
      - unlimited common shares without par valueIssued
      - common shares
            
            Number
            
            
            $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
            
            
            
            7,804,571Private
      placements
            
            
            11,700,000
            
            
            
            4,095,000Warrants
      valuation
            
            
            -
            
            
            
            (368,550
            )For
      agent’s fees
            
            
            157,444
            
            
            
            49,141For
      mineral properties
            
            
            900,000
            
            
            
            333,000Less
      share issue costs
            
            
            -
            
            
            
            (425,253
            )Balance,
      December 31, 2007
            
            
            34,506,036
            
            
            
            11,487,909





(a)
            During
      the year ended December 31, 2007, the Company
  completed:





i)
            a
      brokered private placement financing of 11,700,000 units at $0.35 per unit
      for gross proceeds of $4,095,000.  The financing was completed
      in two tranches of 2,200,000 units and 9,500,000 units on April 12, 2007
      and April 19, 2007, respectively.  Each unit is comprised of one
      common share and one half common share purchase warrant. Each full warrant
      entitles the holder thereof to purchase one additional common share in the
      capital of the Company at a price of $0.45 per share for two years from
      the close of the financing. In addition to cash commissions and related
      costs of $333,895, the agents were granted 930,800 agent’s warrants and
      157,444 agent’s units. Each agent’s unit entitles the holder to acquire
      one common share and one half common share purchase
      warrant.  Each full agent’s warrant is exercisable for one share
      at a price of $0.45, for a period of two years from the close of the
      financing.








F-19


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)











6.           SHARE CAPITAL(continued)





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





1)
            value
      assigned to 5,850,000 warrants was $326,492, net of warrant issue costs of
      $42,058




2)  value
assigned to the 1,009,523 agent’s warrants was $84,276





The
Black-Scholes Option Pricing Model was used to value the warrants and agent’s
warrants (tranche 1 - $0.075 per warrant: tranche 2 - $0.086 per warrant) based
on the following assumptions: dividend yield 0%, risk-free rate 4.0%, expected
volatility 55% and expected life of 12 months.





(b)
            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 is comprised of 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 Option 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 is comprised of 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 Option Pricing Model was used to value the warrants and agent’s
warrants. The warrants and agent’s warrants 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.





F-20


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





6.           SHARE CAPITAL(continued)





(c)
            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.





(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 2007 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,
2007, 2006 and 2005 and the changes for the years ended on those dates is
presented below:





2007
            
            
            2006
            
            
            2005Options
              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
            
            
            1,824,500
            
            
            
            0.68
            
            
            
            1,504,500
            
            
            
            0.70
            
            
            
            1,354,500
            
            
            
            0.70Granted
            
            
            1,987,500
            
            
            
            0.39
            
            
            
            415,000
            
            
            
            0.60
            
            
            
            250,000
            
            
            
            0.75Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (11,000
            )
            
            
            0.75Cancelled
            
            
            (380,000
            )
            
            
            0.56
            
            
            
            (75,000
            )
            
            
            0.75
            
            
            
            (89,000
            )
            
            
            0.75Forfeited
            
            
            -
            
            
            
            -
            
            
            
            (20,000
            )
            
            
            0.60
            
            
            
            -
            
            
            
            -Balance,
      end of year
            
            
            3,432,000
            
            
            
            0.53
            
            
            
            1,824,500
            
            
            
            0.68
            
            
            
            1,504,500
            
            
            
            0.70











F-21


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




6.           SHARE CAPITAL(continued)





Stock
options outstanding and exercisable at December 31, 2007 are as
follows:





Number
      of Options
              Outstanding
      and
              Exercisable
            
            Exercise
      Price
            Expiry
      Date150,000
            
            0.40
            March
      26, 2008850,000
            
            0.60
            December
      12, 2008414,500
            
            0.90
            April
      2, 200965,000
            
            0.75
            March
      21, 2010180,000
            
            0.35
            August
      1, 2010265,000
            
            0.60
            July
      11, 201137,500
            
            0.40
            February
      14, 201250,000
            
            0.40
            May
      22, 20121,400,000
            
            0.40
            July
      27, 201220,000
            
            0.29
            October
      2, 20123,432,000





During
fiscal 2007, the Company granted stock options ranging in price from $0.29 to
$0.40 per share to its directors, employees and consultants to acquire 1,987,500
common shares (2006 - 414,500; 2005 - 250,000) and recorded stock-based
compensation expense of $296,581 (2006 - $90,850; 2005 - $52,500).  Of
the 1,987,500 stock options granted during the year, 330,000 were granted to
investor relation consultants.  These stock options vested 25% every
three months from the date of grant.  There are a total of 128,116
stock options that are unvested at December 31, 2007. The fair value of stock
options granted is estimated on the dates of grants using the Black-Scholes
Option Pricing Model with the following weighted average assumptions used for
the grants made during the year:





2007
            2006
            2005Risk-free
      interest rate
            4.10%
            4.00%
            3.10%Estimated
      volatility
            82%
            97%
            75%Expected
      life
            2.42
      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 $0.17 per share
(2006 - $0.23; 2005 - $0.21).  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.








F-22


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





6.           SHARE CAPITAL(continued)





(e)
            Warrants





A continuity summary of warrant equity
is presented below:


SBalance,
      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
            
            
            498,025Warrant valuation from private
      placement warrants granted
            
            
            368,550Warrant valuation from agent’s
      warrants granted
            
            
            84,276Warrant issue
      costs
            
            
            (42,058
            )Balance,
      December 31, 2007
            
            
            908,793





A
      summary of the number of common shares reserved pursuant to the Company’s
      outstanding warrants and agent’s warrants outstanding at December 31,
      2007, 2006 and 2005 and the changes for the years ending on those dates is
      as follows:





2007
              Number
            
            
            2006
              Number
            
            
            2005
              NumberBalance,
      beginning of year
            
            
            3,703,000
            
            
            
            3,687,783
            
            
            
            4,230,300Issued
            
            
            6,859,523
            
            
            
            3,703,000
            
            
            
            912,731Exercised
            
            
            -
            
            
            
            (1,194,500
            )
            
            
            (508,248
            )Expired
            
            
            -
            
            
            
            (2,493,283
            )
            
            
            (947,000
            )Balance,
      end of year
            
            
            10,562,523
            
            
            
            3,703,000
            
            
            
            3,687,783





During
the year ended December 31, 2006, the Company requested and was granted
permission by the TSX-V 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’s warrants outstanding at
December 31, 2007 are as follows:





Number
            
            Exercise
      Price
              $
            
            Expiry
      Date1,412,000
            
            0.65
            
            January
      30, 20082,291,000
            
            0.45
            
            December
      8, 20081,296,963
            
            0.45
            
            April
      12, 20095,562,560
            
            0.45
            
            April
      19, 200910,562,523
            
            0.48





F-23


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





7.           CONTRIBUTED
SURPLUS





A continuity summary of contributed
surplus is presented below:


SBalance,
      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
            
            
            524,845Contributed Surplus as a
      result of stock options granted
            
            
            296,581Balance,
      December 31, 2007
            
            
            821,426








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., Astral and Blue Sky Uranium Corp.  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, 2007, the Company incurred fees of $540,402
      (2006 - $533,469) to the Grosso Group: $585,385 (2006 - $480,545) was paid
      in twelve monthly payments and $44,983 is included in accounts receivable
      (2006 - $52,924 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 (2006 - $95,000) deposit to the Grosso
      Group for the purchase of equipment and leasehold improvements and for
      operating working capital.





The
President of the Company provides his services on a full-time basis under a
contract with a private company controlled by the President for an annual fee of
$87,500.  During the fiscal 2007, the Company paid $87,500 (2006 -
$85,833) 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.





Effective
May 1, 2007, the Company entered into an agreement with IMA to pay a monthly fee
for the services provided by IMA’s Chief Executive Officer who is a director of
the Company.  The agreement may be terminated at any time by the
Company upon 30 days written notice.  For fiscal 2007, the Company
paid $6,667 to IMA for these 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.








F-24


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




9.           SEGMENTED
INFORMATION





The
Company is primarily involved in mineral exploration activities in Argentina,
Peru, Colombia 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, 2007 and 2006.





