---

UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

[   ] 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 ____________

Commission file number 333-78481

GREAT PANTHER RESOURCES
LIMITED(Exact name of Registrant as specified in its
charter)

Not Applicable(Translation of
Registrant's Name into English)

British Columbia, Canada(Jurisdiction
of incorporation or organization)

2100-1177 West Hastings StreetVancouver,
British Columbia, Canada V6E 2K3(Address of principal
executive offices)

Securities registered or to be registered pursuant to Section
12(b) of the Act:

|Not Applicable | Not Applicable                           
|-------------- | -----------------------------------------
|Title of Class | Name of Each Exchange on Which Registered

Securities registered or to be registered pursuant to Section
12(g) of the Act. Common Shares Without Par Value(Title of Class)

---

- 2 -

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

Not ApplicableTitle of Class

Indicate the number of outstanding shares of each of the
Registrant's classes of capital or common stock as of the close of the
period covered by the annual report.

There were 80,744,352 common shares, without par value,
issued and 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   [X] NO

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. [X]
YES   [   ] NO

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. [X]
YES   [   ] 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
[X]        Non-accelerated filer
[]

Indicate by check mark which financial statement item the
registrant has elected to follow. [X] Item 17   [ 
 ] 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   [X] NO

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

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [   ] YES 
 [   ] NO

---

- 3 -

GLOSSARY OF TERMS

The following glossary, which is not exhaustive, should be used
only as an adjunct to a thorough reading of the entire document of which it
forms a part.

adit: A horizontal or close-to-horizontal tunnel,
man-made for mining purposes.

Ag: The chemical symbol for silver on the Periodic
Table.

andesite: A fine-grained brown or greyish intermediate
volcanic rock.

Au: The chemical symbol for gold on the Periodic Table.

breccia: A course-grained rock, composed of angular,
broken rock fragments held together by a mineral cement or a fine-grained
matrix.

chloritization: A form of alteration of a rock involving
the replacement by, conversion into, or introduction of chloride.

crosscuts: Mine openings or passageways that intersect a
vein or ore bearing structure at an angle.

epithermal: Applied to hydrothermal deposits formed at
low temperature and pressure.

Feasibility Study: A detailed study of a deposit in
which all geological, engineering, operating, economic and other relevant
factors are engineered in sufficient detail that it could reasonably serve as
the basis for a final decision by a financial institution to finance the
development of the deposit for mineral production.

felsic: Applied to an igneous rock having abundant
light-colored materials.

hectare: A metric unit of land measure equal to 10,000
square metres or 2.471 acres.

hydrothermal: Relating to hot fluids circulating in the
earth's crust.

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

Inferred Mineral Resource:As defined by the Canadian
Institute of Mining, Metallurgy, and Petroleum, an Inferred Mineral Resource is
that part of a Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings, and drill holes.ii

Measured Mineral Resource: As defined by the Canadian
  Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources
  and Mineral Reserves, a Measured Mineral Resource is part of a Mineral Resource
  for which quantity, grade or quality, densities, shape and physical characteristics
  are so well established that they can be estimated with confidence sufficient
  to allow the appropriate application of technical and economic parameters, to
  support production planning and evaluation of the economic viability of the
  deposit.

---

- 4 -

The estimate is based on a detailed and reliable exploration,
  sampling and testing information gathered through appropriate techniques from
  locations such as outcrops, trenches, pits, workings, and drill holes that are
  spaced closely enough to confirm both geological and grade continuity.

mineral: An inorganic substance having usually a
definite chemical composition and, if formed under favourable conditions, having
a certain characteristic atomic structure which is expressed in its crystalline
form and other physical properties.

Mineral Resource:As defined by the Canadian Institute
  of Mining, Metallurgy, and Petroleum, a Mineral Resource is a concentration
  or occurrence of natural, solid, inorganic, or fossilized organic material in
  or on the Earths crust in such form and quantity and of such a grade or
  quality that it has reasonable prospects for economic extraction. The location,
  quantity, grade geological characteristics and continuity of a Mineral Resource
  are known, estimated or interpreted from specific geological evidence and knowledge.

Mineral Reserve:As defined by the Canadian Institute of
Mining, Metallurgy, and Petroleum, a Mineral Reserve is the economically
mineable part of a Measured or Indicated Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified. A Mineral Reserve includes diluting materials and allowances for
losses that may occur when the material is mined.

mineral claim: The portion of mining ground held under
law by a claimant.

mineralization: Implication that the rocks contain
sulphide minerals and that these could be related to ore.

ore: That part of a mineral deposit which could be
economically and legally extracted.

Probable Mineral Reserve:As defined by the Canadian
Institute of Mining, Metallurgy, and Petroleum, a Probable Mineral Reserve is
the economically mineable part of an Indicated, and in some circumstances a
Measured Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This Study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified.

Proven Mineral Reserve:As defined by the Canadian Institute
  of Mining, Metallurgy, and Petroleum, a proven mineral reserve, is the economically
  mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary
  Feasibility Study. This Study must include adequate information on mining, processing,
  metallurgical, economic, and other relevant factors that demonstrate, at the
  time of reporting, that economic extraction is justified.

quartz: A common rock forming mineral consisting of
silicon and oxygen.

rhyolite: A fine-grained volcanic (intrusive) rock of
granitic composition.

sulfidation: The reaction of a metal or alloy with a
sulfur-containing species to produce a sulfur compound that forms on or beneath
the surface of the metal or alloy.

stockwork: A metalliferous deposit characterized by the
impregnation of the mass of rock with many small veins or nests irregularly
grouped.

vein: A zone or belt of mineralized rock lying within
  boundaries clearly separating it from neighbouring rock. A mineralized zone
  has, more or less, a regular development in length, width and depth to give
  it a tabular form and is commonly inclined at a considerable angle to the horizontal.
  The term "lode" is commonly used synonymously for vein.

---

- 5 -

CONVERSION TABLE

|From         | To         | Multiply By
|------------ | ---------- | -----------
|             |            |            
|Cubic metres | Cubic feet | 35.494     
|Feet         | Metres     | 0.305      
|Metres       | Feet       | 3.281      
|Miles        | Kilometres | 1.609      
|Kilometres   | Miles      | 0.621      
|Acres        | Hectares   | 0.405      

---

- 6 -

PART I

This annual report contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors" that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

As used in this annual report, the terms "we", "us", "our", and
"Great Panther" mean Great Panther Resources Limited, and our subsidiaries,
Minera Mexicana el Rosario, S.A. de C.V., Metalicos de Durango, S.A. de C.V.,
Minera de Villa Seca, S.A. de C.V., Exploraciones Mineras el Rosario S.A. de
C.V. and/or New Age Investments Inc., unless otherwise indicated.

Unless otherwise indicated, all dollar amounts referred to
herein are in Canadian dollars.

ITEM
1               Identity
of Directors, Senior Management and Advisers

A.Directors and Senior Management

|Name                    | Position                    | Business Address 
|----------------------- | --------------------------- | -----------------
|                        |                             |                  
|Robert A. Archer        | President & CEO             | Vancouver, BC    
|                        |                             |                  
|Kaare G. Foy            | Executive Chairman          | Vancouver, BC    
|                        |                             |                  
|Malcolm A. Burne        | Director                    | London, UK       
|                        |                             |                  
|John T. Kopcheff        | Director                    | Perth, Australia 
|                        |                             |                  
|A. Michael Turko        | Director                    | Vancouver, BC    
|                        |                             |                  
|Raakel S. Iskanius      | Chief Financial Officer     | Vancouver, BC    
|                        |                             |                  
|Charles P. Brown        | Chief Operating Officer     | Vancouver, BC    
|                        |                             |                  
|Francisco Ramos Sanchez | VP, Business Development    | Queretaro, Mexico
|                        |                             |                  
|Robert F. Brown         | Vice President, Exploration | Vancouver, BC    
|                        |                             |                  
|Wendy M. Ratcliffe      | Corporate Secretary         | Vancouver, BC    

---

- 7 -

B. Advisers

Name
    Position
    Business AddressMichael Sikula
    Legal
      Adviser
    West
      Vancouver, BCEnrique Del Bosque
    Legal
      Adviser
    Mexico
      City, Mexico


C. Auditors

Name
    Position
    Business AddressKPMG LLP
    Auditors
    Vancouver, BC


ITEM
2               Offer
Statistics and Expected Timetable

Not applicable.

ITEM
3               Key
Information

*A.*       *Selected Financial Data*

The following financial data summarizes selected financial data
for our Company prepared in accordance with Canadian generally accepted
accounting principles for the five fiscal years ended December 31, 2007.
Additional information is presented to show the differences which would result
from the application of United States generally accepted accounting principles
to our financial information. The information presented below as at December 31,
2007 and 2006, and for each of the years in the three-year period ended December
31, 2007, is derived from our audited financial statements which are included in
this Annual Report on Form 20-F. The information set forth below should be read
in conjunction with our audited financial statements and related notes included
in this annual report and with the information appearing under the heading "Item
5. Operating and Financial Review and Prospects". The data is presented in
Canadian dollars, unless otherwise stated.

---

- 8 -

Selected Financial Data(Stated
in Canadian Dollars - Calculated in accordance with Canadian GAAP)

Fiscal Year Ended December 31 (Audited)

Canadian GAAP
    2007
    2006
    2005
    2004
    2003Sales or Operating Revenue
    17,487,070
    7,069,442
    -
    -
    -Cost of Sales
    16,116,633
    7,119,047
    -
    -
    -General & administrative, mineral property exploration
      expenses, accretion, and stock- based compensation
    12,627,670
    13,049,488
    4,836,932
    2,931,833
    272,151Amortization and depletion of mineral properties, plant and
      equipment
    3,603,668
    1,421,769
    12,579
    2,719
    1,970Income (Loss) From Operations
    (14,860,901)
    (14,520,862)
    (4,849,511)
    (2,934,522)
    (274,121)Loss for the year
    (19,700,861)
    (15,084,437)
    (5,231,685)
    (2,893,657)
    (273,738)(Loss) per Common Share  basic and diluted
    (0.27)
    (0.25)
    (0.22)
    (0.22)
    (0.16)Total Assets
    31,053,110
    32,132,259
    19,218,970
    3,788,331
    1,001,244Net Assets
    21,196,469
    28,549,831
    13,382,428
    3,160,218
    703,813Capital Stock
    56,988,447
    46,393,145
    21,536,440
    7,068,595
    2,089,939Number of Common Shares (adjusted to reflect consolidation
      of common shares)
    80,744,352
    69,797,348
    47,349,431
    15,818,677
    4,213,132Long-Term Debt
    4,117,236
    2,450,740
    5,587,217
    -
    -Cash Dividends per Common Share
      
    -
    -
    -
    -


---

- 9 -

Selected Financial Data(Stated in
Canadian Dollars - Calculated in accordance with US GAAP)

Fiscal Year Ended December 31 (Audited)

United States GAAP
    2007
    2006
    2005
    2004
    2003Sales or Operating Revenue
    17,487,070
    7,069,442
    -
    -
    -Cost of Sales
    16,116,633
    7,119,047
    -
    -
    -General & administrative, mineral
      property exploration expenses, accretion, and stock- based compensation
    12,627,670
    13,049,488
    4,836,932
    2,931,833
    272,151Amortization, asset write-down and depletion
      of mineral property, plant and equipment
    3,603,668
    1,421,769
    416,213
    2,719
    1,970Income (Loss) From Operations
    (14,860,901)
    (14,520,862)
    (5,253,145)
    (2,934,552)
    (274,121)Loss for the period
    (19,323,049)
    (14,934,638)
    (5,231,685)
    (2,893,657)
    (273,738)(Loss) per Common Share  basic and diluted
    (0.27)
    (0.25)
    (0.22)
    (0.22)
    (0.16)Total Assets
    31,053,110
    32,132,259
    19,218,970
    3,789,696
    1,014,974Net Assets
    19,155,080
    27,693,630
    13,382,428
    3,161,583
    717,543Capital Stock
    63,199,652
    52,604,350
    27,747,645
    13,279,800
    8,301,144Number of Common Shares (adjusted to reflect
      consolidation of common shares)
    80,744,352
    69,797,348
    47,349,431
    15,818,677
    4,213,132Long-Term Debt
    6,158,625
    3,306,941
    5,587,217
    -
    -Cash Dividends per Common Share
      
    -
    -
    -
    -


---

- 10 -

Disclosure of Exchange Rate History

On March 20, 2008, the exchange rate in effect for Canadian
dollars exchanged for United States dollars, expressed in terms of Canadian
dollars, and based on the noon buying rates in New York City, for cable
transfers in Canadian dollars, as certified for customs purposes by the Federal
Reserve Bank of New York was $1.0269.

For the past five fiscal years ended December 31, 2007 and for
the period between December 1, 2007 and February 29, 2008, the following
exchange rates were in effect for Canadian dollars exchanged for United States
dollars, expressed in terms of Canadian dollars and based upon the exchange rate
as determined above:

Year/Month End
    Average
    Low/HighDecember 31, 2003
    $1.4015
    not applicableDecember 31, 2004
    $1.3015
    not applicableDecember 31, 2005
    $1.2116
    not applicableDecember 31, 2006
    $1.1341
    not applicableDecember 31, 2007
    $1.0740
    not applicableSeptember 30, 2007
    not applicable
    $1.0222/$1.0287toOctober 31, 2007
    not applicable
    $0.9725/$.09786November 30, 2007
    not applicable
    $0.9617/$0.9716December 31, 2007
    not applicable
    $0.9990/$1.0076January 31, 2008
    not applicable
    $1.0060/$1.0149February 29, 2008
    not applicable
    $0.9952/$1.0035


***B.******Capitalization
and Indebtedness***

Not Applicable

*C.*       *Reasons
  for the Offer and Use of Proceeds*

Not applicable

*D.*       *Risk Factors*

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

---

- 11 -

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

The common shares of our Company are considered speculative.
You should carefully consider the following risks and uncertainties in addition
to other information in this annual report in evaluating our Company and our
business before purchasing shares of our Company's common stock. Our business,
operating and financial condition could be harmed due to any of the following
risks.

Risks Associated with Mining

As our properties are in exploration, development and mining
stages there is no assurance as to the full extent that we will be establishing
commercial discoveries on our properties.

Despite a 48-year history of continuous production at the Topia
Mine, extensive exploration work on our mineral claims and current commercially
profitable operations there, the full extent of the ore bodies has yet to be
established in accordance with Canadian NI 43-101.

Similarly, at the Guanajuato Mine Complex, with its estimates
of historic production ranging from 700 million ounces to 1.5 billion ounces of
silver and 4 to 7 million ounces of gold since 1548, with extensive exploration
work done to date, with current physical mining and with the production of
increasing quantities of silver and gold concentrates, it is nevertheless too
early to determine the full extent of the ore bodies in accordance with Canadian
NI 43-101.

Mineral operations are subject to government regulations
which could have the effect of reducing or preventing us from exploiting any
possible mineral reserves on our properties.

Mining and exploration activities are also subject to national
and local laws and regulations governing prospects, taxes, labour standards,
occupational health, land use, environmental protection, mine safety and others
which currently or in the future may have a substantial adverse impact on our
Company. In order to comply with applicable laws, we may be required to make
capital expenditures until a particular problem is remedied. Existing and
possible future environmental legislation, regulation and action could cause
additional expense, capital expenditures, restriction and delays in the
activities of our Company, the extent of which cannot be reasonably predicted.
Violators may be required to compensate those suffering loss or damage by reason
of our mining activities and may be fined if convicted of an offence under such
legislation.

Mining and mineral exploration has substantial operational
risks, which could prevent us from achieving profitable operations.

Mining and mineral exploration involves many risks, which even
a combination of experience, knowledge and careful evaluation may not be able to
overcome. Operations in which we have an interest will be subject to all of the
hazards and risks normally incidental to exploration, development and production
of base, precious and other metals, any of which could result in damage to or
destruction of mines and other producing facilities, damage to life and
property, environmental damage and possible legal liability for any or all
damage. The nature of these risks is such that liabilities could exceed policy
limits of our insurance coverage, in which case we could incur significant costs
that could prevent us from becoming profitable. Most exploration projects do not
result in the discovery of commercially mineable ore deposits and no assurance
can be given that any anticipated level of recovery of ore reserves will be
realized or that any identified mineral deposit will ever qualify as a
commercially viable ore body which can be legally and economically exploited.

---

- 12 -

Our projects are located in Mexico where mining and
exploration activities may be affected in varying degrees by political and
government regulations, which could have a negative impact on our ability to
continue our operations.

Mining and exploration activities in Mexico may be affected in
varying degrees by political instabilities and government regulations relating
to the mining industry. Any changes in regulations or shifts in political
conditions are beyond our control and may adversely affect our business. Our
operations may also 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 Mexico as a developing country may make it more difficult
for us to obtain any required financing for our projects. The effect of all
these factors cannot be accurately predicted. Notwithstanding the progress
achieved in restructuring Mexican political institutions and revitalizing its
economy, the present administration, or any successor government, may not be
able to sustain the progress achieved. While the Mexican economy has experienced
growth in recent years, such growth may not continue in the future at similar
rates or at all. If the economy of Mexico fails to continue its growth or
suffers a recession, we may not be able to continue our operations in that
country. We do not carry political risk insurance.

Our operations may be subject to environmental regulations
which may result in the imposition of fines and penalties.

Our operations may be subject to environmental regulations
promulgated by government agencies from time-to-time. There is no assurance that
environmental regulations will not change in a manner that could have an adverse
effect on our Company's financial condition, liquidity or results of operations.
Environmental legislation is constantly expanding and evolving in ways that
impose stricter standards and more rigorous enforcement, with higher fines and
more severe penalties for non-compliance, and increased scrutiny of proposed
projects. There is an increased level of responsibility for companies, and
trends towards criminal liability for officers and directors for violations of
environmental laws, whether inadvertent or not. The cost of compliance with
changes in governmental regulations has a potential to reduce the profitability
of our operations.

While we maintain appropriate insurance for liability and
property damage, we may become subject to liability for hazards that cannot be
insured against, which if such liabilities arise, could reduce or eliminate
profitability for our Company.

Our operations may involve the use of dangerous and hazardous
substances. While extensive measures are taken to prevent discharges of
pollutants in the ground water and the environment, and it is anticipated that
we will maintain appropriate insurance for liability and property damage in
connection with our business, we may become subject to liability for hazards
that cannot be insured against or which we may elect not to insure ourselves
against due to high premium costs or other reasons. Should such liabilities
arise, they could reduce or eliminate the profitability of us resulting in a
decline in the value of our securities. In the course of mining and exploration
of our mineral properties, certain risks and, in particular, unexpected or
unusual geological operating conditions including rock bursts, cave-ins, fires,
flooding and earthquakes may occur. It is not always possible to fully insure
against such risks and we may decide not to take out insurance against such
risks as a result of high premiums or other reasons. Should such liabilities
arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of our securities.

There can be no assurance that title to any property
interest acquired by us or our subsidiary is secured.

Although we have taken reasonable precaution to ensure that legal
  title to our properties is properly documented, there can be no assurance that
  our Company's, or our subsidiaries, property interests may not be challenged
  or impugned. Such property interests may be subject to prior unregistered agreements
  or transfers or other land claims, and title may be affected by undetected defects
  and adverse laws and regulations.

---

- 13 -

We have a limited operating history on which to base an
evaluation of our business and prospects.

Since we have only recently begun mining and further
development of our mining properties, we only have a limited operating history
on which to base an evaluation of our future prospects. Our operating activities
from 2004 through 2006, consisted primarily of locating and acquiring the
interest in the properties that we currently hold. In the first part of 2006, we
commenced production at the Topia Mine and limited production at the Guanajuato
Mine Complex, and only increased production at both locations in the second half
of 2006. 2007 was the first year in which both mines were in full production.
For the year ended 2007, we generated $17,487,070 in revenue, compared to
$7,069,442 and $0 for the twelve month periods ending December 31, 2006 and
2005, respectively. Although we have prepared internal mining plans and cash
flow analyses for the Topia Mine and Guanajuato Mine Complex, we have no way to
evaluate the likelihood that we will be able to operate our business
successfully or that our properties contain a sufficient amount of recoverable
reserves. We recognize that if we are unable to generate significant revenues
from our mining operations and any dispositions of our properties, we will not
be able to earn profits or continue operations, potentially resulting in
significant losses in the foreseeable future. At this early stage of our
operation, we also expect to face the risks, uncertainties, expenses and
difficulties frequently encountered by companies at the early stage of their
business development. We cannot be sure that we will be successful in addressing
these risks and uncertainties and our failure to do so could have a materially
adverse effect on our financial condition. Aside from the professional track
record of our Companys management team, there is no history upon which to base
any assumption as to the likelihood that our Company will prove successful and
we can provide investors with no assurance that we will generate any net
operating revenues or achieve profitable operations.

The fact that we have generated significant revenues for
only two years raises some doubt about our ability to continue as a going
concern.