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





December
      31, 2007Corporate
              Canada
              $
            
            Argentina
              $
            
            Peru
              $
            
            Colombia
              $
            
            USA
              $
            
            Total
              $Current
      assets
            1,774,401
            
            1,933
            
            61,916
            
            38,219
            
            -
            
            1,876,469Mineral
      properties and
              deferred
      costs
            -
            
            2,788,995
            
            1,596,955
            
            -
            
            107,131
            
            4,493,0811,774,401
            
            2,790,928
            
            1,658,871
            
            38,219
            
            107,131
            
            6,369,550





December
      31, 2006Corporate
              Canada
              $
            
            Argentina
              $
            
            Peru
              $
            
            USA
              $
            
            Total
              $Current
      assets
            925,066
            
            714
            
            61,914
            
            -
            
            987,694Mineral
      properties and
              deferred
      costs
            -
            
            2,450,504
            
            774,353
            
            131,301
            
            3,356,158925,066
            
            2,451,218
            
            836,267
            
            131,301
            
            4,343,852








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:


2007
            
            
            2006
            
            
            2005Statutory
      tax rate
            
            
            34.12
            %
            
            
            34.12
            %
            
            
            34.12
            %$
            
            
            
            $
            
            
            
            $Loss
      for the year
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )Provision
      for income taxes based on statutory
              Canadian
      combined federal and provincial
              income
      tax rates
            
            
            (793,742
            )
            
            
            (655,189
            )
            
            
            (489,469
            )Differences
      in foreign tax rates
            
            
            13,958
            
            
            
            30,315
            
            
            
            (7,210
            )Non-deductible
      items
            
            
            162,902
            
            
            
            228,677
            
            
            
            -Losses
      for which an income tax benefit
              has
      not been recognized
            
            
            616,882
            
            
            
            396,197
            
            
            
            496,679-
            
            
            
            -
            
            
            
            -




F-25


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




10.
            INCOME TAXES(continued)





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





2007
              $
            
            
            
            2006
              $Future
      income tax assetsShare
      and warrant issuance costs
            
            
            108,518
            
            
            
            60,826Mineral
      properties
            
            
            198,630
            
            
            
            84,526Operating
      loss carryforward
            
            
            1,560,092
            
            
            
            1,113,2461,867,240
            
            
            
            1,258,598Valuation
      allowance for future tax assets
            
            
            (1,867,240
            )
            
            
            (1,258,598
            )-
            
            
            
            -Future
      income tax liabilities
            
            
            38,434
            
            
            
            61,794





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 2007
and 2006.





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,
2007, the Company recorded a reduction of future income tax liability of $23,360
(2006 – $93,087) and a corresponding adjustment to mineral
properties.





The
Company has Canadian non-capital loss carryforwards of $4,861,262 that may be
available for tax purposes.  The losses expire as
follows:





Expiry
      Date
            $2008
            1162009
            26,2582010
            195,8572014
            852,5552015
            1,219,3522026
            1,081,3902027
            1,485,7344,861,262





At
December 31, 2007, the Company had a net operating loss carryforward for Peru
income tax purposes of approximately Cdn$620,000 (2006 – Cdn$422,350) which, if
not utilized to reduce Peru taxable income in future periods, expires through
the year 2011. These available tax losses may only be applied to offset future
taxable income from the Company's current Peru subsidiary.








F-26


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





10.
            INCOME TAXES(continued)





At
December 31, 2007, the Company had a net operating loss carryforward for Chile
income tax purposes of approximately Cdn$71,000 (2006 – Cdn$53,000) that may be
available for tax purposes. These available tax losses may only be applied to
offset future taxable income from the Company's current Chile
subsidiary.





At
December 31, 2007, the Company had a net operating loss carryforward for
Colombia income tax purposes of approximately Cdn$141,000 that may be available
for tax purposes. These available tax losses may only be applied to offset
future taxable income from the Company's current Colombia
subsidiary.








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 consolidated financial statements are
      summarized in the tables below.





2007
              $
            
            
            2006
              $Consolidated
      balance sheetsMineral
      properties and deferred costsBalance
      per Canadian GAAP
            
            
            4,493,081
            
            
            
            3,356,158Exploration
      expenditures under US GAAP (i)
            
            
            (2,747,953
            )
            
            
            (2,023,841
            )Balance
      per US GAAP
            
            
            1,745,128
            
            
            
            1,332,317Future
      income tax liabilitiesBalance
      per Canadian GAAP
            
            
            38,434
            
            
            
            61,794Reversal
      of future income tax liability (i)
            
            
            (38,434
            )
            
            
            (61,794
            )Balance
      per US GAAP
            
            
            -
            
            
            
            -Shareholders'
      equityBalance
      per Canadian GAAP
            
            
            6,250,457
            
            
            
            4,165,095Exploration
      expenditures (i)
            
            
            (2,747,953
            )
            
            
            (2,023,841
            )Reversal
      of future income tax liability (i)
            
            
            38,434
            
            
            
            61,794Accumulated
      other comprehensive income (ii)
            
            
            21,000
            
            
            
            7,000Balance
      per US GAAP
            
            
            3,561,938
            
            
            
            2,210,048











F-27


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




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





2007
              $
            
            
            2006
              $
            
            
            2005
              $Consolidated
      statements of operationsLoss
      for the year under Canadian GAAP
            
            
            (2,326,325
            )
            
            
            (1,920,249
            )
            
            
            (1,434,551
            )Exploration
      expenditures for the year (i)
            
            
            (842,188
            )
            
            
            (520,820
            )
            
            
            (1,005,831
            )Future
      income tax liability (i)
            
            
            (23,360
            )
            
            
            (93,087
            )
            
            
            55,124Exploration
      expenditures written off during the year which would have been expensed in
      the year incurred (i)
            
            
            94,716
            
            
            
            318,703
            
            
            
            -Loss
      for the year under US GAAP
            
            
            (3,097,157
            )
            
            
            (2,215,453
            )
            
            
            (2,385,258
            )Unrealized
      gains on available-for-sale securities (ii)
            
            
            14,000
            
            
            
            7,000
            
            
            
            -Comprehensive
      loss (iii)
            
            
            (3,083,157
            )
            
            
            (2,208,453
            )
            
            
            (2,385,258
            )Basic
      and diluted loss per share under US GAAP
            
            $
            (0.10
            )
            
            $
            (0.12
            )
            
            $
            (0.15
            )Weighted
      average number of common shares outstanding
            
            
            30,615,987
            
            
            
            19,169,121
            
            
            
            15,916,822











2007
              $
            
            
            2006
              $
            
            
            2005
              $Consolidated
      statements of cash flowsOperating
      activitiesCash
      used per Canadian GAAP
            
            
            (1,747,974
            )
            
            
            (1,350,297
            )
            
            
            (1,131,111
            )Exploration
      expenditures (i)
            
            
            (1,078,239
            )
            
            
            (540,890
            )
            
            
            (950,707
            )Cash
      used per US GAAP
            
            
            (2,826,213
            )
            
            
            (1,891,187
            )
            
            
            (2,081,818
            )Investing
      activitiesCash
      used per Canadian GAAP
            
            
            (2,378,239
            )
            
            
            (796,915
            )
            
            
            (196,242
            )Exploration
      expenditures (i)
            
            
            1,078,239
            
            
            
            540,890
            
            
            
            950,707Cash
      provided (used) per US GAAP
            
            
            (1,300,000
            )
            
            
            (256,025
            )
            
            
            754,465





(i)
            Mineral
      properties, deferred costs and exploration
  expenditures





Exploration
expenditures are accounted for in accordance with Canadian GAAP as disclosed in
Note 2.  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 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.





F-28


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





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





(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.  For fiscal 2007, the Company began recording holding
gains and losses reported as a separate component of shareholders’ equity as
required by Canadian GAAP.





(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 began recording
comprehensive income as required by Canadian GAAP.





(iv)         Income
Tax





Under
Canadian GAAP, future income tax assets are calculated based on enacted or
substantively 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, 2007, 2006 and 2005.





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 Statement of Financial Accounting Standards 109
(“SFAS”), 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.








F-29


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)




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





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 adopted the provisions of this
Interpretation in fiscal 2007. This provision did not have an impact on the
Company for the year ended December 31, 2007.





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.





Recently
issued US GAAP accounting standards:





i)
            In
      September 2006, FASB issued SFAS No. 157, “Fair Value Measurement”,
      effective for fiscal periods beginning after November 15, 2007.  SFAS
      defines fair value, establishes a framework for measuring accepted
      accounting principles, and expands disclosures about fair value
      measurements.  In December 2007, the FASB issued SFAS157-b, which
      provided for a one year deferral of the implementation of SFAS 157 for
      non-financial assets and liabilities.  However, SFAS is still
      required to be adopted effective January 1, 2008 for financial assets and
      liabilities that are carried at fair value.  The Company is
      currently reviewing the guidance to determine the potential impact, if
      any, on its consolidated financial
  statements.





ii)
            In
      February 2007, FASB issued SFAS No. 159, “Fair value option for
      financial assets and liabilities”which permits entities to choose
      to measure various financial instruments and certain other items at fair
      value. We do not expect the adoption of this Interpretation to have a
      significant effect on the Company’s results of operations or financial
      position.