We have generated revenues for two years since beginning our
mining and exploration activities in Mexico. We may continue to incur greater
operating expenses than revenues until all our mining properties are
sufficiently developed to sustain commercial production and as a result, we may
need to undertake further financing. There can be no assurance that we will be
able to successfully mine, develop and explore our mining properties or that
viable reserves exist on our properties for extraction. If we are unable to
generate sufficient cash inflow to support our business activities during the
fiscal year ending December 31, 2008, we may be forced to delay, scale back, or
eliminate our mining and exploration activities.

Because we have only recently begun to earn revenue from our
business, we may need to raise additional funds for the further exploration and
development of our mining claims and to respond to unanticipated requirements or
expenses. We do not currently have any arrangements for financing and we can
provide no assurance to investors that we will be able to find such financing if
it is required. The most likely source of future funds presently available to
our Company is through the sale of equity capital. All of these circumstances
raise some doubt about its ability to continue as a going concern. The report of
the independent registered public accounting firm on our 2007 annual financial
statements includes an additional explanatory paragraph that states that
conditions or events exist, which raise substantial doubt about our ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of that uncertainty.

---

- 14 -

Our properties are in the production, development and
exploration stages; however, they have not all been proven commercially viable
at this time and there is no assurance that commercially viable quantities of
ore will continue to be discovered.

Our mineral properties are in the early production,
development, and/or exploration stages and are not all commercially viable at
this time. Despite extensive exploration work on our mineral properties and a
long history of continuous production at both the Topia and Guanajuato mines, no
known bodies of commercial ore or economic deposits have been established to the
satisfaction of National Instrument 43-101 on any of the mineral properties.
Mineral exploration involves a high degree of risk. There is no assurance that
commercially viable quantities of ore will be discovered at our exploration
sites, or that our exploration properties will be brought into commercial
production. If we are not able to continue to locate sufficient quantities of
commercially viable ore and bring our exploration properties into commercial
production, we may not be able to continue operations and, as a result, our
shareholders may lose any investment in our Company.

There is substantial risk that no commercially exploitable
minerals will be found at our exploration properties and our business may fail.

The search for valuable minerals as a business is extremely
risky. We can provide investors with no assurance that the mineral claims that
we have an option to acquire contain commercially exploitable reserves.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. The probability of an individual prospect having reserves and
being commercially profitable is remote and, if a property does not contain any
reserves, the funds we have spent or will spend on exploration of such property
will be lost.

We are subject to environmental protection legislation with
which we must comply or suffer sanctions from regulatory authorities.

If the results of our geological exploration program indicate
commercially exploitable reserves and we decide to pursue commercial production
of our mineral claims, we may be subject to an environmental review process
under environmental assessment legislation. Compliance with an environmental
review process may be costly and may delay commercial production. Furthermore,
there is the possibility that we would not be able to proceed with commercial
production upon completion of the environmental review process if government
authorities do not approve our mine or if the costs of compliance with
government regulation adversely affect the commercial viability of the proposed
mine.

Mineral prices are subject to dramatic and unpredictable
fluctuations.

The market price of precious metals and other minerals is
volatile and cannot be controlled. If the price of precious metals and other
minerals should drop significantly, the economic prospects of the projects in
which we have an interest could be significantly reduced or rendered uneconomic.
There is no assurance that, even if commercial quantities of ore are discovered,
a profitable market may exist for the sale of same. Factors beyond our control
may affect the marketability of any minerals discovered. Mineral prices have
fluctuated widely, particularly in recent years. The marketability of minerals
is also affected by numerous other factors beyond our control, including
government regulations relating to royalties, allowable production and importing
and exporting of minerals, the effect of which cannot be accurately predicted.

If we cannot locate qualified personnel, we may have to
suspend or cease operations which will result in the loss your investment.

Not all of our directors and officers have direct training or
experience in metals exploration or mining and as a result, they may not be
fully aware of any of the specific requirements related to working within the
industry. Their decisions and choices may not take into account standard
engineering or managerial

---

- 15 -

approaches that mineral exploration companies commonly use.
Consequently, our operations, earnings and ultimate financial success could
suffer irreparable harm. As a result, we may have to suspend or cease operations
which would result in the loss of your investment.

Risks Associated with our Business

We have limited financial resources and there can be no
assurance that we will be able to obtain adequate financing in the future.
Failure to obtain such financing may result in a delay or indefinite
postponement of further exploration, development and mining of our projects.

We have limited financial resources and we have no assurances
that additional funding will be available to be used for working capital, to
further develop the Companys mines and exploration properties, to fulfil
certain contractual obligations and to fund corporate overhead costs. Although
we have been successful in the past in obtaining financing through the sale of
equity securities and, recently, through the sale of minerals, there can be no
assurance that we will be able to obtain adequate financing in the future or
that the terms of such financing will be favourable, or that our sale of
minerals will generate sufficient revenues. Failure to obtain such additional
financing could result in a delay or indefinite postponement of mining
activities, exploration and development of our projects and the possibility of
loss of such properties.

Fluctuation in foreign currency exchange rates may affect
our results.

Virtually all of the goods and services required by us in
connection with our operations in Mexico and costs for the further acquisition
of interests in our properties, will be paid for in Mexican pesos or United
States dollars. Prices for goods and services offered to members of the mining
industry in Mexico, when quoted in Mexican pesos, are, for the most part,
adjusted so as to remain competitive with prices offered in respect of the same
goods and services in the United States and Canada. Nonetheless, an increase in
the value of the Mexican pesos or of the United States dollar relative to the
Canadian dollar, which is not followed by such an adjustment, may affect the
ability of our Company to carry out our exploration and development programs and
may substantially increase the costs of such programs.

Variations in the market prices of metals may affect our
ability to raise funding to continue exploration, development and mining of our
properties. In addition, any significant fluctuations in metal prices will
impact on our decision to accelerate or reduce our exploration activities.

Factors beyond our control may affect the marketability of any
substances discovered. The prices of various metals have experienced significant
movement over the last two years, and are affected by numerous factors beyond
our control, 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
due to improved mining and production methods. 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 affect our ability to raise funding to
continue exploration of our properties. In addition, any significant
fluctuations in metal prices will impact on our decision to accelerate or reduce
our exploration activities.

We are dependant on the services of certain key officers,
namely Robert Archer, Kaare Foy and Charles Brown, and the loss of these certain
key personnel may have a materially adverse effect on our Company.

While engaged in the business of mining and exploring mineral
properties in Mexico, the nature of our business, our ability to continue our
exploration of potential projects, and to develop a competitive edge in the
marketplace, depends, in large part, on our ability to attract and maintain
qualified key management personnel. Competition for such personnel is intense,
and we may not be able to attract and retain such personnel. Our growth has
depended, and in the future will continue to depend, on the efforts of our key

---

- 16 -

management personnel such as Robert A. Archer, our President,
CEO and a director, Kaare G. Foy, Executive Chairman and Charles Brown, our
Chief Operating Officer. The loss of any of these people would have a material
adverse effect on us. Currently, we have contracts with these key employees. We
do not have key-man life insurance.

Conflicts of interest may arise as a result of our directors
and officers being directors and officers of other natural resource companies.

Certain of our directors and officers may continue to be
involved in a wide range of business activities through their direct and their
indirect participation in corporations, partnerships or joint ventures.
Situations may arise in connection with potential acquisitions and investments
where the other interests of these director and officers may conflict with the
interests of our Company. Our directors and officers with conflicts of interest
will be subject to and will follow the procedures set out in the applicable
corporate legislation.

Risks Relating to an Investment in our Securities

Trading in our common shares on the Toronto Stock Exchange
(TSX) is limited and any sporadic trading may make it difficult for our
shareholders to sell their shares or liquidate their investments.

The trading price of our shares has been and may continue to be
subject to wide fluctuations. Trading prices of our shares may fluctuate in
response to a number of factors, many of which are beyond our control. In
addition, the stock market in general, and the market for gold and silver
exploration companies in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of such companies. These broad market and industry factors may
adversely affect the market price of our shares, regardless of our operating
performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs and a diversion of management's attention and resources.

Our By-laws indemnify our officers and directors against all
  costs, charges and expenses incurred by them.

Our By-laws contain provisions limiting the liability of our
officers and directors for all acts, receipts, neglects or defaults of
themselves and all of our other officers or directors or for any other loss,
damage or expense incurred by our Company which shall happen in the execution of
the duties of such officers or directors, as do indemnification agreements
between us and our directors. Such limitations on liability may reduce the
likelihood of derivative litigation against our officers and directors and may
discourage or deter our shareholders from suing our officers and directors based
upon breaches of their duties to our Company, though such an action, if
successful, might otherwise benefit our Company and our shareholders.

Investors' interests in our Company will be diluted and
investors may suffer dilution in their net book value per share if we issue
incentive stock options to our employees, directors, officers and consultants.

We have granted, and in the future may grant, to directors,
officers, insiders, and key employees options to purchase our common shares as
non-cash incentives to those persons. Such options have been and may in future,
be granted at exercise prices equal to market prices, or at prices as allowable
under the policies of the TSX. The issuance of additional shares will cause our
existing shareholders to experience dilution of their ownership interests.

---

- 17 -

Investors' interests in our Company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities.

As our operating expenses currently exceed our revenue from
mineral sales, we may be required to issue additional shares to finance our
operations and, depending on the outcome of our exploration programs and mining
operations, may issue additional shares to finance additional programs and
mining operations or to acquire additional properties. In the event that we are
required to issue additional shares or decide to enter into joint ventures with
other parties in order to raise financing through the sale of equity securities,
investors' interests in our Company will be diluted and investors may suffer
dilution in their net book value per share depending on the price at which such
securities are sold. As at December 31, 2007, there are also outstanding common
share purchase warrants and options exercisable into 10,378,074 common shares
which, if exercised, would represent approximately 11.4% of our issued and
outstanding shares. If all of these shares are exercised and issued, such
issuance also will cause a reduction in the proportionate ownership and voting
power of all other shareholders. The dilution may result in a decline in the
market price of our shares.

We have a history of net losses and there is no assurance
that we can reach profitability in the future.

We have a history of losses and there is no assurance that we
can reach profitability in the future. We may require significant additional
funding to meet our business objectives which include expanding our current
mining facilities and operations, further developing our existing exploration
properties and acquiring additional mineral properties. We may not be able to
obtain additional financing on reasonable terms, or at all, depending on market
conditions and the market sentiment towards the Company. If equity financing is
required, then such financings could result in significant dilution to existing
shareholders. If we are unable to obtain sufficient financing, we might have to
dramatically reduce mining and exploration activities, and/or lose control of
our projects. We have historically obtained the preponderance of our financing
through the issuance of equity as there is no limit to the number of authorized
common shares. There are no other plans to obtain financing, if needed, other
than through equity financing.

U.S. investors may not be able to enforce their civil
liabilities against us or our directors, controlling persons and officers.

It may be difficult to bring and enforce suits against us. We
were incorporated under the Company Act (British Columbia) and continued
in the Yukon Territory under theBusiness Corporations Act(Yukon), and
then continued to British Columbia under the Business Corporations Act
(British Columbia) on July 9, 2004. All of our directors and officers are
residents of countries other than the United States and all of our assets are
located outside of the United States. Consequently, it may be difficult for
United States investors to affect service of process in the United States upon
those directors or officers who are not residents of the United States, or to
realize in the United States upon judgments of United States courts predicated
upon civil liabilities under the United States Securities Exchange Act of 1934,
as amended. There is substantial doubt whether an original action could be
brought successfully in Canada against any of such persons or us predicated
solely upon such civil liabilities.

Trading of our stock may be restricted by the SEC's "Penny
Stock" regulations which may limit a stockholder's ability to buy and sell our
stock.

The U.S. Securities and Exchange Commission has adopted regulations
  which generally define "penny stock" to be any equity security that has a market
  price (as defined) less than $5.00 per share or an exercise price of less than
  $5.00 per share, subject to certain exceptions. Our securities are covered by
  the penny stock rules, which impose additional sales practice requirements on
  broker-dealers who sell to persons other than established customers and "accredited
  investors". The term "accredited investor" refers generally to institutions
  with assets in excess of $5,000,000 or individuals with a net worth in excess
  of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
  spouse.

---

- 18 -

The penny stock rules require a broker-dealer, prior to a transaction
  in a penny stock not otherwise exempt from the rules, to deliver a standardized
  risk disclosure document in a form prepared by the SEC which provides information
  about penny stocks and the nature and level of risks in the penny stock market.
  The broker-dealer also must provide the customer with current bid and offer
  quotations for the penny stock, the compensation of the broker-dealer and its
  salesperson in the transaction and monthly account statements showing the market
  value of each penny stock held in the customer's account. The bid and offer
  quotations, and the broker-dealer and salesperson compensation information,
  must be given to the customer orally or in writing prior to effecting the transaction
  and must be given to the customer in writing before or with the customer's confirmation.
  In addition, the penny stock rules require that prior to a transaction in a
  penny stock not otherwise exempt from these rules, the broker-dealer must make
  a special written determination that the penny stock is a suitable investment
  for the purchaser and receive the purchaser's written agreement to the transaction.
  These disclosure requirements may have the effect of reducing the level of trading
  activity in the secondary market for the stock that is subject to these penny
  stock rules. Consequently, these penny stock rules may affect the ability of
  broker-dealers to trade our securities. We believe that the penny stock rules
  discourage investor interest in, and limit the marketability of, our common
  stock.

U.S. investors could suffer adverse tax consequences if we
are characterized as a passive foreign investment company.

We may be treated as a passive foreign investment company, or
PFIC, for United States federal income tax purposes during the 2008 tax year or
in subsequent years. We may be deemed a PFIC because previous financings
combined with proceeds of future financings may produce, or be deemed to be held
to produce, passive income. Additionally, U.S. citizens should review the
section entitled "Taxation-U.S. Federal Income Taxation - Passive Foreign
Investment Companies" contained in this annual report for a more detailed
description of the PFIC rules and how those rules may affect their ownership of
our capital shares.

If we are or become a PFIC, many of the U.S. shareholders will
be subject to the following adverse tax consequences:

|- | They will be taxed at the highest ordinary income tax
      rates in effect during their holding period on certain distributions on
      our capital shares, and gains from the sale or other disposition of our
      capital shares;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                        
|- | They will be required to pay interest on taxes allocable
      to prior periods; and                                                                                                                                                   
|  |                                                                                                                                                                                                                                        
|- | The tax basis of our capital shares will not be increased
      to fair market value at the date of their date.                                                                                                                        

We do not expect to declare or pay any dividends.

We have not declared or paid any dividends on our common stock
since our inception, and we do not anticipate paying any such dividends for the
foreseeable future.

ITEM
4              
Information on the Company

*A.*       *History
and Development of Great Panther*

We were originally incorporated under the Company Act
(British Columbia) in 1965 under the name Lodestar Mines Ltd. Since that time,
we have had the following name changes:

-**** in
1980, to Lodestar Energy Inc.

---

- 19 -

- ****in
1985, to Controlled Environmental Farming Int'l Ltd.

-**** in
1987, to International Controlled Investments Inc.

- ****in
1991, to New Age Ventures Inc.

- ****in
January 1998, to Great Panther Inc.

-**** in
October 2003, to Great Panther Resources Limited.

On March 22, 1996 we continued under the Business
Corporation Act (Yukon). On July 9, 2004, we continued to British Columbia
under the Business Corporation Act (British Columbia).

We have offices located at Suites 350 and 2100, 1177 West
Hastings Street, Vancouver, British Columbia, V6E 2K3, Canada. Our telephone
number is 604-608-1766, and our facsimile number is 604-608-1744.

Our Company is currently a reporting issuer under the
securities laws of British Columbia, Alberta and Ontario.

On June 18, 1980, our common shares were listed on the TSX
Venture Exchange (formerly known as the CDNX, and the Vancouver Stock Exchange).
Our trading symbol is "GPR", and until February 27, 2005, we were classified by
the TSX Venture Exchange as a Tier 2 company.

On October 2, 2003, we consolidated our common shares whereby
every ten common shares before consolidation became one common share after
consolidation.

On February 11, 2004, we entered into an option agreement
granting our Company the right and option, for a period of three years, to
purchase 100% of the ownership rights in and to the Santo Nino Mining Concession
located in the Guadalupe y Calvo Mining District, State of Chihuahua, Mexico by
making staged cash payments totaling US$165,000 with no underlying NSR and no
work commitments. We made cash payments totaling US$20,000 during the year ended
December 31, 2004, cash payments totaling US$20,000 during year ended December
31, 2005, cash payments totaling US$30,000 during the year ended December 31,
2006 and cash payments totaling US$95,000 during the year ended December 31,
2007, thus fulfilling all conditions of the option agreement.

On February 28, 2004, we entered into an option agreement
granting our Company the right and option, for a period of three years plus 30
days, to purchase 100% of the ownership rights in and to the San Taco Mining
Concessions located in the Guadalupe y Calvo Mining District, State of
Chihuahua, Mexico by making staged cash payments totalling US$965,000 with no
underlying NSR and no work commitments. We made a cash payment of US$50,000
during the year ended December 31, 2004 and a cash payment of US$75,000 during
the 2005 fiscal year in accordance with the option agreement. The Company
elected not to make the required US$100,000 payment on February 28, 2006 and as
a result forfeited all rights and options to the property.

On December 31, 2004, we entered into a letter of intent to
acquire up to an 80% interest in certain mineral properties located in the Cerro
Colorado Mining District of Pima County in southern Arizona. On February 4,
2005, we elected not to proceed with this proposed acquisition.

On June 13, 2005, we signed an option agreement to purchase 100%
  of the ownership rights in and to two mining claims designated as the Virimoa
  Property located in the Topia Mining District, State of Durango, Mexico. Terms
  of the agreement call for our Company to make four staged cash payments and
  share issuances totaling US$300,000 and 300,000 shares (100,000 issued), over
  a period of three years, to the property owner. If the option is exercised,
  the property owner will retain a 2% NSR, half of which can be purchased for
  US$1,000,000.

---

- 20 -

In May 2005, we received title for an additional 2,184 hectares
staked by us in the Guadalupe y Calvo Mining District of southwest Chihuahua
State, Mexico, increasing the size of our San Antonio Project to 12,274.7
hectares.

On June 30, 2005, we entered into an agreement to purchase 100%
of the ownership rights in and to all the fixed assets, machinery, equipment and
Topia Silver-Lead-Zinc Mine located in the Municipality of Topia, State of
Durango, Mexico. Upon signing the agreement, we paid a total of US$540,165 to
the vendor and to two divisions of Peñoles, the latter being part of the assumed
debt. The balance of the purchase price, approximately US$1.76 million, is
divided between the vendor (US$946,000 owed) and La Cienega, a division of
Peñoles. While the debt to the vendor will be paid in stages over the next three
years, the debt to La Cienega will be paid effectively from the proceeds of
production as a 10% NSR. We have the option of paying out the debt in full at
any time. During 2006, a total of US$628,507 was paid in respect of the Topia
Mine debt, being US$328,507 to La Cienega subsidiary of Peñoles and US$300,000
to the vendor, Cia Minera de Caneles y Topia S.A. de C.V (Caneles). During
2007, a total of US$1,135,986 was paid in respect of the Topia Mine debt, being
US$486,067 to La Cienega and US$646,919 to Caneles. All debt with respect to the
Topia Mine has been repaid at December 31, 2007.

On July 12, 2005 we incorporated Metalicos de Durango, S.A. de
C.V. and on October 5, 2005 we incorporated Minera de Villa Seca, S.A. de C.V.
These two operational subsidiaries of our Company are responsible for the
day-to-day affairs and operations of the Topia Mine and Guanajuato Mine
respectively.

On October 25, 2005, we signed a formal purchase agreement to
acquire a 100% interest in a group of producing silver-gold mines in Guanajuato,
Mexico. The total purchase price is US$7,250,000 which includes 1,107 hectares
in two main properties, the 1,200 tonne-per-day plant, workshops and
administration facilities, complete mining infrastructure, mining equipment, and
certain surface rights (real estate). At December 31, 2005, we had paid
US$3,650,000 of the total purchase price to the vendor. At December 31, 2006, we
had made the final payment for the Guanajuato Properties.

Subsequent to December 31, 2005, we decided not to actively
commit to further exploration of the San Taco property and as a result the value
of the property as at December 31, 2005, was determined to be nil. As such, the
acquisition costs associated with the property ($403,634) was expensed as part
of the write down of property cost.

On February 28, 2006, the TSX Venture Exchange elevated our
classification from a Tier 2 company to a Tier 1 company.

On March 8, 2006, we purchased a 100% interest in the Arcoiris
concession. The agreement required a cash payment of US$20,000 upon signing of
the purchase agreement (paid) and additional staggered payments totalling
US$280,000 (US$180,000 paid) over a three year period. The 100 hectare Arcoiris
concession contains portions of the strike extension and down-dip projection of
the Dos Amigos Vein that the Company has already started developing on its own
Topia Mine Property. In addition, the new claim contains much of the Don Antonio
vein, from which Peñoles produced silver-lead-zinc in the past.

On May 24, 2006, we announced the purchase of 3.88 hectares of
land adjacent to the plant at our Guanajuato Silver-Gold Mine Complex from
Sociedad Cooperativa Minero Metalurgica Santa Fe de Guanajuato for a total of US
$690,425. A payment of US$201,825 was made at the time of signing of the
purchase agreement. The remaining US$488,600 was paid during the 5-month period
that followed.

On June 1, 2006 we closed a private placement offering (the "Offering"),
  with Jennings Capital Inc. (Jennings), as underwriter, of 5,000,000
  units of the Company ("Units"), on an underwritten basis, at a price of $2.00
  per Unit to raise gross proceeds of $10,000,000. Jennings elected to exercise
  the over-allotment option to sell up to an additional 2,500,000 units at a price
  of $2.00 per unit for gross aggregate proceeds of $15,000,000.

---

- 21 -

Each Unit comprises one common share and one-half of one
transferable share purchase warrant. Each whole warrant entitles the holder,
upon exercise, to acquire one common share of the Company at a price of $2.65
until June 1, 2008. After the expiration of the hold period the Company has the
right to accelerate the expiry date of the warrants if the closing price of the
Company's common shares on the TSX Venture Exchange exceeds $3.35 for a period
of 20 consecutive trading days.

Jennings was paid a commission of $958,750 and received broker
warrants equal to 6.5% of the number of units issued under the Offering.
Proceeds from the Offering have been and will continue to be used to accelerate
the ongoing exploration and development activities on the Guanajuato and Topia
Mines, for evaluation of potential acquisitions and for general corporate
purposes.

On June 23, 2006, we paid a cash instalment of US$50,000 and
issued a second share allotment of 50,000 to its June 15, 2005 option agreement
with Minera Aciero del Fuego S.A. de C.V. to purchase the Virimoa Property. The
shares were subject to a holding period, which expired October 21, 2006.

On July 7, 2006, Great Panther appointed Mr. A. Michael Turko
to its board of directors.

On September 11, 2006, we signed an option agreement to acquire
a 100% interest in the Mapimi Project in eastern Durango State, Mexico. The
project consists of 17 concessions comprising 3,508 hectares and hosts
significant silver-lead-zinc-gold mineralization with excellent potential for a
large bulk tonnage deposit. The property is bisected by paved highway
approximately 100 kilometres from Peñoles' smelter at Torreon and as such, the
infrastructure is considered excellent. Terms of the agreement call for the
Company to make 6 staged cash payments and share issuances totalling
US$3,000,000 (US$300,000 paid) and 500,000 shares (400,000 issued), over a
period of 4 years. If the option is exercised, the vendors will retain a 3% NSR,
each 0.5% of which, up to 2%, can be purchased for US$500,000.

On November 13, 2006, our common shares began trading on the
TSX with the trading symbol GPR. Subsequently, we were de-listed from the
TSX Venture Exchange.

On February 2, 2007, we signed an option agreement with Altair
Ventures Inc. (Altair) whereby Altair has the option to earn 70% interest in
four of our mining claims: San Antonio, Santo Nino, Iran, and Chirpa. The terms
of the agreement stipulate that Altair will make three staged payments and share
issuances to Great Panther totalling US$200,000 and 200,000 shares over a period
of 3 years. Over the same period, Altair must spend a total of US$1,000,000 in
exploration on the project. Great Panther will be the operator of the
exploration program. The agreement required Altair make a cash payment of
US$30,000 upon signing of the agreement (received) and issue 100,000 shares
(received).

On May 30, 2007, the Company chose to forfeit all rights and
options to the Virimoa Property located in the Topia Mining District, State of
Durango. No payments were made in 2007 with respect to the option agreement.

On August 2, 2007, we paid a cash instalment of US$100,000 with
respect to its May 8, 2006 option agreement to purchase the Arcoiris Concession.

On August 28, 2007, issued a second share allotment of 200,000
and on September 6, 2007, we paid a cash instalment of US$200,000 with respect
to its September 11, 2006 option agreement to purchase the Mapimi Project. The
shares were subject to a holding period, which December 29, 2007.

On December 27, 2007, we signed an agreement to purchase of
0.2804 hectares of land adjacent to our Guanajuato Silver-Gold Mine Complex from
Sociedad Cooperativa Minero Metalurgica Santa Fe de Guanajuato for a total of
US$320,530. Payment will be made in two instalments, US$45,790 and US$274,740,
on March 31, 2008 and June 30, 2008, respectively.

---

- 22 -

*B.*       *Business
Overview*

We are an active mining and exploration company listed on the
Toronto Stock Exchange (TSX), trading under the symbol GPR. Our current
activities are focused on the mining of precious and base metals from our two
wholly owned mines in Mexico. In addition, we are also involved in the
acquisition, exploration and development of other properties in Mexico that have
a potential for success, based upon the recommendation of our technical director
and professional advisors, and the assessment of our board of directors.

We have the following property interests:

*C.*       *Primary
Mining Properties*

Topia Mine

The property consists of three groups of exploitation
concessions covering a total area of 1,555 hectares and one group of exploration
concessions covering a total of 4,844 hectares, for a grand total of 6,399
hectares. The largest group of exploitation concessions, the Topia group,
consists of 39 claims covering 1,275 hectares. In addition to the Topia group
are two satellite claim groups known as the Las Papas group and the Jarillal
group and cover approximately 228 hectares and 52 hectares, respectively. The
exploration concessions completely surround the Topia group.

We had conducted extensive work on the Topia property as far
back as 2004. The diamond drill program conducted between June 2004 and February
2005 comprised 7,436 metres in 30 surface holes with results evidencing high
grade silver-lead-zinc mineralization. Five separate areas were tested with one
or two main veins present in each area. The main goal of the program was to test
the strike, dip and grade continuity of the veins beyond where they had been
mined in the past in order to indicate the exploration potential of the property
and to guide the short term underground development work with the goal of
successfully re-opening the mine.

In December 2005, we commenced limited production at the Topia
Silver-Lead-Zinc Mine in Durango, Mexico.

In March 2006, we reached a significant milestone in becoming a
primary silver producer with our first shipment of concentrates from operations.
In the second half of 2006, we commissioned our second ball mill increasing the
plants production from 120 to 170 tonnes per day.

More than a dozen sub-parallel veins are known to exist at
Topia and some extend for more than 4 kilometres along strike. During 2007,
ongoing exploration development of the mine continued to demonstrate high grades
of silver-lead-zinc in relatively narrow veins. In addition, new underground
drilling and chip-sampling has demonstrated very good potential on the yet
unmined parts of the Don Benito and La Dura veins.

Vein widths are typically narrow, (0.2 to 1.0 meter). The
Company is successfully utilizing a resuing method of stope mining whereby the
waste material adjacent to the vein is mined first to provide the waste-rock
floor onto which the narrow vein is cleanly mined.

Immediately behind the plant, a decline ramp from the main access
  adit (tunnel), Level 'A', has intersected the Argentina vein both on and above
  the Level 2. This is the top priority area for development and exploitation
  due to its proximity to the mill and the presence of wider high grade silver-lead-zinc
  veins. A sub-level above Level 2 has been driven on-vein to explore
  the immediate area around the intersection of the closest surface drill hole
  (A04-04 from Great Panther's 2004 program that returned grades of 644 g/t Ag,
  11.9% Pb and 3.1% Zn over 0.96 metres and 571 g/t Ag, 8.4% Pb, and 2.6%Zn over
  0.40 metres in 2 closely spaced veins). The Level 2 and associated sub-level
  will provide the base for stope preparation and stoping during 2008.

---

- 23 -

Deeper drilling from surface of the Argentina Vein was underway
at the end of 2007 to outline the deeper potential to support further
development of the mine to Levels 3, 4 and 5.

Production - Topia Mine

The production capacity of the processing plant has been
increased to 200 tonnes per day (tpd) with the commissioning of the third and
largest mill.

For the year, throughput at the plant was 33,605 tonnes at a
head grade of 300 g/t Ag, 0.71 g/t Au, 2.44% Pb and 3.04% Zn, or 21.85 oz Ag Eq
per tonne.

Average recoveries of 86.1% for Ag, 84.3% Au, 89.6% Pb and
82.9% Zn were realized which resulted in the production of 279,441 oz Ag, 643 oz
Au, 1,619,560 lbs Pb and 1,867,712 lbs Zn for a silver equivalent production of
625,726 ounces.

A summary of production at Topia for 2007 is as follows:

FY07-Q1
    FY07-Q2
    FY07-Q3
    FY07-Q4
    TOTALTonnes milled
    8,161
    7,407
    9,509
    8,528
    33,605Silver ounces
    72,437
    58,270
    65,884
    82,850
    279,441Gold ounces
    148
    126
    128
    241
    643Lead tonnes
    204
    153
    184
    194
    735Zinc tonnes
    252
    189
    204
    202
    847Silver equivalent
      ounces (Ag eq oz)
    171,891
    133,522
    148,490
    171,823
    625,726


In addition to the material processed for the Companys
account, an additional 11,143 tonnes were processed for various local miners.
Custom milling utilizes excess capacity and provides additional income

Cash cost of sales was CDN$6,212,737 for 2007. This includes
costs the Company incurred in the direct purchase of minerals from various
independent miners.

Guanajuato Mine Complex

The Guanajuato Silver-Gold Mine Complex in Guanajuato, Mexico
consists of three principal mines, the Valenciana, Cata and Rayas. These mines
occupy the heart of the 25 kilometre long Veta Madre (Mother Lode) structure
that controls the majority of the silver-gold mineralization in the Guanajuato
Mine District. Silver was discovered in the area in 1548 with estimates of
historical production ranging from 700 million to 1.5 billion ounces of silver,
and 4 to 7 million ounces of gold.

Limited drilling was completed on the property in the 1980's
and 1990's which indicated that silver-gold mineralization continues to depth
under the existing workings. Based upon this work, a "reserve" and "resource"
estimation, representing a possibility of 4.7 million ounces of silver and
38,000 ounces of gold was completed in 2000. This resource and reserve estimate
is considered to be part of the global resource of 2,750,000 tonnes grading 1.56
g/t Au and 176 g/t Ag, established by the previous owners of the property.
Neither of these disclosures follows the requirements for reserves and resources
outlined in NI 43-101 and both are regarded as historical in nature.

---

- 24 -

Mining at Guanajuato has been conducted since the year 1600,
initially by the Spaniards but since 1939 by a mining cooperative. Production by
the latter, from whom the Company bought the property, had dwindled to about 200
tonnes per day by 2005, despite the plant capacity of 1,200 tonnes per day. It
stopped completely in August of that year and Great Panther took possession of
the mine in December 2005.

In addition to the Rayas and Cata Mines, mining is currently
being conducted in the San Vicente North, Promontorio and Guanajuatito areas,
which are accessible by ramps. San Vicente North is adjacent to the southeast
side of the old Animas Mine, where surface drilling by Great Panther in 2006
intersected zones of previously unknown high grade silver-gold mineralization.
Mining at Guanajuatito is pursuing a zone of high grade mineralization
intersected by the Companys surface drilling in late 2005 and 2006. At
Promontorio, development is progressing to access an area from where encouraging
drill intersections were reported during 2007. Mining at the Cata Mine is
focused on an area below the previously worked Cata Clavo where recent drilling
results indicate that the high grade mineralization extends at depth.

In May 2006, the Company purchased an additional 3.88 hectares
of real estate adjacent to the plant at the Guanajuato Silver-Gold Mine Complex
in order to facilitate any future expansion of the plant facilities and to
protect the plant site from any possible development nearby. Great Panther
already owns the land occupied by the plant and administration facilities and
the Company has now received clear title to the new property.

From Q4 2005 to year-end 2007, the surface diamond drilling
program at Guanajuato totaled 14,619 metres in 86 holes and was highly
successful in identifying and delineating new zones of silver-gold
mineralization. These discoveries highlight the lack of previous exploration on
the property and the potential for new zones to be found throughout the mine. In
addition, the easy access to these zones from existing underground workings and
the utilization of existing infrastructure means that these zones can be
developed quickly and cost-effectively.

In December 2007, the Company purchased an additional 0.2804
hectares of land immediately adjacent to the plant and below our tailings dam at
the Guanajuato Mine Complex in order to protect the area from any possible
development. The Company has received clear title to the new property.

Production - Guanajuato Mine Complex

After a period of preliminary plant and mine rehabilitation,
Great Panther commenced production in June of 2006 on easily accessible low
grade stockwork zones. The development of high grade zones did not proceed as
quickly as originally anticipated however, and only in 2007 did these reach the
point where they were contributing to production. As such, the average head
grades at Guanajuato remained low for 2006 and only slowly improved through most
of 2007. With increasing production from the higher grade areas of the mines and
the vigilant implementation of grade control procedures, the average grade for
the mine improved significantly such that in December, grades were more than
twice what they were at the start of the year.

The plant at Guanajuato contains three ball mills and the
Company initiated production with one ball mill, brought a second on stream in
November 2006, and commissioned the third ball mill in 2007. A metallurgical
testwork program, directed by a senior Canadian metallurgist, was initiated in
the fourth quarter of 2007 to assess the plant upgrades necessary to improve
plant recovery and concentrate quality. Improvements are already being
experienced as a result of this program.

Total throughput for 2007 amounted to 203,968 tonnes at an
average grade of 108 g/t Ag and 0.80 g/t Au, or 4.76 oz of silver equivalent (Ag
Eq oz) per tonne of ore mined. The recovered Ag Eq oz mill production totaled
710,903 Ag Eq oz.

A summary of production at Guanajuato for 2007 is as follows:

---

- 25 -

FY07-
    FY07-
    FY07-
    FY07-Q1
    Q2
    Q3
    Q4
    TOTALTonnes milled
    49,761
    48,403
    60,031
    45,773
    203,968Silver ounces
    106,646
    131,683
    155,272
    127,624
    521,225Gold ounces
    798
    903
    1,147
    946
    3,794Silver equivalentounces (Ag Eq oz)
    146,552
    176,828
    212,617
    174,906
    710,903


At Guanajuato, total production costs for FY07 totalled
CDN$9,903,896. The Company anticipates 2007 production costs, on a per silver
ounce basis, at Guanajuato to be lower with the achievement of higher
grades.

*D.*       *Primary
Exploration Properties*

Mapimi Project

The Mapimi Project (formerly Km66) is an advanced stage
exploration project that hosts significant silver-lead-zinc-gold mineralization
with excellent potential for a large bulk tonnage deposit. If continued work
proves successful, it could be developed quickly with the goal of defining a new
resource amenable to open pit mining, thereby significantly enhancing Great
Panther's growing portfolio of silver projects. The property consists of 17
concessions in northeast Durango State and is bisected by a paved highway
approximately 100 kilometres from Peñoles' smelter at Torreon, so infrastructure
is considered excellent.

On September 11, 2006, the Company signed an Option Agreement
for the right to earn a 100% interest in the 3,508 hectare property, subject to
a 3% Net Smelter Return (NSR). Terms of the agreement call for the Company to
make staged cash payments of US$3,000,000 and share issuances totalling 500,000
shares, over a period of 4 years. If the option is exercised, the Company can
purchase up to 2% of the NSR, for US$500,000 per 0.5% .

On September 28, 2006, the Company filed a NI 43-101 compliant
resource estimate for the property prepared by Wardrop Engineering (Wardrop)
of Vancouver, B.C., which is available for viewing on the Companys website at
www.greatpanther.com or under the Companys
profile at www.sedar.com. The independently
produced report estimated that the Palmitas and Gloria Zones together contain an
Inferred Mineral Resource of 4,969,800 tonnes at a grade of 59 g/t Ag, 0.13 g/t
Au, 0.81% Pb and 1.31% Zn. Wardrop calculated that these grades equate to a
silver equivalent grade of 139 g/t using commodity prices (based upon 3 year
averages) of US$7.70/oz for silver, US$471/oz for gold, US$0.41/lb for lead and
US$0.69/lb for zinc and recoveries of 76%, 70%, 80% and 80%, respectively. This
resource equates to a total of 22.3 million ounces of silver equivalent.

The resource estimate was based upon a comprehensive exploration
  program completed on the property by Coeur d'Alene Mines during 1997 and 1998,
  wherein they drilled 81 reverse circulation holes (7,515 metres & 3,614
  samples) and 22 diamond drill holes (2,983 metres & 900 samples). The geological
  database also includes 422 surface channel samples. Coeur d'Alene returned the
  property to the vendor in 1998 due to depressed mineral prices prevailing at
  that time. The resource includes 2,643,600 tonnes of oxide material at a grade
  of 51 g/t Ag, 0.11 g/t Au, 0.73% Pb and 0.98% Zn for a silver equivalent grade
  of 113 g/t and 2,326,200 tonnes of sulphide mineralization at a grade of 68
  g/t Ag, 0.16 g/t Au, 0.90% Pb and 1.69% Zn for a silver equivalent grade of
  169 g/t. As the grade of sulphide mineralization is 50% higher than the 40-60
  metre-thick oxide zone, the Company expects the overall grade of the resource
  to increase over time as the deposit is extended to depth.

---

- 26 -

A first phase exploration program is underway and consists of
detailed geological mapping and re-sampling of outcrops, adits and trenches; an
airborne geophysical survey and ground induced polarization geophysical survey;
and a 5,000 metre core drilling program, which commenced in December 2006 has
increased the confidence level of the resource, resulting in a new Indicated
Mineral Resource estimated at 6,585,900 tonnes grading 28g/t silver, 0.09g/t
gold, 0.41% lead and 1.14% Zn and an Inferred Mineral Resource at 2,027,900
tonnes grading 34g/t silver, 0.13g/t gold, 0.54% lead and 0.81% zinc.

In March, 2008 Wardrop delivered an updated NI 43-101 compliant
mineral resource estimate for the La Gloria / Las Palmitas Zones on the
Companys Mapimi. The new estimate effectively upgraded the previous resource of
22.3 million silver equivalent ounces (Ag Eq Oz) from the Inferred to the
Indicated category and added an additional 6.3 million Ag Eq Oz in the Inferred
category for a global resource of 28.6 million recoverable Ag Eq oz.

The final report itself will be posted on the Companys website
and on SEDAR once it is received from Wardrop (anticipated by early April 2008).

San Antonio Project

The exploration and exploitation concessions comprising the San
Antonio project cover an area of 12,274.7 hectares, and are located in the
municipality of Guadalupe y Calvo, State of Chihuahua, Mexico, approximately 162
kilometres south-southwest of the city of Hidalgo de Parral, Chihuahua, and 265
kilometres southwest of the city of Chihuahua.

Multiple targets have been identified by Great Panther at San
Antonio within a variety of geological settings, including gold-copper veins,
breccias and stockworks, as well as silver-lead-zinc veins. A total of 20
separate mineralized structures have been identified to date. Underground
sampling by the Company in 2004 along the Santo Nino Zone returned an average
grade of 7.75 g/t gold over an average width of 3.03 metres along a 25 metre
strike length. Great Panther previously had an option to acquire a 100% interest
in the Santo Niño concession and, subsequent to year-end has exercised that
right and is in the process of transferring the title. The Company now owns a
100% undivided interest in the entire San Antonio package. (During the year, the
Company elected to discontinue exploration of the San Taco property, which
previously formed part of the project).

On February 2, 2007, the Company entered into an agreement with
Altair Ventures Incorporated by which Altair was granted an option to earn a 70%
interest in the San Antonio property. Altair may exercise the option by making
staged cash payments of US$200,000, (of which $30,000 has been received by the
Company during 2007), issuing 200,000 Altair common shares (of which 100,000
have been issued) to the Company and incurring a minimum US$1 million of
exploration expenditures over a three-year period. Highlights of 2007 fieldwork
are discussed in further detail in section G of this document.

Virimoa Project

The two Virimoa concessions are located in the Topia Mining
District of Durango, Mexico. The project consists of two mining concessions
comprising 148 hectares and hosts a zone of intense alteration, exposed for more
than 350 metres. The Virimoa property is situated in the heart of the Sierra
Madre Mineral Belt and is centrally located between several significant
deposits. It lies approximately 17 kilometres southwest of the Companys Topia
Silver-Lead-Zinc Mine, which can be used for logistical support, and was
identified as a result of Great Panthers ongoing regional evaluation around the
mine. In addition, Virimoa is approximately 30 kilometres west of La Ciénega,
Mexicos largest gold mine, currently in production and owned by Compañía Minera
Peñoles.

---

- 27 -

In March 2005, fieldwork commenced on the Virimoa Gold Property
with initial exploration comprising detailed and extensive channel sampling and
mapping focused on an exposure of intense iron oxide alteration. This work
attempted to better define the controls on mineralization and to trace its
extent. As the property has good road access, specific drill targets were
generated for a diamond drilling program, the first ever, which was conducted in
April, 2005. The diamond drill program outlined the presence of multiple zones
of gold-silver-copper-zinc mineralization across a width of more than 250
metres.

On June 13, 2005, the Company signed an Option Agreement to
purchase a 100% interest in the Virimoa Property located in the Topia Mining
District, State of Durango, Mexico. Terms of the agreement call for the Company
to make four staged cash payments and share issuances totaling US$300,000 and
300,000 shares, over a period of three years. If the option is exercised, the
property owner will retain a 2% NSR, half of which can be purchased for US$1
million.