iii)
            In
      December 2007, the FASB issued SFAS 160 a standard on accounting for
      non-controlling interests and transactions with non-controlling interest
      holders in consolidated financial statements.The standard is
      converged with standards issued by the Accounting Standards Board (“AcSB”)
      and the International Accounting Standards Board (“IASB”) on this
      subject. This statement specifies that non-controlling interests
      are to be treated as a separate component of equity, not as a liability or
      other item outside of equity. Because non-controlling interests are an
      element of equity, increases and decreases in the parent's ownership
      interest that leave control intact are accounted for as capital
      transactions rather than as a step acquisition or dilution gains or
      losses. The carrying amount of the non-controlling interests is adjusted
      to reflect the change in ownership interests, and any difference between
      the amount by which the non-controlling interests are adjusted and the
      fair value of the consideration paid or received is recognized directly
      inequity attributable to the controlling
  interest.





F-30


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)





11.           DIFFERENCES
BETWEEN CANADIAN AND UNITED STATES GENERALLY


ACCEPTED ACCOUNTING PRINCIPLES(continued)





This
standard requires net income and comprehensive income to be displayed for both
the controlling and the non-controlling interests. Additional required
disclosures and reconciliations include a separate schedule that shows the
effects of any transactions with the non-controlling interests on the equity
attributable to the controlling interest.





The
statement is effective for periods beginning on or after December 15, 2008. SFAS
160 will be applied prospectively to all non-controlling interests, including
any that arose before the effective date. The Company has not determined the
effect of the adoption of this Interpretation to the Company’s results of
operations or financial position.





iv)
            In
      December 2007, the FASB issued a revised standard on accounting for
      business combinations, SFAS 141R. The major changes to accounting for
      business combinations are summarized as
follows:





§
            all
      business acquisitions would be measured at fair
  value.


§
            the
      existing definition of a business would be
  expanded.


§
            pre-acquisition
      contingencies would be measured at fair
value.


§
            most
      acquisition-related costs would be recognized as expense as incurred (they
      would no longer be part of the purchase
  consideration).


§
            obligations
      for contingent consideration would be measured and recognized at fair
      value at acquisition date (would no longer need to wait until contingency
      is settled).


§
            liabilities
      associated with restructuring or exit activities be recognized only if
      they meet the recognition criteria of SFAS 146, Accounting for Costs
      Associated with Exit  or Disposal Activities, as of the
      acquisition date.


§
            non-controlling
      interests would be measured at fair value at the date of acquisition (i.e.
      100% of the assets and liabilities would be measured at fair value even
      when an acquisition is less than
100%).


§
            goodwill,
      if any, arising on a business combination reflects the excess of the fair
      value of the acquiree, as a whole, over the net amount of the recognized
      identifiable assets acquired and liabilities assumed. Goodwill is
      allocated to the acquirer and the non-controlling
  interest.


§
            in
      accounting for business combinations achieved in stages, commonly called
      step acquisitions, the acquirer is to re-measure its pre-existing
      non-controlling equity investment in the acquiree at fair value as of the
      acquisition date and recognize any unrealized gain or loss in
      income.





The
statement is effective for periods beginning on or after December 15,
2008.  The Company does not expect the adoption of this Interpretation
to have a significant effect on the Company’s results of operations or financial
position.








F-31


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (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, 2007, 2006 and 2005 as follows:


2007
              $
            
            
            2006
              $
            
            
            2005
              $Investing
      activitiesExpenditures
      on mineral property interests and
              deferred
      costs
            
            
            (333,000
            )
            
            
            (126,000
            )
            
            
            (143,500
            )Shares
      issued for mineral properties
            
            
            333,000
            
            
            
            126,000
            
            
            
            143,500Proceeds
      on the optioning of mineral properties
            
            
            -
            
            
            
            33,000
            
            
            
            -Investment
      in marketable securities
            
            
            -
            
            
            
            (33,000
            )
            
            
            --
            
            
            
            -
            
            
            
            -





Financing
      activitiesShare
      and warrant issuance costs
            
            
            (133,417
            )
            
            
            (6,435
            )
            
            
            (23,078
            )Warrants
            
            
            84,276
            
            
            
            3,635
            
            
            
            -Shares
      issued for payment of agent’s fees
            
            
            49,141
            
            
            
            2,800
            
            
            
            23,078-
            
            
            
            -
            
            
            
            -







13.
            SUBSEQUENT
      EVENTS





(i)
            On
      February 1, 2008, the Company signed a Letter of Intent with Geologix
      Explorations Inc. to earn up to 70% interest in their gold properties
      totaling 3,200 hectares in south-central Peru, Huancavelica
      Department.