There was no work conducted on the Virimoa Project in 2006 as
the Company focused its efforts on getting its two mines into production.

On May 30, 2007, the Company provided notice that it was terminating
  the option agreement on the Virimoa property. No field work was conducted on
  the property during 2007.

*E.*       *Revenues*

The Company recognizes revenue from the sale of concentrates
based on the market metal prices and mineral content when title to the
concentrates transfers to the customer, which generally occurs on the date of
delivery. Revenue is recorded gross of treatment and refining costs paid to
counter parties under terms of the off take arrangements. Revenue from the sale
of the concentrates are subject to adjustment upon final settlement based upon
metal prices, weights and assays. Adjustments to revenue for metal prices are
recorded monthly and any other adjustments are recorded on final settlement.

For the year ended December 31, 2007, we earned $17,487,070 in
revenue from our Topia and Guanajuato mining operations. Revenues for 2006 were
$7,069,442.

Market Prices of Gold

The market prices of gold, silver and other precious metals
have historically fluctuated widely and are affected by numerous global factors
beyond our control. A decline in such market prices may have an adverse effect
on revenues we receive from the sale of minerals. A decline in prices will also
reduce our exploration efforts and make it more difficult to raise capital.

Seasonality of our Business

Our business is not expected to be seasonal and our mining and
milling operations will be carried out year round.

Sources and Availability of Raw Materials

Other than water and power, both of which are readily available
and do not experience any material price volatility, we do not require any raw
materials with which to carry out our business.

Patents and Licenses; Industrial Commercial and Financial
Contracts; and New Manufacturing Processes

In conducting our business operations, we are not dependent on
any patented or licensed processes, technology, industrial, commercial or
financial contracts or new manufacturing processes.

---

- 28 -

Competitive Conditions

We compete with other mining companies, some of which have
greater financial resources and technical facilities, for the acquisition of
mineral interests, as well as for the recruitment and retention of qualified
employees.

Governmental Regulations

The mining industry in Mexico is controlled by the Secretaria
de Economia  Dirección General de Minas which is located and administered from
Mexico City. Mining concessions in Mexico may only be obtained by Mexican
nationals or Mexican companies incorporated under Mexican laws. Mexican law
grants concessions under the denominations of exploration or exploitation. The
construction of processing plants requires further governmental approval.

The holder of an exploration concession is granted the
exclusive right to explore a designated area. Exploration concessions are
granted for a period of six years from the date of their recording in the Public
Registry of Mining. Exploration concessions are not renewable after the end of
the initial term. The holder of an exploration concession must file an
application for an exploitation concession before the end of the six year term.
If the concessionaire does not comply with this requirement, the concession will
be cancelled. Exploitation concessions are granted for 50 years from the date of
their registration with the Public Registry of Mining to the exploration
concession holder as a matter of law if all regulations have been complied with.
During the final five years of exploitation, the concession holder may apply for
one additional 50 year period, which is automatically granted provided all other
concession terms had been complied with.

In accordance with the Federal Duties Law ("LFD") the holder of
an exploration or exploitation concession is obligated to pay biannual duties in
January and July of each year based upon the number of hectares covered by the
concession area. These fees are determined per hectare as follows:

|1. | during the first and second year, 4.60 Mexican Pesos
      (approximately $0.41) per hectare;        
|-- | -----------------------------------------------------------------------------------------------------
|   |                                                                                                      
|2. | from the third and fourth year, 6.88 Mexican Pesos
      (approximately $0.62) per hectare;          
|   |                                                                                                      
|3. | the fifth and six year, 14.24 Mexican Pesos
      (approximately $1.28) per hectare;                 
|   |                                                                                                      
|4. | the seventh and eight year, 28.64 Mexican Pesos
      (approximately $2.58) per hectare;             
|   |                                                                                                      
|5. | the ninth and tenth year, 57.26 Mexican Pesos
      (approximately $5.15) per hectare and;           
|   |                                                                                                      
|6. | the eleventh year and subsequent years, 100.79 Mexican
      Pesos (approximately $9.07) per hectare.

Concessionaires for both exploration and exploitation must
perform work each year that must begin within ninety days of the concession
being granted. Concessionaires must file each May, proof of the work performed.
Non-compliance with these requirements is cause for cancellation only after the
Ministry of Mines communicates in writing to the Concessionaire of any such
default, granting the Concessionaire a specified time frame in which to remedy
the default.

The investment in exploration work must be at least equal to
the amount resulting from applying the following table to the number of hectares
covered by the exploration concession or by the grouping of mining
concessions:

---

- 29 -

Surface Area (hectares)
      Minimum Annual Expenditure
        (Mexican Pesos)
      Additional Minimum Annual **Expenditure**Per Hectare (Mexican Pesos)1st Year
      2ndto 4th
        Year
      5thand 6th
        YearFrom 1 to 30
      --
      7.93
      31.72
      47.57From 31 to 100
      --
      15.86
      63.43
      95.15From 101 to 500
      792.90
      31.72
      95.15
      190.30From 501 to 1,000
      2,378.70
      29.34
      90.39
      190.30From 1,001 to 5,000
      4,757.40
      26.96
      87.22
      190.30From 5,001 to 50,000
      16,650.90
      24.58
      84.05
      190.30From 50,001 onwards
      158,580.00
      22.20
      79.29
      190.30


In the case of groupings of exploration concessions, the
additional fee per hectare is applied based on the date of issuance of the
oldest concession which is part of the grouping.

The investment in exploitation work must be at least equal to
the amount resulting from applying the following table to the number of hectares
covered by the exploitation concession or by the grouping of concessions:

Surface Area (hectares)
      Minimum Annual Expenditure
      (Mexican Pesos)
      Additional Minimum Annual Expenditure Per Hectare (Mexican Pesos)From 1 to 30
    --
    47.57From 31 to 100
    --
    95.15From 101 to 500
    792.90
    190.30From 501 to 1,000
    2,378.70
    380.59From 1,001 to
      5,000
    4,757.40
    761.18From 5,001 onwards
    16,650.90
    1,522.37


There are no limitations on the total amount of surface covered
by exploration or exploitation concessions or on the amount of land held by an
individual or company. Excessive accumulation of land is regulated indirectly
through the duties levied on the property and the production requirements as
outlined above.

Mexican mining law does not require royalties to the
Government, except for the discovery premium related to National Mineral
Reserves, Concessions in Marine Zones and Allotments to the Council of Mineral
Resources.

---

- 30 -

*F.*       *Organizational
Structure*

As at the date of this annual report, we have five wholly-owned
subsidiaries. They are:

|1. | Minera Mexicana el Rosario, S.A. de C.V., a company
      incorporated in the United States of Mexico. This Mexican subsidiary holds
      our Mexican property interests. This Mexican subsidiary was acquired by us
      on February 5, 2004.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                 
|2. | Metalicos de Durango, S.A. de C.V., a company
      incorporated in the United States of Mexico on July 12, 2005. This
      operational subsidiary is responsible for the day-to-day affairs and
      operations of the Topia Mine.           
|   |                                                                                                                                                                                                                                                 
|3. | Minera de Villa Seca, S.A. de C.V., a company
      incorporated in the United States of Mexico on October 5, 2005. This
      operational subsidiary is responsible for the day-to-day affairs and
      operations of the Guanajuato Mine.    
|   |                                                                                                                                                                                                                                                 
|4. | Minera Exploraciones el Rosario, S.A. de C.V., a company
      incorporated in the United States of Mexico on February 20, 2007 is
      responsible for the exploration and further development of the Companys
      mineral properties.     
|   |                                                                                                                                                                                                                                                 
|5. | New Age Investments Inc., a company incorporated in the
      Province of Alberta. This company is presently
inactive.                                                                                                                          

*G.*       *Property,
Plant and Equipment*

We rent executive and administrative office space located at
Suite 350 and Suite 2100-1177 West Hastings Street, Vancouver, British Columbia,
V6E 2K3, Canada, for the sum of $11,200 per month.

Our Mexican subsidiary, Minera Mexicana el Rosario, S.A. de
C.V. (MMR), rents office space at Camino del Amanecer 409, Los Remedios,
Durango, DGO, Mexico, for the sum of $7,280 Mexican Pesos (approximately $660)
per month.

Our Mexican subsidiary Minera de Villa Seca, S.A. de C.V.,
maintains office space at Hacienda de Bustos, Mineral de Cata, Guanajuato, GTO
C.P. 36010. No rent is paid as the premises are owned by MMR.

Our Mexican subsidiary, Metalicos de Durango S.A. de C.V.,
maintains office space at Boulevard La Sierra No. 1, Topia, Dgo. 34541. No rent
is paid as the premises are owned by MMR.

We believe that our current office arrangements provide
adequate space for our foreseeable future needs.

We rent land for the tailings dam located in Topia, DGO,
Mexico, for the sum of US$1,060 (approximately CAD$1,051) per month.

At present, our activities are focused on the mining,
exploration, development and acquisition of precious and base metal properties
located in Mexico.

Our Mineral Properties/Projects

1. Topia Mine

a. Acquisition

Effective February 18, 2004, we entered into the Topia Option
  Agreement, which granted us the right and option, for a term of one year, to
  purchase 100% of the ownership rights in and to all the fixed assets, machinery,
  equipment and Topia Mining Concessions located in the Municipality of Topia,
  State of Durango, Mexico from Cia Minera des Canelas y Topia, as optionor, by
  making cash payments totalling US $1,426,919 as follows:

---

- 31 -

(a) US $100,000 within 10 days of the date of registration at
the Mining registry of the option agreement;

(b) US $150,000 within 5 days of the date the Company notifies
the optionor of its decision to exercise the option (notice must be given within
45 days of the one year term);

(c) US $540,165 on the date of signing of the purchase
agreement;

(d) Three annual payments of US $300,000, US $300,000 and US
$346,919 each of the first, second and third year, respectively, commencing 18
months after the date the Company notifies the optionor of its decision to
exercise the option.

All payments due to the optionor have been made as of December
31, 2007.

In addition to the payments to the optionor, we agreed to
assume the debt encumbering the property, totalling US $814,594 upon signing of
the purchase agreement. The debt owing is secured by the Topia Mine assets. The
balance of the debt is repayable out of production from concentrate sales as a
10% Net Smelter Return. After the debt is repaid, there is no further NSR. As of
December 31, 2007, the remaining debt balance is fully paid.

Other than discussed above, there are no other Net Smelter
Return royalties, or other royalties payable, and there are no work commitments.

On March 8, 2006, the Company purchased a 100% interest in the
Arcoiris concession. The agreement requires cash payments of US$20,000 (paid)
upon signing of the purchase agreement and additional staggered payments
totalling US$280,000 (US$180,000 paid). The Arcoiris concession is a strategic
claim that is contiguous with the existing Topia Mine Property. The 100 hectare
concession contains portions of the strike extension and down-dip projection of
the Dos Amigos Vein that the Company has already started developing on its own
ground.

b. Location and Accessibility

The property consists of three groups of exploitation
concessions covering a total area of 1,555 hectares and one group of exploration
concessions covering a total area of 4,844 hectares. The largest group of
exploitation concessions, the Topia group, consists of 39 claims covering 1,275
hectares. Two satellite claim groups known as the Las Papas group and the
Jarillal group cover approximately 228 hectares and 52 hectares, respectively.
In addition to the exploitation concessions, the Topia 2 group consists of 14
exploration concessions, staked and owned 100% by our Mexican subsidiary, Minera
Mexicana el Rosario, S.A. de C.V.

The Topia and the Topia 2 groups are located in the
municipality of Topia in the west central part of Durango State, Mexico; the Las
Papas group is about 10 kilometres northeast of the town of Topia; and the
Jarillal group is near the town of Torance about six kilometres east of Topia.
Access is gained by travelling north for roughly 200 km on paved highway #23
from Durango through the city of Santiago Papasquiaro, and then west on paved
and gravel roads to the town of Topia, a distance of approximately 150 km. Total
driving time from Durango City is about 8 hours. Most of the main roads in Topia
are paved with concrete or cobblestones, and the town contains numerous stores,
restaurants and hotels. A small airstrip on the east side of the town is
serviced daily from Culiacán, Sinaloa by small aircraft. Flight time from
Culiacán is less than an hour.

The property is located within the Sierra Madre Occidental
Mountain Range. The terrain is quite steep and rugged with elevations ranging
from approximately 600m in the river valleys in the western portion

---

- 32 -

of the property rising to nearly 2,000m in the northeastern
portion of the property where high level plateaus exist. The area is generally
dry except during the rainy season when between 20-50cm of rain may fall. Mining
operations and most exploration activities (especially underground exploration
and development) can be conducted on a year-round basis. Access to the numerous
mine entrances is via gravel roads that are narrow in the steep Sierra.

c. Mineralization

The veins of the Topia district have formed along the northeast
series of faults. Mineralized veins are limited to the lower series of andesitic
lavas and interbedded pyroclastics known as the Topia andesites. These veins
contain ore grade mineralization over a limited vertical extent of between 100
and 300 metres but this mineralized zone extends laterally along strike in
individual veins for as much as four kilometres.

The workings on the site are named according to the vein worked
and the name of the portal such as the Madre Vein on the Tres Varones level.
Although some of the different veins are connected by crosscuts, in general the
individual veins have been developed individually on several levels. This has
resulted in numerous adits being used for production purposes.

The Victoria portal is one exception to this, whereby it was
designed to be the focal point of the operation for veins east of the Victoria
Fault. The Victoria portal is located at the 1,450 metre elevation well below
most of the productive stopes. This adit crosses through the Victoria fault
within a few hundred metres of its mouth and then extends 1,700 metres to the
north intersecting the Oliva, Madre, Cantanranas and Argentina veins, all on the
eastern side of the Victoria fault. It is at an elevation well below the mill
requiring production ore to be hauled up the steep, narrow dirt roads. The ore
dump at the Victoria portal has been washed out and will require some major
repairs before it can be used again. This level also drains many of the upper
levels with about 10 litres per second of water flowing out the portal. In
operating times this water was pumped up to the mill for use as process water.
The Victoria adit is currently being rehabilitated in order to facilitate the
development of production stopes on the Argentina Vein.

(i) Veta Madre

The principle ore source at Topia has been the Veta Madre
(Mother Vein or Mother Lode). This vein has been mined over a strike length
of more than three kilometres. Early work was focused primarily east of the
Victoria fault and then later from the Cocinera level west of the Carrizo fault.
The most recent work on the Veta Madre is in 15-22 mine area which is accessed
by the 15-22 (1,522m elev.), the Tres Varones (1,580m elev.) and Don Benito
(1,622m elev.) levels. Although longitudinal sections are available for most of
the other veins, the long section of the Veta Madre best shows the lateral
extent of the mineralization and mine workings at Topia.

One of the prospects for ore is between the Tres Varones and
Cocinera levels of the Veta Madre. This area has good vein widths and is
relatively accessible. The longitudinal section of the Veta Madre shows many
small remnant blocks that may be extracted from the 15-22 level. However, these
small blocks will be costly to define and extract. Of greater interest however
is the area to the west with one drill intercept. This intercept is west of a
major dyke and about 200 metres west of any workings. There is also potential to
the east where mineralization is thought to extend. However, there are no drill
intercepts in this area. The Veta Madre is also unexplored in the area of the
Victoria fault but the vein appears to be faulted into very small pieces in this
area that might not permit efficient mining and may make it difficult to follow
by drifting. This section of the vein is also directly below the town of Topia.

(ii) Veta Cantanranas

The Veta Cantanranas is the closest vein to the Veta Madre and
  in fact splays to the north from the Veta Madre looking toward the east. The
  Cantanranas vein tends to dip steeply to the south, somewhat different than
  the almost vertical Veta Madre. It has been stoped between sections 200 West
  and 2600 East and may extend to the Hormiguera mine at 3200 East. The gaps in
  stope locations on this vein may be due to the overlap of the Madre vein stopes.

---

- 33 -

The combination and then splaying of these two veins makes following
  them difficult at times and there may be some instances where lost portions
  of economic veins remain in the walls.

(iii) Mina Argentina

The Argentina vein is located immediately north of the mill and
has been exploited between sections 900 East and 1,600 East from six main
levels. Vertically the stopes are located between 1,600 and 1,900 metres.
Peñoles had postulated potential strike extensions to this vein and some
drilling was done to test these theories. Four holes were drilled to the east
from surface, in 1986 and in 1987.

The Argentina vein is the northern limit of surface exposure of
Topia andesites as rhyolite outcrop is found making exploration of strike
extensions difficult. There is potential for the Argentina vein to continue west
of the Victoria fault similar to the Madre and Cantanranas veins.

(iv) Animas Vein

The Animas vein is south of the Madre vein and due to the lower
surface elevation there seems to be mineralized sections missing due to the
level of erosion. Other veins in this area and possible continuations may be the
Oliva, La Dura, and Dos Amigos veins. To the north there are other minor veins
stoped such as the Santa Cruz and Santa Juliana. Like the major veins all of
these veins contain small remnant blocks beside, below and above existing stopes
as well as the potential for strike extensions. The numerous faults and splays
make following the veins difficult and there is potential for better veins in
the wall rock in places where the wrong vein has been followed.

(v) Las Papas

The Las Papas area is located about ten kilometres northeast of
Topia. There are 3 known veins with minor underground development and only the
Vicente vein has been stoped. At Las Papas the veins occupy both the vein and
main fault orientation seen at Topia. Another significant difference in this
area is that the Ag:Au ratio is much lower being between 10 and 20 to one
instead of the 300 to 1 seen typically at Topia.

(vi)Previous Exploration

Most of the historical exploration on the Topia property has
been conducted by tunneling on veins found in either crosscuts or on surface. In
the Peñoles era, veins were both mapped and sampled, but in the subsequent ten
years little geological work seems to have been maintained. In total over 24
kilometres of horizontal tunnels exist on the various veins and connecting them.

d. Mineral Resource Estimation

On December 28, 2006, Wardrop Engineering (Wardrop) of
Vancouver, B.C. delivered a NI43-101 compliant resource estimate for our Topia
Silver-Lead-Zinc Mine. Wardrop used a US$60 Gross Metal Value (GMV) cut-off
grade rather than silver equivalents due to the high value of base metals in the
mineralization, reflecting current commodity prices. Silver equivalents can be
calculated by dividing the GMV above by the silver price of US$11.56 used in the
estimation. Doing this would yield a total Measured Resource of 1,185,219oz of
Ag Equivalent, an Indicated Resource of 2,440,384oz of Ag equivalent, and an
Inferred Resource of 1,418,900oz of Ag Equivalent. The following table indicates
the amount of each of the four commodities represented by the Wardrop resource
figures.

The Table below uses the terms Measured Resources, Indicated
Resources and Inferred Resources We advise U.S. investors that while these
terms are recognized and required under Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors
are cautioned not to assume that any part of all of the mineral deposits in this
category will ever be converted into reserves.

---

- 34 -

Payable Metal from Wardrop Resource:

Category
    Ag ozs
    Au ozs
    Pb lbs
    Zn lbs
    Ag Eq grade (oz/t diluted)
    Ag Eq ozs (total)Measured
      Resources
    848,584
    1,518
    5,858,988
    5,319,835
    22.14
    1,185,219Indicated
      Resources
    1,695,588
    3,083
    12,135,379
    11,315,905
    21.90
    2,440,384Inferred
      Resources
    1,022,111
    1,582
    6,921,932
    6,451,895
    19.79
    1,418,900


In order to bring these resources into a reserve category,
Wardrop would have to conduct a more detailed analysis of the costs at the Topia
Mine.

e. Exploration

The Company has conducted extensive work on the Topia property
as far back as 2004. The diamond drill program conducted between June 2004 and
February 2005 comprised 7,436 metres in 30 surface holes with results evidencing
high grade silver-lead-zinc mineralization. Five separate areas were tested with
one or two main veins present in each area. The main goal of the program was to
test the strike, dip and grade continuity of the veins beyond where they had
been mined in the past in order to indicate the exploration potential of the
property and to guide the short term underground development work with the goal
of successfully re-opening the mine.

As known from previous mining, three of these areas (Las
Trancas, Don Benito and Hormiguera) represent portions of the same veins that
extend for more than four kilometres across the property, while the two other
areas represent parallel vein systems approximately one kilometre to the
northwest (Argentina) and two kilometres to the southeast (El Rosario). Several
other veins are known and have yet to be drilled.

The intersections obtained are typical of vein deposits in
general and the widths and grades are consistent with those mined in the past at
Topia. Based upon the success of the drilling in the Argentina area, the Company
began the rehabilitation of the underground workings here. Other areas such as
El Rosario are proving to have similar potential. The drill program provided the
Company with sufficient confidence that the veins have excellent continuity and
therefore the potential to provide resources for a renewed mining effort.

Along the Animas vein, on Level 1550, underground channel
sampling returned 1.62g/t Au, 338g/t Ag, 2.28% Pb, 1.53% Zn over 30 metres
strike length, with an average width of 0.31m (average of 16 samples); and
1.4g/t Au, 429g/t Ag, 1.14% Pb, 6.23% Zn over 35 metres strike length, with an
average width of 0.55m (average of 11 samples).iii

In 2006, mine development continued along the Dos Amigos Vein
system. New sampling of this vein from the east end of the ramp has returned
average grades of 924 g/t Ag, 21.78% Pb and 16.16% Zn along a 30 metre strike
length. Although the vein has an average width of only 0.21 metres along this
length, we are use a mining method called 'resuing' which reduces dilution and
maximizes the grade of the material being recovered.

Along strike of this high grade mineralization and to the
northeast, lie the old La Dura Mine workings that are part of the Companys
property. Recent sampling from the Dos Amigos Vein at the southwest end of La
Dura has returned 475 g/t Ag, 1.01 g/t Au, 3.92% Pb and 5.09% Zn over a strike
length of 89 metres and an average width of 0.36 metres. Slightly lower grade
mineralization continues for another 108 metres to the northeast, returning
average grades of 265 g/t Ag, 1.19 g/t Au, 0.62% Pb and 1.21% Zn over an average
width of 0.52 metres.

---

- 35 -

There has been no underground development for approximately 200
metres between the southwest end of the La Dura Mine and the ramp mentioned
above, so the potential to find more high grade mineralization is considered
excellent. Collectively, the aforementioned results represent more than 750
metres of strike length along the Dos Amigos Vein and the mineralization is open
to depth along this entire distance. Continuing development on this vein system
will include stations for an underground drill program, which will enable the
Company to more easily and quickly determine the overall potential of the vein
and to delineate a new resource that can be added to the mine plan.

The Animas vein has continued to demonstrate good gold grades.
  For example, hole ST07-36, returned 2.58 g/t Au over 2.50 metres, while individual
  samples in other holes returned assays up to 12.70 g/t Au.

During 2006, mining on the Animas vein was conducted on three
levels, 1420, 1430, and 1550 (note that levels are named according to metres
above mean sea level, so level 1550 is 130m higher than level 1420). Underground
sampling from levels 1430 down to 1380 showing excellent gold grades was
reported on October 12, 2006 and the surface drilling is designed to test the
vein along strike and to depth. Drill holes ST06-030, 031, and 032 targeted the
Animas vein east of the 1430 workings, and below the 1550 level. All three holes
were successful, with the best intersection in ST06-032 of 2.43g/t gold, 315g/t
silver, 0.9% lead, and 9.0% zinc over 0.4m (see summary of results in the table
below. Drill hole ST06-033 was a test of the Animas vein at depth, and
intersected the vein at approximately the 1300 metre level, well below existing
workings, with 2.85 g/t gold and 42.9 g/t silver over 0.55m.

Approximately 350 metres along strike to the east of these
holes, ST07-034 and 035 intersected the Animas vein at the 1400 level in a
previously untested area, returning low grade values in both drill holes. A
further 200 metres east, hole ST07-036 intersected a silicified breccia zone
returning 2.58g/t gold over 2.50 metres, as mentioned above. This brecciation
likely occurs along the Animas vein structure, and will be further drill tested,
both for the extent of the brecciation, and veining.

Hole ST07-037 was drilled east of a major fault and no
recognizable structures were identified. ST07-038 did not reach its primary
target, the Veta Madre, but did intersect a parallel, although very narrow
(0.08m) structure, potentially the Hipolito vein, which returned 0.57g/t gold,
1080g/t silver, 2.8% lead, and 1.1% zinc. Due to the high silver grade of this
vein, it will be tested farther along strike to see if it widens out.

In addition to the Animas vein drilling, the eastern and depth
extent of the Veta Madre was targeted by two holes. Hole ST07-039 was lost due
to bad ground but ST07-040 intersected the Veta Madre, returning 5.08g/t gold,
149g/t silver, 2.6% lead and 0.8% zinc over 0.6m.

---

- 36 -

Highlights of Surface Drilling:

CoreDrill Hole
    From
    To
    width
    True width
    ZONE
    Au
    Ag
    Pb
    Zn(m)
    (m)
    (m)
    (m)
    
    g/t
    g/t
    %
    %ST06-030
    62.50
    62.90
    0.35
    0.32
    Animas
    1.89
    170
    0.35
    0.15ST06-032
    94.40
    94.80
    0.40
    0.20
    Animas
    2.43
    315
    0.90
    9.00ST06-033
    184.00
    184.55
    0.55
    0.39
    Animas
    2.85
    43
    0.33
    0.24including
    184.45
    184.55
    0.10
    0.07
    
    12.70
    185
    1.80
    1.30ST07-036
    58.00
    60.50
    2.50
    2.25
    Animas
    2.58
    6
    <0.01
    0.07ST07-038
    150.35
    150.43
    0.08
    0.06
    Hipolito
    0.57
    1,080
    2.80
    1.10ST07-040
    80.60
    81.20
    0.60
    0.30
    Veta
      Madre
    5.08
    149
    2.60
    0.80


During 2006, ongoing westward development of veins continued to
demonstrate high grades of silver-lead-zinc through underground sampling, with
deeper portions of the Madre, La Dura, and Animas veins increasingly rich in
gold with the westward development of the mine.

Systematic sampling on the deeper portions of the Animas vein
demonstrated high grades of silver-lead-zinc and returned the following results
(mine levels are named according to their elevation above mean sea level;
therefore level 1380 is 50 metres below level 1430):

Level 1430: 1.47g/t Au, 186g/t Ag, 2.02% Pb, 4.43% Zn over 25
metres strike length with an average width of 0.19m (average of 5 channel
samples).

Level 1420: 3.03g/t Au, 878g/t Ag, 3.19% Pb, 2.74% Zn over 38
metres strike length with an average width of 0.32m (average of 13 channel
samples).

Level 1400: 5.08g/t Au, 679g/t Ag, 7.07% Pb, 6.32% Zn over 45
metres strike length with an average width of 0.42m (average of 16 channel
samples).

Level 1390: 6.84g/t Au, 279g/t Ag, 2.17% Pb, 0.19% Zn over 15
metres strike length with an average width of 0.5m (average of 4 channel
samples).

Level 1380: 5.92g/t Au, 304g/t Ag, 4.35% Pb, 12.72% Zn over 10
metres strike length with an average width of 0.45m (average of 3 channel
samples).

The increase in gold grades in some of these veins will
obviously enhance the economics of their development, particularly as historical
gold grades at Topia have averaged less than 1.0g/t.

In addition, many of the sampled sections reported above represent
  the complete length of the current exposure, so the potential to extend the
  development of these veins is wide open. The deeper levels of the Animas vein
  are virtually untouched over a strike length of 1,000m and will be drill tested
  over the next six months.

---

- 37 -

Along the Animas vein, on Level 1550, underground channel
sampling returned 1.62g/t Au, 338g/t Ag, 2.28% Pb, 1.53% Zn over 30 metres
strike length, with an average width of 0.31m (average of 16 samples); and
1.4g/t Au, 429g/t Ag, 1.14% Pb, 6.23% Zn over 35 metres strike length, with an
average width of 0.55m (average of 11 samples).

Along the La Dura vein, mine development on Level 1495,
returned 4.96g/t Au, 242g/t Ag, 8.32% Pb and 2.42% Zn over 38 metres strike
length with an average width of 0.49m (average grade of 16 samples). Exploration
potential exists above Level 1495 for approximately 150 metres vertical as this
part of the La Dura vein was not previously developed.

The deepest access level on the Madre vein is the 1420 Level
where sampling returned average grades of 5.7g/t Au, 49g/t Ag, 0.17% Pb, 0.18%
Zn over a horizontal length of 45 metres and an average width of 0.32m (average
grade of 12 samples). Further sampling is being completed with the recent
cleaning and safety inspection of this level.

Immediately behind the plant, a decline ramp from the main
access adit, Level 'A', has intersected the western edge of previous stoping on
the Argentina vein. This is the top priority area for development and
exploitation due to its proximity to the mill and the presence of multiple
parallel, thick and high grade silver-lead-zinc veins. A cross-cut from the ramp
intersected the main vein wherein 3 channel samples returned grades of
2,060-2,640 g/t Ag and 29-36% combined Pb-Zn over 1.0 metre. The vein in the end
of the westernmost stope is still approximately 1.0 metre wide and consists of
quartz-barite with bands of galena and sphalerite. The distance from here to the
closest surface drill hole (A04-02 from Great Panther's 2004 program that
returned grades of 708g/t Ag, 4.0% Pb and 4.2% Zn over 1.8 metres) is
approximately 300 metres, part of which contains former reserve blocks of
Peñoles (now classified as Historical Resources). This represents a large block
of potential high grade resources and will be targeted by an underground drill
program.

An underground diamond drilling program in the deeper portions
of the La Dura vein also is continuing to demonstrate high grades of silver,
gold, lead and zinc, up to 55.7 oz/t silver equivalent* (Ag Eq). In particular,
gold grades up to 7.21g/t in the drilling are significantly higher than the
historical average (less than 1.0g/t) for the Topia Mine.

Eleven principal mineralized vein structures have been defined
on the Topia Mine property, of which development and exploitation is presently
taking place on five, including La Dura. Surface and underground drilling over
the course of 2007 will target nine of the eleven veins in an effort to expand
the Topia Mine mineral resource and the number of veins being developed and
exploited. The nine-hole, 637.3 metre underground drilling program at La Dura is
part of the plan to test a 165 metre vertical interval (between the 1420 and
1585 levels) along a 600 metre strike length. These holes represent a 200m
horizontal by 50m vertical portion of that block. To date, there has been no
exploitation below the 1625 level in this part of the La Dura Mine. (Note: Mine
levels are named according to their elevation above mean sea level and the town
of Topia sits at an elevation of 1650 metres, such that most mine levels are
accessed via adits from the sides of the mountains).

Underground drill holes UT06-001 to 005 tested the La Dura vein
and a series of splays and parallel veins within a zone complicated by cross
faulting. One such vein in the hanging wall, called La Dura Alto, is the most
consistent of these in terms of grade and continuity. Significant results from
the first five holes include 0.6m @ 5.96g/t gold, 191g/t silver, 4.35% lead and
4.85% zinc (29.9 oz/t Ag Eq) in UT06-001; and 1.3m @ 3.03g/t gold, 194g/t
silver, 3.51% lead and 11.4% zinc (41.0 oz/t Ag Eq) in UT06-004, both on the
main La Dura vein.

---

- 38 -

Holes UT06-006 to 008 successfully located the La Dura vein,
with continuing high grades, east of a major fault and 85 metres below previous
workings. Significant results from these holes include 0.55m @ 2.88g/t gold,
609g/t silver, 5.84% lead and 11.1% zinc (55.7 oz/t Ag Eq) in UT06-006; and
1.05m @ 1.24g/t gold, 539g/t silver, 10.1% lead and 4.21% zinc (39.0 oz/t Ag Eq)
in UT06-008 (farthest east). Drill hole UT06-009 was used as an engineering hole
and as such was not oriented to intersecting veins.

Highlights of La Dura Underground Drilling:

Drill Hole
    From (m)
    To (m)
    Width (m)
    True width (m)
    Vein
    Au (g/t)
    Ag (g/t)
    Pb(%)
    Zn (%)
    Ag Eq.UT06-001
    0.00
    0.60
    0.60
    0.50
    La
      Dura
    5.96
    191
    4.35
    4.85
    29.9UT06-002
    3.25
    3.45
    0.20
    0.20
    La
      Dura
    5.53
    422
    4.25
    4.30
    35.328.50
    28.85
    0.35
    0.35
    La Dura alto
    0.77
    396
    10.10
    0.80
    25.7UT06-003
    36.60
    37.00
    0.40
    0.30
    La Dura alto
    0.80
    216
    3.35
    10.10
    35.5UT06-004
    5.60
    6.90
    1.30
    0.90
    La
      Dura
    3.03
    194
    3.51
    11.40
    41.0UT06-005
    3.00
    3.50
    0.50
    0.50
    La
      Dura
    3.27
    162
    0.60
    1.83
    14.526.60
    26.70
    0.10
    0.10
    La Dura alto
    7.21
    195
    7.02
    2.33
    28.2UT06-006
    31.45
    32.00
    0.55
    0.45
    La
      Dura
    2.88
    609
    5.84
    11.10
    55.7UT06-007
    23.00
    23.65
    0.65
    0.65
    La
      Dura
    2.97
    201
    6.71
    8.83
    38.1UT06-008
    104.55
    105.60
    1.05
    0.50
    La
      Dura
    1.24
    539
    10.10
    4.21
    39.0


*Note: Silver Equivalents (Ag Eq) were calculated using prices
of US$575/oz for Au, US$12.00/oz for Ag, US$0.60/lb for Pb and US$1.50/lb for
Zn; and recoveries of 85%, 87%, 90% and 87%, respectively.

Production from the Argentina vein has begun on a small scale
and will build as the veins are developed on multiple levels, allowing the
Company to achieve its production targets.

Ongoing drilling from surface and underground in 2007 continued
to extend high grade silver, gold, lead and zinc mineralization along strike and
to depth on several of the veins that are currently being mined.

Surface drilling throughout the last two quarters of 2007
tested the down-dip and strike extensions of six veins. Highlights include down
dip drilling on the Cantarranas vein, in hole ST07-061, which intersected
1,950g/t silver, 1.7g/t gold, 2.7% lead, and 3.01% zinc over 0.35 metres; and
the strike extension of the Madre vein, in hole ST07-044, which intersected
502g/t silver, 3.78g/t gold, 3.91% lead, and 5.47% zinc over 0.40 metres.

Underground drilling in the 4th quarter of 2007
focused on the re-discovered Don Benito vein and was highlighted by an
intersection of 749g/t silver, 5.67g/t gold, 3.71% lead and 4.96% zinc over 1.27
metres, in hole UT07-011, including a higher grade portion of 1,400g/t silver,
6.84g/t gold, 4.54% lead and 3.43% zinc over 0.55 metres. Holes UT07-010 to 013
(results compiled in table below) were all drilled from the

---

- 39 -

same site along the Dos Amigos ramp area at approximately the
1500 level in a fan section, and intersected both the La Dura and the Don Benito
veins (see maps on the company website at www.greatpanther.com). (Note: Mine levels are named
according to their elevation above mean sea level and the town of Topia sits at
an elevation of 1650 metres, such that most mine levels are accessed via adits
from the sides of the mountains).

Highlights of recent underground drilling:

**True**Drill
    From
    
    Width
    Width
    
    
    Au
    Pb
    ZnHole
    (m)
    To (m)
    (m)
    (m)
    Vein
    Ag g/t
    g/t
    %
    %UT07-010
    9.80
    9.95
    0.15
    0.15
    La Dura
    97
    2.75
    1.94
    8.0513.60
    13.75
    0.15
    0.15
    La Dura
    406
    2.19
    11.5
    28.60.83
    Don67.03
    67.90
    0.87
    
    Benito
    35
    1.39
    0.12
    0.811.04
    DonUT07-011
    34.32
    35.59
    1.27
    
    Benito
    749
    5.67
    3.71
    4.960.45
    Donincluding
    35.04
    35.59
    0.55
    
    Benito
    1,400
    6.84
    4.54
    3.43UT07-012
    6.70
    7.07
    0.37
    0.21
    La Dura
    270
    1.63
    6.70
    7.460.38
    Don46.77
    47.43
    0.66
    
    Benito
    222
    2.80
    1.14
    2.04UT07-013
    9.87
    10.02
    0.15
    0.09
    La Dura
    175
    1.48
    4.08
    8.42Don39.60
    39.95
    0.35
    0.20
    Benito
    769
    10.10
    6.65
    4.25


Underground development on the Don Benito vein, accessed from
La Dura level 1585, has opened 70 metres of continuous vein. Development to the
east along 40 metres of strike returned 276g/t silver, 0.39g/t gold, 4.32% lead,
and 2.69% zinc with an average width of 0.61 metres. Development to the west
along 28 metres of strike returned 105g/t silver, 0.82g/t gold, 0.84% lead, and
2.48% zinc over an average width of 0.49 metres. Development along the vein is
continuing.

---

- 40 -

From a review of historic maps, and re-mapping of old workings,
the Don Benito vein is open from the 1585 level upward to at least the 1700
level and, considering the recent underground drilling along Don Benito from the
1500 level, it is open downwards to at least the 1450 level. This implies a
vertical extent of at least 250 metres. The known strike extent of Don Benito is
approximately 300-350 metres. Underground drilling is continuing on the 1500
level, and this month several surface drill holes will test the Don Benito vein
between the 1585 and 1700 levels.

Underground development and exploitation is presently taking
place on eight mineralized vein structures on the Topia Mine property. This
includes initial development along the Don Benito vein, continued development
along the Recompensa, Argentina, Madre, Cantarranas, La Dura, and Animas veins
and commencement of development along the San Gregorio vein.

Surface drilling during the second half of 2007 tested the dip
and strike extent of the Madre, La Dura, Animas, Cantarranas, and Oliva veins.
During 2007 a total of 33 surface holes were completed totaling 7,422 metres.
All of the surface and underground holes presented herein will be included in
the new resource report being prepared by Wardrop Engineering and expected in
April, 2008.

In the eastern portion of the Perla area, on the Madre vein,
five surface holes were completed to test the dip and strike extension of
mineralization towards the Carrizo fault. Drill hole ST07-044 intersected 502g/t
silver, 3.78g/t gold, 3.91% lead, and 5.47% zinc over 0.40 metres, while
ST07-040 intersected 149g/t silver, 5.08g/t gold, 2.6% lead and 0.8% zinc over
0.6 metres. The deeper holes, ST07-045 to 047, intersected the Madre vein but
with modest gold and lower silver, lead and zinc values.

The down dip extension of the Cantarranas vein was tested in
the Jicara area. Two holes were drilled with ST07-061 intersecting 1,950g/t
silver, 1.7g/t gold, 2.7% lead, and 3.01% zinc over 0.35 metres, while the more
easterly ST07-062 intersected an old stope. Further drilling is planned for 2008
as access is facilitated by the use of a short ramp from existing
infrastructure.

Three holes were drilled to test the down dip extension of the
La Dura vein below the 1585 level. The drill holes reflect the grade of the
underground development in this area, with the best results from ST07-042, which
returned 307g/t silver, 1.88g/t gold, 0.13% lead, and 0.48% zinc over 0.3
metres.

Further west along the La Dura vein, in the Dos Amigos area,
holes ST07-056 & 057 intersected the La Dura vein at about the 1400 level,
and also discovered a new vein named the La Dura Alta. The best results are from
ST07-057 where the La Dura Alta vein returned 1,040g/t silver, 2.27g/t gold,
0.3% lead, and 0.5% zinc over 0.2 metres, and the La Dura vein returned 39g/t
silver, 5.25g/t gold, 0.3% lead, and 0.35% zinc over 0.35 metres. Underground
development and exploitation in this area is ongoing from the 1420 level and
1500 level ramp.

Both the surface and underground drilling in the western part
of the Topia District continue to demonstrate higher gold grades in addition to
silver, lead and zinc. Given the typically narrow veins at Topia, the higher
gold content makes a significant contribution to the value of the
mineralization.

Highlights of the recent surface drilling are summarized in the
table below and a plan map of veins and mine areas can be found on the Company
website. Presently the surface drilling is testing both the Santa Cruz and
Argentina veins in the northern part of the district and underground development
is also continuing in this area. Following this, the surface drill will test the
Cantarranas vein in the Jicara area, following up on ST07-061, and will further
test the Don Benito vein. Results of this drilling will be reported when assay
data is compiled.

---

- 41 -

Highlights of recent surface drilling:

TrueDrill
    From
    
    Width
    Width
    
    
    Au
    Pb
    ZnHole
    (m)
    To (m)
    (m)
    (m)
    Vein
    Ag g/t
    g/t
    %
    %ST07-040
    80.60
    81.20
    0.60
    0.20
    Madre
    149
    5.08
    2.60
    0.80ST07-042
    154.50
    154.80
    0.30
    0.17
    La
      Dura
    307
    1.88
    0.13
    0.48ST07-043
    166.50
    168.12
    1.62
    0.92
    La Dura
    179
    1.12
    0.13
    0.12including
    167.68
    168.12
    0.44
    0.25
    La
      Dura
    371
    0.55
    0.06
    0.02ST07-044
    182.45
    182.85
    0.40
    0.26
    Madre
    502
    3.78
    3.91
    5.47ST07-047
    182.50
    183.51
    1.01
    0.20
    Madre
    22
    3.93
    0.14
    1.10ST07-050
    67.68
    68.03
    0.35
    0.20
    Animas
    114
    2.58
    0.40
    0.74ST07-
    
    
    
    
    La Dura056
    82.00
    82.20
    0.20
    0.16
    Alta
    111
    2.79
    0.30
    0.50ST07-
    
    
    
    
    La Dura057
    105.10
    105.30
    0.20
    0.14
    Alta
    1,040
    2.27
    0.30
    0.50204.85
    205.20
    0.35
    0.25
    La
      Dura
    39
    5.25
    0.30
    0.35ST07-059
    366.07
    367.10
    1.03
    0.84
    Cantarranas
    118
    1.14
    0.07
    0.23ST07-061
    202.45
    202.80
    0.35
    0.18
    Catarranas
    1,950
    1.70
    2.70
    3.01


2. Guanajuato Mine Complex

a. Acquisition

On October 25, 2005 we signed a formal purchase with the Sociedad
  Cooperativa Minero Metalúrgica Santa Fe de Guanajuato to purchase 100%
  of the ownership rights in a group of producing silver-gold mines in the Guanajuato
  Mining District.