In order
to earn an initial 51% undivided interest in these projects, the Company must
complete   US $3,800,000 exploration expenditures on each of the
properties, including a minimum of US $100,000 exploration commitments during
the first year. The Company may earn an additional 10% interest in each of these
projects by completing a positive feasibility study on each property within
three years of earning its 51% interest. A further 9% interest may be earned by
the Company by placing the property into commercial production within six years
of earning its initial interest, for an aggregate 70% interest in the
property.





(ii)
            On
      March 26, 2008, the Company announced a non-brokered private placement
      financing of up to 5,900,000 units.  On April 16, 2008, the
      Company announced that it would not proceed with the private
      placement.  Instead, the Company negotiated a brokered private
      placement of 3,571,000 units (“Units”) to raise up to $500,010. The Units
      will be priced at $0.14 per Unit and each Unit will consist 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 two years at a price of $0.18 per
      share. The Company will pay a commission of 8% of gross proceeds in cash
      or Units and will issue warrants to the agent (“Agent’s Warrants”) equal
      to 8% of the Units issued.  Each Agent’s Warrant will be
      exercisable at $0.18 for a period of two years. This financing is subject
      to regulatory approval and a four-month hold
  period.





(iii)
            Based
      on results obtained from the 2008 work program, the Company has decided to
      terminate its option on the Laguna Gold Project. The Company estimates
      costs in 2008 that will be incurred are approximately
      $700,000.


F-32


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (Expressed
in Canadian Dollars)








Argentina
            
            Peru
            
            USAMogote
              $
            
            Cocha
              $
            
            Cruz
      de Mayo
              $
            
            Laguna
              $
            
            Mitu
              $
            
            Other
              $
            
            Walker
              Lane,
      Nevada
              $
            
            Total
              $Balance,
              beginning of
    year
            2,450,504
            
            486,049
            
            172,301
            
            5,769
            
            8,360
            
            101,874
            
            131,301
            
            3,356,158Expenditures
      during the yearAcquisition
    costs
            333,000
            
            -
            
            56,674
            
            179,377
            
            -
            
            -
            
            -
            
            569,051Assays
            -
            
            28,104
            
            407
            
            516
            
            5,324
            
            -
            
            -
            
            34,351Communications
            -
            
            7,458
            
            4,790
            
            -
            
            211
            
            -
            
            -
            
            12,459Drilling
            -
            
            179,503
            
            -
            
            -
            
            -
            
            -
            
            -
            
            179,503Office
            3,945
            
            48,864
            
            467
            
            19,450
            
            4,949
            
            -
            
            -
            
            77,675Salaries and
      contractors
            -
            
            169,021
            
            8,974
            
            15,108
            
            19,058
            
            -
            
            -
            
            212,161Supplies and
      equipment
            -
            
            -
            
            33
            
            8,368
            
            167
            
            6,529
            
            -
            
            15,097Transportation
            -
            
            53,846
            
            4,456
            
            8,990
            
            4,684
            
            -
            
            -
            
            71,976Imagery and base
      maps
            -
            
            1,337
            
            -
            
            158
            
            -
            
            -
            
            -
            
            1,495Foreign value added
      tax
            1,546
            
            191,338
            
            7,932
            
            20,614
            
            13,482
            
            2,559
            
            -
            
            237,471338,491
            
            679,471
            
            83,733
            
            252,581
            
            47,875
            
            9,088
            
            -
            
            1,411,239Future
      income tax (Note 10)
            -
            
            7,289
            
            (5,078)
            
            -
            
            692
            
            (2,093)
            
            (24,170)
            
            (23,360)Write-off
      of mineral
              properties
            -
            
            -
            
            (250,956)
            
            -
            
            -
            
            -
            
            -
            
            (250,956)Balance,
      end of year
            2,788,995
            
            1,172,809
            
            -
            
            258,350
            
            56,927
            
            108,869
            
            107,131
            
            4,493,081








F-33


AMERA
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
 (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
            
            -
            
            -
            
            139,493Office
            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