---

- 42 -

The total purchase price is US$7,250,000, which includes 1,107
  hectares in two main properties, the 1,200 tonne-per-day plant, workshops and
  administration facilities, complete mining infrastructure, mining equipment,
  and certain surface rights. In 2006, we paid the remaining balance of US$3,625,000.

On May 15, 2006, we announced the purchase of 3.88 hectares of
real estate adjacent to the plant at our Guanajuato Silver-Gold Mine Complex.
The land was purchased from the Sociedad Cooperativa Minero Metalúrgica Santa Fe
de Guanajuato, the same Cooperative from which the mines were purchased in 2006,
for a total of US$690,425. A payment of US$201,825 was made at the time of the
signing of the purchase agreement and the remaining balance of US$488,600 was
paid in the second half of 2006. The Company has received clear title to the
property. The decision to buy the extra land was taken in order to facilitate
any future expansion of the plant facilities and to protect the plant site from
any possible development nearby.

In December 2007, the Company purchased an additional 0.2804
hectares of land immediately adjacent to the plant and below our tailings dam at
the Guanajuato Mine Complex. The land was purchased from the Sociedad
Cooperativa Minero Metalúrgica Santa Fe de Guanajuato, the same Cooperative from
which the mines were purchased in 2006. The land was primarily purchased in
order to protect the area from any possible development. The Company has
received clear title to the new property.

b. Location and Accessibility

The Guanajuato Mine Complex is located alongside the city of
Guanajuato, 380 km northwest of Mexico City in central Mexico. Guanajuato is
situated in the Central Plateau of Mexico in the mountains of Sierra de
Guanajuato at elevations ranging from 1,600 to 2,200 metres. The principle claim
group is centred at approximately 21o03N latitude and
101o15W longitude (NAD 27, UTM coordinates 2327500N, 265500E). The
Guanajuato Mine Complex consists of 1,107.28Ha, made up of 28 non-contiguous
concessions.

Excellent access is availed to Guanajuato with an international
airport 30 minutes to the west near Silao/Leon. Toll free-ways skirt the city
linking it with Leon, Guadalajara, and Mexico City. All of the facilities of the
Guanajuato Mine are accessed from city streets.

The Guanajuatito ramp provides easy access to the
mineralization throughout the Guanajuatito-Encarnación area where only a minor
amount of mining has taken place in the past.

c. History

The Guanajuato Mining District was founded in 1548.

- 1548: The first silver vein at San Bernabé (La Luz) was discovered by a
  local mule driver. Silver ore was hand mined and transported by mule to
  Zacatecas to be milled.
- 1550: Juan de Rayas discovered the Veta Madre system at the site where the
  present day Rayas shaft is located. This triggered an exploration rush which
  saw the discovery of the La Valenciana, Tepeyec, Mellado, Cata and Sirena
  silver occurrences.
- 1726: Production was very limited in early years as the method of
  extracting ores was the fire method where the rock face was heated with a fire
  and then quickly quenched with water, the rapid cooling resulting in the
  shattering of the rocks. It was not until gun powder was introduced by Don
  Jose de Sardeneta y Legaspi in 1726 that production became significant.
  Construction began on the Rayas shaft.

---

- 43 -

- 1760-1770: Antonio Obregón y Alcocer, who later became Count Valenciana,
  completed numerous exploration ventures, culminating with the discovery of the
  Valenciana ore-shoot and the development of the Valenciana mine.
- 1771: The dream of the Guanajuato miners became a reality with the
  discovery of immense masses of silver sulphides, mixed with ruby silver and
  native silver. After various fortunate discoveries, Antonio Obregón y Alcocer
  became famous, and was considered to be one of the richest men in the world.
  He was honoured with the title of Count Valenciana because, at the time, the
  Valenciana mine was estimated to be producing one-third of the worlds silver.
  Production was increased under the Counts direction, and the Santo Cristo de
  Burgos shaft was sunk to a depth of 150 metres.
- 1775: The San Antonio shaft on the Valenciana vein was sunk to a depth of
  227m.
- 1810-1868: Production stopped as the result of the War of Independence
- 1821: Revolutionaries burned all the mining installations, including the
  headworks of the newly-built Valenciana shaft.
- 1868: The Valenciana mine was reopened by British investment capital.
- 1936: Peñoles S.A. tested the Veta Madre with four diamond drill holes.
- 1939: The Sociedad Cooperativa Minero Metalúrgica Santa Fe de Guanajuato
  became the legal owner of the properties of the Guanajuato Reduction and Mines
  Company. Starting with no mineral reserves and no working capital, the new
  Cooperative had a difficult time carrying out exploration and mining with
  outdated equipment.
- 1947-1949: The Fresnillo Company completed a diamond drilling program
  consisting of nine holes, which intersected the Veta Madre 80m to 150m below
  the lowest existing workings.
- 1968: The Fresnillo Company acquired the adjacent claims and incorporated
  Cebada a Negociación Minera Santa Lucía and the Peregrina Mine; in the same
  year, Fresnillo discovered the Torres-Cedros orebody during an exploration and
  drilling program.
- 1973: The contracting company Tormex, S.A. completed a photogeological
  study in the area of the Cebada mine holdings (Figure 3). The SCMMSFG
  discovered the Clavo de Rayas bonanza oreshoot.
- 1976: The Cebada mine began production. Between 1976 and 1995, the Cebada
  mine produced 1,277,216 tonnes at an average grade of 4.04 g/t gold and 372
  g/t silver. The Cebada mine is not a part of the Sociedad Cooperativa Minero
  Metalúrgica Santa Fe de Guanajuato holdings.
- 2003: The Grupo Guanajuato closed the Torres, Sirena, Peregrina and Apolo
  mines. The Bolañitos, Golondrinas, Asunción and Cebada mines stayed in
  production on a break-even basis.
- 2004: A Canadian company MexGold Resources (Gammon Lake Resources)
  purchased the near-by El Cubo mine.

Since discovery to 1990, total production from the Guanajuato
Mining District has been estimated to be approximately 35,000 tonnes silver
(1.12 billion oz Ag) and 175 tonnes gold (5.63 million oz Au).

Sociedad Cooperativa Minero-Metalurgica Santa Fe de Guanajuato
  has completed various small drill programs since 1939. Most of the historic
  drill log and drill assay data exists at the mine but not in a readily accessible
  form. The last phase of drilling completed in 1992, was utilized for the estimation
  of the Cata mine resources in the 1992 Sociedad Cooperativa Minero-Metalurgica
  Santa Fe de Guanajuato report.

---

- 44 -

d. Mineralization

Three major fault systems with associated mineralization occur
in the Guanajuato Mining District; La Luz, Sierra, and the Veta Madre systems,
the largest being the 25 km long Veta Madre. The principal mineralizing event is
thought to be late Oligocene in age +27 Ma, which has created three identifiable
stages of mineralization according to Clark (2005); 1) pre-ore, 2) ore, 3)
post-ore and the ore can be divided into three zones; upper ore, lower ore, and
deep ore. The upper ore is defined as being >2,100m a.s.l., lower ore is
found between 2,100m and 1,700m a.s.l. and deep ore as being <1,700m a.s.l.

All historic descriptions of the mineralization contain the
term ore. In most cases, the terminology applies to previously mined
mineralization. Historic authors have generally agreed that there are three
separate zones of mineralization; upper ore, lower ore and deep ore. Normally
this categorization refers to areas now mined out but in other cases, it refers
to horizons of un-mined material that may contain mineralization that would not
be considered as ore as defined by NI 43- 101 Standards of Disclosure for
Mineral Projects adopted by the securities regulators in Canada. The authors
have chosen to use the same language to be consistent with the historic
documentation and are not implying that the mineralization will ever become ore
that can be mined at a profit.

The Veta Madre systems strike northwesterly and dip
450 to 650SW. The bulk of the mining production has come
from a five-kilometre section of the Veta Madre stretching between the
Valenciana shaft of our Companys ground in the northwest to the Sirena shaft on
Peñoles ground in the southeast. In this five kilometre area, the vein stockwork
averages approximately 20m in width but can be as wide as 90m. Most of the
historic production has come from the economically important lower ore level
(2,100m to 1,700m a.s.l.) and is typically associated with faults and both
footwall and hanging wall stockwork vein systems.

The argentiferous mineralization is hosted in quartz veins with
gangue mineralogy of quartz, calcite, pyrite, adularia, and sericite. The
principal silver bearing mineralization is acanthite (argentite), aguilarite and
naumannite while gold occurs as free gold and as electrum. The gold to silver
ratios vary from approximately 1:70 to 1:200. Base metal mineralization is not
common; when it occurs it is observed as chalcopyrite, sphalerite and galena.
The exception is the deep ore in the Rayas mine which is associated with
chalcopyrite and galena.

The economic mineralization is hosted in
quartz-carbonate-adularia veins and stockwork systems with identifiable
ore-shoots that carry the bulk of the economic mineralization. The ore shoots
are discontinuous, 10-40m wide and typically equal in vertical dimensions to
strike length. The discontinuous nature of the ore-shoots has made ongoing
underground and surface exploration challenging and not necessarily well
understood. On average, approximately 20% of the volume of the individual veins
becomes ore. The higher grade portions of the veins range in width from less
than a meter up to 90m in width, historic average grade in the Veta Madre are
450g/t Ag and 2.5g/t Au.

---

- 45 -

e. Mineral Resource and Mineral Reserve Estimates

There are currently no reserve or resource estimates conforming
to NI 43-101 Standards of Disclosure for Mineral Projects adopted by the
securities regulators in Canada. The most recent, noncompliant, resource
estimate was made in 2000 by Sociedad Cooperativa Minero-Metalurgica Santa Fe de
Guanajuato with most of the resource located in the lower levels of the mine.

f. Exploration

The Company commenced a surface diamond drilling program in
2005. The drilling program intersected bonanza grade silver and above average
gold within the Veta Madre vein structure. Highlights of the program include 692
g/t silver and 5.17 g/t gold over 5.8 metres and 1,096 g/t silver and 4.15 g/t
gold over 2.5 metres.

The drilling, comprising 1,163.3 metres in six holes, was
designed to duplicate and surround a lone 1989 drill hole (#317) that
intersected a 5.35 metre wide zone grading 3.34 g/t Au and 81.5 g/t Ag,
including 10.65 g/t gold and 165 g/t silver over 1.55 metres. The drilling was
completed under and northwest of the Guanajuatito ramp along the trend of the
Veta Madre, approximately one kilometre northwest of the famous Valenciana Mine
(now owned by Great Panther).

The holes were drilled on four section lines at 50 metre
intervals, covering a strike length of 150 metres. Two styles of mineralization
were noted in the drill holes: silver-gold mineralization in the Veta Madre
itself and a previously unrecognized zone of gold-arsenic-antimony
mineralization in the hanging wall. Both zones are epithermal in nature, and
likely represent separate pulses of mineralization.

In this part of the mine complex, the Veta Madre is manifested
as a silica breccia at the contact between the hanging wall diorite and the
footwall sediments. Hole GTTO-05-004 was drilled to test the zone of
mineralization in hole 317, mentioned above. Hole 004 intersected a 7.3 metre
wide vein breccia, interpreted as the Veta Madre, of which 5.8 metres (4.1 metre
true width) assayed 692 g/t silver and 5.17 g/t gold. Fifty metres along strike
to the southeast, hole GTTO-05-005 intersected a 3.4 metre thick section of the
same Veta Madre breccia, with a 2.5 metre (1.77 metre true width) portion
assaying 1,096 g/t silver and 4.15 g/t gold. A further 50 metres along strike to
the southeast, hole GTTO-05-006 intersected 7.5 metres of the Veta Madre breccia
with a 1.5 metre (1.06 metre true width) portion assaying 209 g/t silver and
1.55 g/t gold. The most northwesterly holes, GTTO-05-001 & 002, as well as
GTTO-05-003, drilled 50 metres updip from hole 004, did not intersect the Veta
Madre breccia. Details of significant intersections are listed below.

The gold-arsenic-antimony mineralization consists of a 10-30
metre thick (estimated true width) zone of quartz-pyrite veinlets within an
extensive stockwork/breccia in the hanging wall diorite and was intersected in
all six holes. Although gold values in this zone were mostly below 1 g/t in the
drilling, the holes may be too high in the epithermal system, with the
possibility of better mineralization at depth. As such, the hanging wall diorite
breccia is a significant, previously un-assayed, gold target which will be
followed up by surface and underground mapping, rock geochemistry and further
drilling. Elsewhere in the mine, stockwork/breccia zones can achieve thicknesses
of 30 metres or more and have historically provided substantial tonnages of
silver-gold mineralization amenable to bulk underground mining methods.

The Company concluded that the Veta Madre breccia forms the more
  appealing target as the drill holes show that it continues with excellent widths
  and grades below previous workings at the Guanajuatito ramp. The aforementioned
  intersections occurred at a vertical depth of 100 -120 metres below surface.
  The Veta Madre is known to extend more than 700 metres vertically (approximately
  1,000 metres down dip) from surface. Mineralized shoots within the
  structure are often continuous to depth, which bodes well for these new intersections,
  as there has been no drilling or underground development below them. The Guanajuatito
  ramp provides easy access to this high grade mineralization and only a minor
  amount of mining has taken place in the past. The underground workings here
  will be re-sampled and surveyed as part of the Company's ongoing silver-gold
  resource evaluation.

---

- 46 -

An extensive underground sampling program continued through
2006 at Guanajuato. Preliminary sampling in the first quarter of 2006 has
returned spectacular bonanza grades from the Valenciana Mine. Silver grades
ranged from 1,100 g/t (32 oz/t) to 30,468 g/t (889 oz/t) and gold grades ranged
from 19 g/t (0.6 oz/t) to 177 g/t (5.2 oz/t) in 27 selective grab samples taken
by the mine staff. These results yield an arithmetic average of 11,036 g/t (322
oz/t) Ag and 62 g/t Au (1.8 oz/t). Using a silver-to-gold ratio of 60:1, this
equates to a silver equivalent grade of 430 oz/t or a gold equivalent grade of
7.2 oz/t. The samples also contained, on average, 0.34% Cu, 0.24% Pb and 0.87%
Zn.

The samples were taken from the walls of old stopes in a part
of the mine that has historically been mined by hand, dating back to the early
19th century. As such, there has been very little, if any, mechanized mining
here, and stopes are typically small and erratic in shape. The sampling was
carried out as a first-pass assessment of the tenor and distribution of
mineralization that has been left behind by these historic mining campaigns.
Consequently, it is presently unknown just how representative these grades may
be from a mining standpoint.

Significantly, the sampling came from 6 different stopes above
and below the 285 metre level over a total strike length of about 500 metres.
Grades from the various stopes were comparable. Five of these stopes lie within
200 metres of the Valenciana shaft and there has only been limited development
below this level, approximately 150 metres, to the bottom of the shaft. The
sixth stope, number 1414, lies 400 metres southeast of the shaft and has been
partially developed between the 285 and 320 metre levels. There has been no
development above this for at least 100 metres and there does not appear to have
been any work done below it at all, suggesting that the mineralization is
totally open to depth.

In addition, initial surface rock sampling on the Promontorio
claim, southeast of the Rayas Shaft, has identified a gold-rich zone of
mineralization along more than 100 metres of the Veta Madre structure. Two
channel samples across this zone returned 5.2 g/t Au over 3.2m and 7.6 g/t Au
across 3.0m. A further 100 metres along strike to the southeast of the above, an
exposure of silica breccia and a footwall shear were sampled over a 25 by 45
metre area, yielding anomalous to "ore-grade" (as defined by the current
operators) gold and silver values. In the Promontorio area the Veta Madre and
associated stockwork and shear zones form topographic dip slopes making for easy
drill targets and are readily accessible for potential surface exploitation.
Elsewhere in the mine complex, these mineralized stockworks can reach widths of
30 metres or more and locally exceed 100 metres in strike length and down-dip
extent allowing for bulk tonnage underground mining methods to be used.

Initial evaluations of underground workings near the
Promontorio Shaft, and approximately 150 metres vertically below these surface
outcrops, indicated the presence of similar gold-dominated mineralization.
Compilation of the underground data is ongoing, as will be the evaluation of the
extent of former mining, and re-sampling of stopes and levels. There is more
than 300 metres of strike length to the southeast of Promontorio that has
apparently seen only limited exploration and underground development, such that
the potential for previously unrecognized mineralization in this area is
excellent. Overall, the property encompasses more than four kilometres of strike
length on the Veta Madre structure, much of which has seen little to no
exploration.

In June 2006, we commenced the first phase of our underground
diamond drilling program, which is to comprise of a minimum of 3,000 metres in
approximately 45 holes. The purpose of the drilling was to better define zones
of silver-gold mineralization for production purposes and for the preparation of
a NI43-101 compliant resource. The drilling focused mainly on San Vicente North.

In October 2006, we commenced a second phase of our diamond
drilling program and completed extensive underground sampling at the limits of
the silver-gold mineralization in the Guanajuatito Mine. The work to date in
this northwest area of the Guanajuato Mine Complex has included the collection
of

---

- 47 -

more than 1,000 underground channel samples and is leading to a
better understanding of the distribution of silver-gold mineralization. It has
been observed that, while the Veta Madre quartz breccia is fairly consistent and
is present in almost every hole, silver and gold grades vary somewhat, with
higher grades tending to cluster in pockets with lower grade material in
between, a typical feature of precious metal vein deposits. As such, even low
grade intersections of vein material in drill holes spaced 50 metres apart are
important as they indicate the continuity of the zone. Continued detailed
sampling underground and/or follow-up drilling on a closer spacing will be
needed to better define the actual grade of the zone.

Further underground development is already underway and this
part of the mine is providing about 150 tonnes per day to the mill. Underground
mapping and sampling is continuing in this area and the surface drilling is
continuing in the Animas and Promontorio area in the Cata and Rayas shaft areas
to the southeast. Results for these areas will be released in due course.

While all eight holes in the Animas drilling intersected
silver-gold mineralization, the most significant results include 1.5 metres
averaging 505g/t silver and 1.98g/t gold within 4.5 metres averaging 219g/t
silver and 0.86g/t gold in GTT-06-020, and 2.1 metres of 658 g/t silver and 1.7
g/t gold in hole GTT-06-023. Mineralization in these holes, as well as that of
hole GTT-06-21, is hosted within a portion of the Veta Madre structure that
extends into the footwall shale. Approximately 125 metres further south from
GTT-06-20 and 21, GTT-06-022 intersected 230g/t silver and 1.28g/t gold over 3.0
metres in a hanging wall stockwork. Fifty and seventy metres, respectively,
deeper than hole 22, GTT-06-026 intersected 121g/t silver and 1.05g/t gold over
7.8 metres, and GTT-06-024 intersected 89g/t silver and 0.33 g/t gold over 9.0
metres. Both the intersections in GTT-06-024 and 026 as well as the narrower
intersections in GTT-06-025 and 027 are within stockwork zones in hangingwall
rocks.

In early 2006, we commenced a Phase II surface diamond drilling
program designed to test three separate areas along a 4 kilometres of strike
length along of the Veta Madre. The drill program was to follow-up on the
successful drilling at Guanajuatito, in the northwest part of the property, as
well as to test the Animas, and Garrapata areas which are farther along strike
to the southeast. The 6,753 metres drilled in 34 holes was highly successful in
identifying and delineating three new zones of silver-gold mineralization in the
northwest, central and southeast parts of the mine property. These discoveries
accentuate the previous lack of exploration on the property and the potential
for new zones to be found throughout the mine. In addition, the easy access to
these zones from existing underground workings means that they can be developed
and mined quickly and cost-effectively.

In the Guanajuatito-Encarnación area, results of the diamond
drilling program provided further definition of a new zone of silver-gold
mineralization. Extensive underground sampling also confirmed the extension of
the silver-gold mineralization. Both the drilling and sampling were part of a
comprehensive, ongoing exploration program at Guanajuato to help better
understand and delineate the silver-gold mineralization in area. A total of
3,205 metres was completed under and northwest of the Guanajuatito ramp, and in
the adjacent Encarnación area along the trend of the Veta Madre, approximately
one kilometre northwest of the famous Valenciana Mine (now owned by Great
Panther). The program was initially designed to surround the 2005 drilling that
intersected 692 g/t silver and 5.17 g/t gold over 5.8 metres and 1,096 g/t
silver and 4.15 g/t gold over 2.5 metres. A total of nineteen holes have now
been drilled in this area at approximately 50 metre intervals, covering a strike
length of 400 metres and a vertical extent of 100 to 150 metres.

The work in the northwest area of the Guanajuato Mine Complex
  has included the collection of more than 1,000 underground channel samples and
  is leading to a better understanding of the distribution of silver-gold mineralization.
  It has been observed that, while the Veta Madre quartz breccia is fairly consistent
  and is present in almost every hole, silver and gold grades vary somewhat, with
  higher grades tending to cluster in pockets with lower grade material in between,
  a typical feature of precious metal vein deposits. This is illustrated on the
  level plan maps on the Companys website. As such, even low grade intersections
  of vein material in drill holes spaced 50 metres apart are important as they
  indicate the continuity of the zone.

---

- 48 -

Continued detailed sampling underground and/or follow-up drilling
  on a closer spacing will be needed to better define the actual grade of the
  zone.

Significant results from the 2006 drilling include 2.87 metres
of 651g/t silver and 3.16g/t gold in hole GTT-06-015, located approximately 50m
vertically below GTT-05-005 (1,096 g/t silver and 4.15 g/t gold over 2.5
metres). Drill hole GTT-06-015 helps define a high grade zone of silver-gold
mineralization below the Guanajuatito ramp in the section 2800N area. Drill hole
GTT-06-014 intersected 9.5m of anomalous Veta Madre mineralization including 6.0
metres of 111g/t silver and 1.55g/t gold under the Guanajuatito level +45
(mining formerly took place above level +45). Drill hole GTT-06-010 intersected
6.0m of anomalous Veta Madre with 1.0 metre of 82g/t silver and 0.35g/t gold.
GTT-06-010 is 40 metres vertically below the high grade GTT-05-004 (692 g/t
silver and 5.17 g/t gold over 5.8 metres). Drill hole GTT-06-013 intersected
8.2m of anomalous Veta Madre, while GTT-06-019 intersected a broad zone of
silica breccia with 1.0 metre of 77g/t silver and 0.59g/t gold. This hole is 60m
northwest of former mining on the Encarnación sublevel 45.

As in the 2005 drilling, two styles of mineralization were
noted in the 2006 holes: silver-gold mineralization in the Veta Madre itself and
a zone of gold-arsenic-antimony stockwork mineralization in the hanging wall.
Although only the Veta Madre style has returned grades of an economic level so
far, the stockwork style often contains anomalous levels of gold and will be
evaluated underground to better understand the distribution of the
mineralization.

Highlights of Diamond Drilling:

Hole No.
    From (m)
    To (m)
    Width (m)
    True Width (m)
    Ag (g/t)
    Au (g/t)GTTO-05-004*
    131.7
    137.5
    5.8
    4.1
    692
    5.17GTTO-05-005*
    110.5
    113.0
    2.5
    1.77
    1,096
    4.15GTTO-05-006*
    113.5
    115.0
    1.5
    1.06
    209
    1.55GTT-06-010
    160.0
    161.0
    1.0
    0.9
    82
    0.35GTT-06-013
    156.7
    158.5
    1.8
    1.5
    22
    0.55GTT-06-004
    167.0
    176.5
    9.5
    8.1
    90
    1.13Includes
    169.0
    176.0
    6.0
    5.1
    111
    1.55GTT-06-015
    168.83
    171.7
    2.87
    2.4
    651
    3.16GTT-06-016
    218.5
    220.4
    1.9
    1.6
    127
    0.91GTT-06-019
    220.5
    221.5
    1.0
    0.9
    77
    0.59


* designates results released Dec 1,
2005.

The continued drilling and sampling have helped us better define
  a zone of silver-gold mineralization (the Guanajuatito Zone) that appears to
  plunge off to the southwest. This zone is approximately 200 metres along strike
  and could extend for at least 400 metres down-plunge as it appears to join up
  with mineralization intersected in deep drilling from the 1980's. Structurally,
  this appears to be a new trend to mineralization in the mine complex and may
  be related to the contact between a dioritic intrusive that forms the hanging
  wall in the Guanajuatito area and the "Guanajuato Conglomerate" which is the
  hanging wall unit along strike to the southeast.

---

- 49 -

Plan maps for the Guanajuatito +45 level and Encarnación +15
level (all mine levels are referenced to the '0 metre' elevation at the access
to the Rayas shaft) have been included on the Companys website. Re-sampling of
these levels (2450N - 2750N sections) returned some excellent values associated
with the Veta Madre silica breccia. Mineralized intersections in GTT-06-013, 014
and 019 imply further potential in this area and have helped to define the
western limits to the Encarnación Zone, which appears to follow the more common
southeast plunge and is open to depth. Continued evaluation of this part of the
mine will be conducted from underground as is will be more cost-efective than
drilling from surface.

On the Guanajuatito +45 level, 31.6% of the samples assayed
greater than 55 g/t silver equivalent (AgE) using US$525/oz gold and US$10.50/oz
silver. These samples averaged 178 g/t AgE (143 g/t AgE using an 80% historic
mill recovery rate). On the Encarnación +15 level, 57.1% of the samples assayed
greater than 55 g/t silver equivalent (AgE) using the same prices. These samples
averaged 231 g/t AgE (185 g/t AgE using an 80% historic mill recovery rate). On
both levels, the higher grade values cluster into distinct zones as seen on the
level plans.

The second portion of the 2006 drill program focused on testing
a gap in historical production, known as the Animas area, between the Cata Mine
and San Vicente North Ramp. It represents a section of the Veta Madre vein
structure approximately 175 metres in strike length by 150 metres vertical,
immediately below surface and accessible by ramp. As such, the newly defined
mineralization presents an immediate target for stope development and
mining.

While all eight holes in the Animas drilling intersected
silver-gold mineralization, the most significant results include 1.5 metres
averaging 505g/t silver and 1.98g/t gold within 4.5 metres averaging 219g/t
silver and 0.86g/t gold in GTT-06-020, and 2.1 metres of 658 g/t silver and 1.7
g/t gold in hole GTT-06-023. Mineralization in these holes, as well as that of
hole GTT-06-21, is hosted within a portion of the Veta Madre structure that
extends into the footwall shale. Approximately 125 metres further south from
GTT-06-20 and 21, GTT-06-022 intersected 230g/t silver and 1.28g/t gold over 3.0
metres in a hanging wall stockwork. Fifty and seventy metres, respectively,
deeper than hole 22, GTT-06-026 intersected 121g/t silver and 1.05g/t gold over
7.8 metres, and GTT-06-024 intersected 89g/t silver and 0.33 g/t gold over 9.0
metres. Both intersections in GTT-06-024 and 026 as well as the narrower
intersections in GTT-06-025 and 027 are within stockwork zones in hangingwall
rocks. The latter two were the deepest of the eight holes and may represent a
pinching of the zone at this point. Highlights of Diamond Drilling:

Hole No.
    From (m)
    To (m)
    Width (m)
    True Width (m)
    Ag (g/t)
    Au (g/t)GTT-06-020
    33.0
    37.5
    4.5
    4.5
    219
    0.86Including
    36.0
    37.5
    1.5
    1.5
    505
    1.98GTT-06-021
    37.1
    44.5
    7.4
    5.2
    37
    0.18GTT-06-022
    56.5
    59.5
    3.0
    3.0
    230
    1.28GTT-06-023
    102.9
    105.0
    2.1
    2.1
    658
    1.7GTT-06-024
    124.35
    143.5
    9.15
    9.0
    89
    0.33GTT-06-025
    197.0
    198.0
    1.0
    0.7
    163
    0.3


---

- 50 -

Hole No.
    From (m)
    To (m)
    Width (m)
    True Width (m)
    Ag (g/t)
    Au (g/t)GTT-06-026
    115.3
    124.0
    8.7
    7.8
    121
    1.05GTT-06-027
    172.5
    173.5
    1.0
    0.7
    19
    0.98


As there still remains a portion of the Animas area that is
inaccessible for surface drilling, additional holes to test this gap are being
completed in an underground drill program.

The styles of mineralization at Animas are somewhat different
from the quartz breccia at Guanajuatito in the northwest end of the property. At
Animas, gold-silver mineralization is hosted in quartz-carbonate stockwork zones
in hanging wall conglomerate; in the Veta Madre silica breccia located along the
contact between the hanging wall conglomerate and footwall shales; and in silica
flooded (stockwork and breccia) footwall shale. These styles of mineralization
are well displayed in the surface drilling and in underground workings in the
various shallow levels of San Vicente North. The fact that the Animas
mineralization is located virtually from surface down to about the 170 metre
level underscores the fact that the upper levels of the Guanajuato Mine Complex
have not been mined out.

The third portion of the 2006 drill program focused on an
unexplored area along strike from the mine workings at the Promontorio shafts.
The area represents a section of the Veta Madre vein structure approximately 150
metres in strike length by 150 metres vertical, immediately below surface and
accessible by the San Vicente South Ramp.

While all seven holes in the Promontorio drilling intersected
silver-gold mineralization, the most significant results include 149g/t silver
and 2.2g/t gold across 5.4 metres of the Veta Madre in hole GTT-06-031; and
141g/t Ag and 0.54g/t Au across 2.24 metres of the Veta Madre in GTT-06-034,
located 40 metres northwest of hole 31. Another 120m northwest of GTT-06-034,
near the Promontorio shaft, GTT-06-028 intersected 92g/t Ag and1.08g/t Au across
3.65 metres.

Parallel zones to the Veta Madre are also well developed,
including a hanging wall silica stockwork developed in conglomerate. Apparently,
this zone was partially exploited in the past as holes GTT-06-030 and 032 were
unexpectedly lost in unrecorded stopes. However, the remaining hangingwall
stockwork in GTT-06-032 assayed 43g/t Ag and 0.95g/t Au across 4.9 metres.

Of particular note is that a footwall stockwork is locally
developed in the porphyritic diorite. This new zone has been traced for
approximately 150m of strike length with notable intersections of 92g/t Ag and
0.53g/t Au across 4.3 metres in GTT06-028 and 197g/t Ag and 0.57g/t Au across
1.52 metres in GTT-06-034.

---

- 51 -

Hole No.
    From (m)
    To (m)
    Width (m)
    True Width (m)
    Ag (g/t)
    Au (g/t)
    Zone/CommentsGTT-06-028
    69.75
    73.4
    3.65
    3.65
    31
      1.08
    Vetra Madre76.2
    80.5
    4.3
    4.3
    92
      0.53
    FW stkwkGTT-06-029
    64.7
    71.5
    6.8
    4.8
    44
      0.78
    HW stkwkIncludes
    66.15
    67.2
    1.05
    0.7
    185
      2.31GTT-06-031
    134.5
    139.9
    5.4
    5.4
    149
      2.02
    Vetra MadreGTT-06-032
    115.05
    128.7
    13.6
    9.5
    45
      0.35
    Upper HW stkwk155.95
    162.05
    6.1
    4.9
    43
      0.95
    HW stkwkGTT-06-033
    122.5
    129.5
    7.0
    4.9
    59
      0.21
    HW stkwk131.5
    137.5
    6.0
    4.2
    80
      1.85
    Vetra Madre146.5
    148.5
    2.0
    1.4
    123
      0.44
    FW stkwkGTT-06-034
    125.7
    128.5
    2.8
    2.24
    141
      0.54
    Vetra Madre140.3
    142.2
    1.9
    1.52
    197
      0.57
    FW stkwk


Additional holes in the Promontorio area will be completed by
the underground drill commencing in early 2007.

The styles of mineralization at Promontorio, as seen in the
surface drilling and surface outcroppings, include silver-gold mineralization
hosted in several quartz-carbonate stockwork zones in the hanging wall
conglomerate; silica breccia in the Veta Madre located along the contact between
the conglomerate and footwall diorite porphyry; and in silica flooded (stockwork
and breccia) footwall diorite. Detailed geological mapping and rock sampling of
underground workings in this part of the mine are ongoing.

In early 2006, preliminary sampling returned spectacular
bonanza grades from the Valenciana Mine. Silver grades ranged from 1,100 g/t (32
oz/t) to 30,468 g/t (889 oz/t) and gold grades ranged from 19 g/t (0.6 oz/t) to
177 g/t (5.2 oz/t) in 27 selective grab samples taken by the mine staff. These
results yield an arithmetic average of 11,036 g/t (322 oz/t) Ag and 62 g/t Au
(1.8 oz/t). Using a silver to gold ratio of 60:1, this equates to a silver
equivalent grade of 430 oz/t or a gold equivalent grade of 7.2 oz/t. The samples
also contained, on average, 0.34% Cu, 0.24% Pb and 0.87% Zn.

The samples were taken from the walls of old stopes in a part
of the mine that has historically been mined by hand, dating back to the early
19th century. As such, there has been very little, if any, mechanized mining
here and stopes are typically small and erratic in shape. The sampling was
carried out as a first-pass assessment of the tenor and distribution of
mineralization that has been left behind by these historic mining campaigns.
Consequently, it is presently unknown just how representative these grades may
be from a mining standpoint.

Significantly, the sampling came from 6 different stopes above
and below the 285 metre level over a total strike length of about 500 metres.
Grades from the various stopes were comparable. Five of these stopes

---

- 52 -

lie within 200 metres of the Valenciana shaft and there has
been only limited development below this level to the bottom of the shaft,
approximately 150 metres below. The sixth stope, number 1414, lies 400 metres
southeast of the shaft and has been partially developed between the 285 and 320
metre levels. There has been no development above this for at least 100 metres
and there does not appear to have been any work done below it at all, suggesting
that the mineralization is totally open to depth. Longitudinal sections of the
mine are available for viewing on the Company's website at www.greatpanther.com.

The Company is continuing to better determine the extent of
this mineralization or to quantify any potential volumes. The most important
issue in doing this is in evaluating the safety level of any procedure that
could be implemented to extract this material from the historic workings. Any
mining below these levels, however, would be in virgin rock and could be
developed using modern techniques and safety standards.

With these grades, this material would not need to be processed
at the on-site plant, but would be shipped directly to the smelter for
processing, thereby decreasing the production costs and increasing the net
value.

The Valenciana Mine has always been known for its high grades.
Mineralization was first discovered here by the Spanish in 1768, and the ore was
so rich that Valenciana quickly became the most productive silver mine in the
world in the second half of the 18th century (Elizabeth Emma Ferry, Cultural
Anthropology, 2002). Of the 3 operating shafts on Great Panther's property,
Valenciana is the deepest, at 500 metres, and limited diamond drilling in the
1980's suggest that the mineralization continues below this for at least another
200 metres.

The Company continued surface diamond drilling in 2007 and
intersected four new silver-gold zones and provided further definition on the
three previously known zones of silver-gold mineralization in the Promontorio
area. All zones are sub-parallel and occur within 70 metres of the main Veta
Madre. Having several zones within close proximity like this will significantly
lower their development costs and plans are already in preparation for the
exploitation of this area. The new mineralization lies between 70 and 150 metres
below surface and is accessible by ramp.

This portion of the 2007 drill program comprised 2,135.8 metres
in eleven holes (SG07-035 to SG07-045) and was focused on defining
mineralization in the Promontorio / Garrapata area - the southern most area of
exploitation in the Guanajuato Mine Complex. Previous results from this part of
the mine were announced on Dec. 12, 2006. Mineralization in this area is now
known to comprise at least seven parallel zones: the main Veta Madre, a
hangingwall zone (HW  above the Veta Madre) and five footwall zones (FW 
below the Veta Madre). The Veta Madre quartz breccia occurs at the fault contact
between hangingwall conglomerates and a footwall mix of metasediments,
metavolcanics, and intrusions. The hangingwall zones occur as quartz stockworks
in the conglomerates. The footwall zones have been divided into the FW #1a, #1b,
#1c, #2, and #3 zones and are associated with quartz stockworks and breccias.
The FW #1 and #2 zones are hosted within diorite and quartz-feldspar porphyry
intrusions, while the #3 zone occurs at the lower contact between the intrusions
and footwall metasediments.

The HW zone was cut by drill holes SG07-035 to 037, and 040 to
045 and displays a higher gold:silver ratio than other zones. Examples of this
include 21.2g/t gold and 52g/t silver over 0.88 metres in SG07-035; 11.1g/t gold
and 13g/t silver over 1.15 metres in SG07-036; 9.95g/t gold and 477g/t silver
over 1.05 metres in SG07-037; and 23.45g/t gold and 45g/t silver over 2.45
metres in SG07-043. The HW zone has been traced for more than 150 metres along
strike and up to 100 metres down dip.

The Veta Madre itself was intersected in all holes except SG07-041,
  which was lost in an old stope. Signs of former mining along the Veta Madre
  were noted in seven of the eleven holes in this program, however no signs of
  previous mining were observed in the FW zones. Parts of the Veta Madre have
  been left in place as evidenced by several mineralized intersections, including
  1.98g/t gold and 77g/t silver over 2.59 metres in SG07-038 and 2.39g/t gold
  and 202g/t silver over 3.55 metres in SG07-043. As such, an in situ and well
  mineralized portion of the the Veta Madre zone has been traced for more than
  150 metres along strike and up to 150 metres down dip.

---

- 53 -

The FW #1a zone was described in the last Promontorio news
release (Dec 12, 2006) as the footwall #1 zone in drill holes SG06-033 and 034.
The 2007 drilling has added to this with intersections in holes SG07-036 through
040, 042, 044, and 045. FW #1a is located 5-10 metres below the Veta Madre.
Noteable intersections include 18.28g/t gold and 104g/t silver over 2.16 metres
in SG07-036; 4.58g/t gold and 312g/t silver over 3.09 metres in SG07-037; and
2.02g/t gold and 265g/t silver over 3.60 metres in SG07-040. The FW #1a zone has
been traced for more than 100 metres along strike and up to 100 metre down dip.

The FW #1b zone is located only 5 metres below the FW #1a zone,
and was intersected in holes SG07-035, 036, 039, 040, and 042 to 045. Highlights
from this zone include 0.93g/t gold and 181g/t silver over 2.47 metres in
SG07-039 and 2.35g/t gold and 430g/t silver over 2.42 metres in SG07-040. To
date, the FW #1b zone has been traced for more than 50 metres along strike and
up to 75 metres down dip.

The FW #1c zone is located 5-10 metres below the FW #1b zone,
and was intersected in SG07-036, 039, 040, and 045. Noteable intersections
include 0.78g/t gold and 266g/t silver over 5.61 metres in SG07-036 and 1.26g/t
gold and 292g/t silver over 3.10 metres in SG07-040. This zone has been traced
for 50 metres along strike and up to 75 metres down dip.

A new footwall zone (designated FW zone #2) has been discovered
approximately 50 metres below the Veta Madre and was intersected in holes
SG07-035, 038, 039, 040, 042, and 045. This zone appears to be significantly
thicker than some of the others with intercepts such as 6.15 metres of 1.20g/t
gold and 206g/t silver in hole SG07-042 and 5.60 metres of 0.71g/t gold and
115g/t silver in SG07-045. The FW zone #2 has been outlined for more than 50
metres along strike and up to 50 metres down dip.

A second new discovery (designated FW zone #3) lies
approximately 70 metres below the Veta Madre and was intersected by holes
SG07-042 and 043a, approximately 25 metres apart. These holes returned 2.97g/t
gold and 175g/t silver over 1.10 metres and 1.55g/t gold and 194g/t silver over
2.31 metres, respectively.

There is no indication from drilling or a review of underground
survey maps that the footwall zones have been previously mined. Drill hole
spacing in this program was approximately 30 metres on average. At this spacing,
the mineralized zones are observed to vary in thickness, and grades are also
quite variable. Detailed drilling to further delineate and extend the zones will
be required and will be carried out from existing underground workings that are
now being re-habilitated.

The discovery of these new zones at Promontorio is significant,
not only because of the near term potential for development but also because
they imply that much of the footwall and hangingwall to the Veta Madre has been
largely unexplored and, therefore, undeveloped. With more than 4 kilometres of
strike length existing on the mine property, the potential for additional zones
to be found is excellent.

Highlights of Diamond Drilling:

DDH #
    From (m)
    To (m)
    Length (m)
    True Width (m)
    Au g/t
    Ag g/t
    ZoneSG07-035
      77.17
      79.50
      2.33
      1.49
      1.44
      27
      HW83.30
      84.18
      0.88
      0.56
      21.20
      52
      HW


---

- 54 -

DDH #
    From (m)
    To (m)
    Length (m)
    True Width (m)
    Au g/t
    Ag g/t
    Zone152.20
    156.20
    4.00
    2.56
    1.40
    83
    FW #2SG07-036
    102.25
    103.40
    1.15
    0.58
    11.10
    13
    HW118.08
    120.24
    2.16
    1.08
    18.28
    104
    FW #1a124.57
    126.37
    1.80
    0.90
    0.58
    161
    FW #1b134.40
    140.01
    5.61
    2.81
    0.78
    266
    FW #1cSG07-037
    58.85
    59.90
    1.05
    0.96
    9.95
    477
    HW65.10
    69.90
    4.80
    4.37
    0.56
    114
    Veta
      Madre76.86
    79.95
    3.09
    2.81
    4.58
    312
    FW #1aSG07-038
    68.11
    70.70
    2.59
    2.51
    1.98
    77
    Veta
      Madre71.75
    72.91
    1.16
    1.13
    1.91
    16
    FW #1aSG07-039
    91.80
    93.48
    1.68
    0.96
    0.55
    197
    FW #1a97.20
    99.67
    2.47
    1.41
    0.93
    181
    FW #1b110.00
    111.10
    1.10
    0.63
    1.04
    112
    FW #1c139.75
    144.91
    5.16
    2.94
    1.84
    62
    FW #2SG07-040
    55.15
    57.20
    6.33
    3.61
    1.61
    57
    HW76.95
    77.90
    0.95
    0.78
    3.29
    37
    Veta
      Madre83.40
    87.00
    3.60
    2.95
    2.02
    265
    FW #1a89.03
    91.45
    2.42
    1.98
    2.35
    430
    FW #1b93.75
    96.85
    3.10
    2.54
    1.26
    292
    FW #1cSG07-042
    112.40
    114.65
    2.25
    0.95
    0.74
    162
    Veta
      Madre122.72
    125.10
    2.38
    1.00
    0.41
    157
    FW #1a130.50
    133.00
    2.50
    1.05
    0.33
    154
    FW #1b158.80
    164.95
    6.15
    2.58
    1.20
    206
    FW #2182.60
    183.70
    1.10
    0.46
    2.97
    175
    FW #3SG07-043
    86.55
    89.00
    2.45
    1.23
    23.45
    45
    HW


---

- 55 -

DDH #
    From (m)
    To (m)
    Length (m)
    True Width (m)
    Au g/t
    Ag g/t
    Zone93.60
    95.85
    2.25
    1.13
    2.02
    21
    HW107.30
    108.23
    0.93
    0.47
    3.50
    60
    Veta
      Madre112.55
    116.10
    3.55
    1.78
    2.39
    202
    Veta
      Madre136.80
    139.00
    2.20
    1.10
    1.40
    14
    FW #1bSG07-043a
    189.30
    191.61
    2.31
    1.16
    1.55
    194
    FW #3SG07-044
    126.00
    127.60
    1.60
    1.13
    0.64
    189
    FW #1a131.73
    134.56
    2.83
    2.00
    1.21
    235
    FW #1bSG07-045
    106.61
    108.96
    2.35
    2.26
    0.87
    193
    FW #1b132.15
    137.75
    5.60
    5.38
    0.71
    115
    FW #2


In September 2007 a deep underground drilling program commenced
in the Guanajuato Mine. The program is designed to twin, then fill in between,
diamond drill holes completed in the 1980s and 1990s by the previous owners
that indicated the continuation of silver-gold mineralization for approximately
200 metres below the existing mine workings.

Intercepts reported from this historic drilling included 863
g/t Ag and 4.33 g/t Au over 3.30 metres, 347 g/t Ag and 1.69 g/t Au over 3.05
metres, 377 g/t Ag and 20.0 g/t Au over 0.40 metres and 141 g/t Ag and 7.4 g/t
Au over 0.60 metres. As both the drill core and drill logs for these holes are
incomplete and assay certificates were not kept at the time, the results cannot
be used for NI 43-101 purposes and cannot be relied upon. This has been one of
the major limiting factors in why the Company has not been able to produce a new
NI 43-101 compliant resource for the Guanajuato Mine. Similarly, most of Great
Panthers surface drilling cannot be used for this purpose due to the inability
of an independent engineer to validate the location of the boundaries of old
mine workings around the holes. This limits the ability to calculate volumes,
and therefore tonnages, of mineralized rock. New, deep holes will have no such
limitations and can then be used to calculate a new NI 43-101 compliant
resource.

Six drill stations have been prepared on the 345 level (345
metres below surface) just southeast of the Cata shaft. As several holes can be
drilled from each station, 30 core holes are currently planned, representing
7,000 metres. The full 4.2 kilometre strike length of the Guanajuato orebody is
open to depth and previous drilling indicates significant potential to expand
the mine below the existing workings. As additional drill stations have yet to
be prepared elsewhere in the mine, it is anticipated that this will be an
ongoing program and the Company hopes to add a second drill once the underground
infrastructure is in place to support it.

In addition, the final holes of the 2007 surface program
expanded the previously discovered mineralization in the Promontorio area with
intercepts such as 12.5 metres of 3.79 g/t gold and 71 g/t silver plus 4.41
metres of 6.26 g/t gold and 256 g/t silver in SG07-065, as well as intersecting
new extensions of historic zones near the Cata plant such as 7.10 metres of 1.10
g/t gold and 155 g/t silver in hole SG07-54.

This portion of the 2007 drill program comprised 5,274 metres
in twenty-three holes (SG07-046 to SG07-068) and tested the near surface parts
of the Veta Madre system near the Tepeyac Shaft (south of the

---

- 56 -

historic Valenciana workings), the Maravillas Shaft (north of
the historic Cata workings) and additional drilling in the Promontorio Shaft
area following up on the recent discovery of new mineralized zones in that area.
A final tally of 7,408 metres of surface drilling has been completed in 2007 at
Guanajuato in 34 holes.

While previous drilling in the Promontorio area showed that
mineralization here comprises at least seven parallel zones - the main Veta
Madre, a hangingwall zone (HW  above the Veta Madre) and five footwall zones
(FW  below the Veta Madre)  the follow up drilling has indicated that some
of these zones locally appear to coalesce into one large zone, or clavo. This
is best displayed in the aforementioned hole SG07-65 where sampling above and
below an old stope on the Veta Madre returned 3.79 g/t gold and 71 g/t silver
over 12.5 metres plus 6.26 g/t gold and 256 g/t silver over 4.41 metres,
respectively immediately adjacent to the stope. As this hole was drilled
somewhat obliquely to the orientation of the vein, the true width of the zone,
including the mined out portion appears to be 9.79 metres. Other significant
parts of the Veta Madre have been left in place as evidenced by the intersection
of 2.25 g/t gold and 96 g/t silver over 5.75 metres in SG07-064.

Also following up on the last round of Promontorio drilling,
additional assays were received from several of the previously drilled holes in
this area and some of the mineralized zones were widened in the process. The
best example of this is hole SG07-43 where 11.20 metres grading 2.83 g/t gold
and 47 g/t silver was sampled adjacent to an old stope on the Veta Madre. The
footwall side of the same stope assayed 2.39 g/t gold and 202 g/t silver over
3.55 metres (previously reported). As such, the true width of this zone,
including the mined out portion, appears to be 9.54 metres, consistent with the
9.79 metre width observed in hole 65.

The HW zone at Promontorio was expanded southward in this
program, and highlighted with intersections of 0.77 g/t gold and 216 g/t silver
over 2.2 metres in SG07-059 and 2.14 g/t gold and 152 g/t silver over 8.34
metres in SG07-063. The FW zones were not significantly expanded in this
program, however, and may be a local feature, possibly related to a dilational
part of the Veta Madre structure. Additional intersections can be found in the
table below.

Drill holes SG07-053 to 058, inclusive, tested the area close
to the old Maravillas Shaft, just north of the plant at Cata. Results here were
highlighted by the aforementioned 7.10 metres of 1.10 g/t gold and 155 g/t
silver in hole SG07-54, while holes 53 and 55 returned similar grades over
narrower intervals. The Tepeyac area did not return any significant results.

Highlights of Diamond Drilling:

TrueFrom
      
      Length
      Width
      Au
      AgDDH #
      (m)
      To
        (m)
      (m)
      (m)
      (g/t)
      (g/t)
      ZonePROMONTORIO
        ADDITIONAL ASSAYSSG07-039
      78.90
      81.30
      2.40
      1.37
      2.55
      17
      HWSG07-042
      135.15
      144.00
      8.85
      3.72
      1.10
      144
      FW #1cand
      150.25
      154.35
      4.10
      1.72
      1.09
      159
      FW #1d?


---

- 57 -

**True**From
      
      Length
      Width
      Au
      AgDDH #
      (m)
      To (m)
      (m)
      (m)
      (g/t)
      (g/t)
      ZoneVeta Madre (HW part ofSG07-043
      97.03
      108.23
      11.20
      5.60
      2.83
      47
      old stope)and
      108.23
      112.55
      4.32
      2.16
      
      
      OLD STOPEVeta Madre (FW part ofold stope); previouslyand
      112.55
      116.10
      3.55
      1.78
      2.39
      202
      reportedSG07-043a
      190.05
      192.30
      2.25
      1.12
      1.56
      195
      F.W. #3SG07-045
      98.59
      99.79
      1.20
      1.15
      0.57
      174
      FW #1b (reinterpreted)PROMONTORIO
        NEWDRILLINGSG07-059
      83.91
      85.00
      1.09
      0.93
      1.72
      28
      HWand
      111.50
      113.72
      2.22
      1.89
      0.77
      216
      HWand
      181.70
      182.78
      1.08
      0.92
      2.53
      37
      FW 2SG07-060
      194.05
      196.28
      2.23
      1.11
      2.18
      91
      HWand
      206.05
      207.50
      1.45
      0.72
      3.25
      33
      HWand
      210.83
      212.00
      1.17
      0.58
      2.41
      118
      Veta MadreSG07-061
      133.50
      134.65
      1.15
      1.09
      0.99
      162
      HWSG07-062
      155.25
      156.80
      1.55
      1.47
      3.34
      72
      Veta MadreSG07-063
      118.25
      122.80
      4.55
      3.19
      1.92
      69
      HWand
      132.10
      140.44
      8.34
      5.84
      2.14
      152
      HW


---

- 58 -

|                                        |        |        |        | True  |       |       |           
|--------------------------------------- | ------ | ------ | ------ | ----- | ----- | ----- | ----------
|                                        | From   |        | Length | Width | Au    | Ag    |           
|DDH #                                   | (m)    | To (m) | (m)    | (m)   | (g/t) | (g/t) | Zone      
|                                        |        |        |        |       |       |       |           
|SG07-064                                | 46.15  | 46.72  | 0.57   | 0.29  | 2.14  | 341   | HW        
|and                                     | 164.40 | 170.15 | 5.75   | 2.88  | 2.25  | 96    | Veta Madre
|including                               | 165.55 | 168.80 | 3.25   | 1.63  | 3.58  | 156   | Veta Madre
|                                        |        |        |        |       |       |       |           
|SG07-065                                | 187.20 | 199.70 | 12.50  | 6.25  | 3.79  | 71    | Veta Madre
|and                                     | 199.70 | 202.35 | 2.65   | 1.33  |       |       | OLD STOPE 
|and                                     | 202.35 | 206.76 | 4.41   | 2.21  | 6.26  | 256   | Veta Madre
|                                        |        |        |        |       |       |       |           
|SG07-066                                | 239.35 | 240.55 | 1.20   | 0.60  | 4.54  | 16    | Veta Madre
|                                        |        |        |        |       |       |       |           
|GARRAPATA
      SHAFT AREA (PROMONTORIO |        |        |        |       |      
|NORTH)                                  |        |        |        |       |       |       |           
|SG07-067                                | 328.70 | 331.64 | 2.94   | 2.06  | 1.89  | 561   | Veta Madre
|                                        |        |        |        |       |       |       |           
|MARAVILLAS
      SHAFT AREA             |        |        |        |       |      
|SG07-053                                | 94.07  | 94.70  | 0.63   | 0.63  | 1.26  | 115   | Veta Madre
|                                        |        |        |        |       |       |       |           
|SG07-054                                | 96.45  | 103.55 | 7.10   | 6.74  | 1.10  | 155   | Veta Madre
|including                               | 96.45  | 99.90  | 3.45   | 3.28  | 2.03  | 261   |           
|                                        |        |        |        |       |       |       |           
|SG07-055                                | 94.80  | 97.40  | 2.60   | 2.21  | 1.47  | 155   | Veta Madre

All of the mineralization intersected in the 2007 surface
program lies between 70 and 160 metres vertically below surface. The Promontorio
Zones represent approximately 150 metres of strike length and 200 metres of
down-dip extension. They are accessible by ramp and existing underground
workings are currently being re-habilitated. As soon as possible, detailed
drilling to define and further extend the

---

- 59 -

Promontorio area mineralization will be carried out from
underground. Mineralization in the Maravillas area will be assessed by the mine
staff to determine how best to develop this area.

In November, 2007 the new underground development and deep
diamond drilling at the Company's wholly-owned Guanajuato Mine in Guanajuato,
Mexico confirmed the depth extension of high grade gold and silver
mineralization. New underground development on the 430 metre level, 13 metres
below the old workings just southeast of the Cata Shaft, has cut the extension
of a zone known as the Cata Clavo, while the first hole of the deep
underground drilling program has intersected two silica breccia zones,
approximately 13 metres apart, beginning at the 460 metre level.

The Cata ramp, which starts on the 345 level, has been extended
from the 417 level (deepest previous workings) down to the 430 level to
investigate the down-dip continuity of the Cata Clavo, and drifts and cross-cuts
have been started on that level to sample the mineralization. Channel sampling
(16 samples) of the advancing face of a central drift (#430-690 drift), driven
parallel to the strike of the lower zone returned 0.63 g/t gold and 202 g/t
silver over an average width of 3.63 metres and strike length of 38.3 metres. At
the same time, a small cross-cut, driven perpendicular to the strike of the
lower zone in the footwall direction, encountered continuous and higher grade
mineralization that has been sampled on both walls (15 samples) over a length of
10.30 metres and averaged 8.16 g/t gold and 2,017 g/t silver. (Gold and silver
assays are uncut and, due to the high values, some samples have been sent for
re-assay, the results of which are pending). Adding this to the mineralization
in the drift gives a minimum horizontal width of approximately 14 metres to the
zone, which is still open in all directions. A plan map of the sampling can be
found on the Company website at www.greatpanther.com.

The first hole of the deep underground program, EUG07-001, was
drilled to test an area below the 417 level in the Cata Clavo, with the upper
zone being 40 metres, and the lower zone 65 metres vertically below the 417
level, respectively. The upper zone is developed along the lower contact of a
diorite intrusion and host sediments, while the lower zone is hosted entirely
within the sediments. The zones consist of silicification, brecciation, and
quartz vein flooding approximately 10-20 metres in thickness with bands of
pyrite and argentite.

The Upper Zone returned 3.63 metres of 1.01 g/t gold and 279
g/t silver, including a core of 0.55 metres assaying 4.47 g/t gold and 1,250 g/t
silver, while the Lower Zone returned 3.24 metres of 1.91 g/t gold and 609 g/t
silver, including 1.25 metres of 2.97 g/t gold and 1,010 g/t silver. This
compares favourably with historic hole 291, drilled in the late 1980s by the
previous owner of the mine, which reported only the lower zone of 3.65 metres of
3.92 g/t gold and 781 g/t silver. A drill section and longitudinal map are also
posted on the Company web-site.

As the data from the historic drilling cannot be verified for
NI 43-101 purposes, the Company can only use it as a guide in re-drilling this
highly prospective area. As such, it is significant that there appears to be
such a good correlation between the old intersection and the new drilling.
Historic drill data indicates that the silver-gold mineralization in this area
extends for at least 150 metres below the existing workings and over a strike
length of approximately 300 metres.

The deep drilling at the Guanajuato Mine is testing the area
between the 400 and 650 metre levels (dip length of 350 metres) along a strike
length of 1,000 metres between and below the Cata and Rayas shafts. This
drilling will be conducted under the historically high grade Cata and Rayas
Clavos, which contained strong gold-silver mineralization down to the 417
metre and 450 metre levels, respectively. This ongoing program, now budgeted at
16,000 metres in 68 holes, is expected to be completed in the 3rd
quarter 2008. Mining development on the 430 metre level of the Cata Clavo is
continuing and the ramp will be extended to lower levels of the Cata Mine
area.

Details of drill hole intersections:

---

- 60 -

Hole #
    From metres
    To metres
    Width metres
    True Width metres
    Gold g/t
    Silver g/t
    ZoneEUG07-001
    132.83
    136.46
    3.63
    3.29
    1.01
    279
    Upperincluding
    135.15
    135.70
    0.55
    0.50
    4.47
    1,250156.16
    159.40
    3.24
    2.94
    1.91
    609
    Lowerincluding
    158.15
    159.40
    1.25
    1.13
    2.97
    1,010


Further deep diamond drilling results from core drill-holes
EUG07-002 to 007 confirmed the extension of high grade gold and silver
mineralization to a depth of approximately 600 metres. This is 170 metres below
the current lowest workings and highlights the potential for a major
continuation of this world class orebody. Given the historical production of
approximately one billion ounces of silver from the upper 400 metres of this
deposit, the possibility of extending it by at least another 50% has major
implications.

These six holes, plus the first hole reported in November 2007,
were all drilled from the same underground drill site on the 345 level. They
tested the down dip continuity, as well as the northwestern limit of the steeply
southeast plunging Cata Clavo high grade ore shoot. Seven sub parallel zones of
economic grade have been intersected in the drilling, and are named the Hanging
Wall 1 (HW 1), Contact, Madre 1 through 4, and Footwall 1 (FW 1). The hanging
wall rocks are intrusive diorite in contact with footwall argillites. The
contact zone is located close to the diorite-argillite contact while the Madre
1-4 and FW-1 zones are within the argillite. All zones contain pyrite and
argentite (silver sulphide), and are hosted within a package of intense
silicification, brecciation, and quartz vein flooding up to 60 metres in
thickness. The zones vary in thickness and grade from hole to hole but most are
present in every hole.

The shallowest holes (EUG07-004 and 005) intersected the
mineralized zones immediately under the 417 level, while EUG07-001, 006 and 007
tested the zones 60-70 metres down dip of the 417 level, and EUG07-002 tested
the zones 200 metres down dip (~600 level). Hole EU07-003 was stopped prior to
reaching the mineralized zones due to a temporary change in priorities but will
be completed at a later date. The 417 level was the deepest level of previous
mine workings, while current mining on the 430 level is the deepest exploitation
in this part of the Guanajuato Mine Complex.

Hole EUG07-004 intersected 683g/t silver and 3.12g/t gold over
1.96 metres in the Contact zone, 1,033g/t silver and 2.88g/t gold over 1.47
metres in the Madre 1 zone and 329g/t silver and 0.92g/t gold over 8.38 metres
in a composite of the Madre 2, 3, and 4 zones. At the same elevation, but
further northwest, EUG07-005 intersected 1,810g/t silver and 20.6g/t gold over
0.26 metres in the Contact zone, and 203g/t silver and 0.82g/t gold over 5.05
metres in the Madre 2 zone.

The intermediate depth holes include EUG07-001 which was
previously reported (November 29, 2007) as containing an Upper Zone (now
interpreted as the Contact Zone) of 279 g/t silver and 1.01 g/t gold over 3.63
metres, including a core of 0.55 metres assaying 1,250 g/t silver and 4.47 g/t
gold, and a Lower (Madre 2) Zone that returned 609 g/t silver and 1.91 g/t gold
over 3.24 metres, including 1.25 metres of 1,010 g/t silver and 2.97 g/t gold.
EUG07-001 was drilled to test an area below the 417 level in the Cata Clavo,
with the upper zone being 40 metres, and the lower zone 65 metres vertically
below the 417 level, respectively. EUG07-007 was drilled to the northwest and
intersected 1.56 metres grading 324g/t silver and 1.2g/t gold in the Madre 1
zone and 1.74 metres grading 165g/t silver and 0.5g/t gold in the Madre 2 zone.
EUG07-006 drilled farther to the northwest intersected the various zones but
with low grades, and likely reflects the northwest limits of the Cata Clavo ore
shoot. Drilling is continuing to the southeast.

---

- 61 -

The deepest hole in this series is EUG07-002, which intersected
all seven zones near the interpreted northwestern edge of the Cata Clavo
oreshoot, and was highlighted by a one metre intersection grading 5,773g/t
silver and 15.45g/t gold in the HW 1 zone. This intersection lies at an
approximate depth of 600 metres, 170 metres vertically below the current mine
workings and 240 metres down-dip. This opens up a very large area at depth for
resource development and exploitation.

The validation of the widely spaced and poorly sampled
historical drill holes is important in that 1) those holes indicated a strike
length of approximately 300 metres for the Cata mineralization, 2) similar
results were obtained below the Rayas and Valenciana Mine and 3) most of the 4.2
kilometre strike length of the Great Panther property has not been explored to
depth.

---

- 62 -

Highlights of drill hole intersections:

|Hole #     | From       | To     | Width | True  | Silver | Gold  | Zone     
|---------- | ---------- | ------ | ----- | ----- | ------ | ----- | ---------
|           |            |        |       | Width | g/t    | g/t   |          
|           | (m)        | (m)    | (m)   | (m)   |        |       |          
|EUG07-     |            |        |       |       |        |       | Contact  
|001*       | 132.83     | 136.46 | 3.63  | 3.29  | 279    | 1.01  |          
|including* | 135.15     | 135.70 | 0.55  | 0.50  | 1,250  | 4.47  |          
|           | 156.16     | 159.40 | 3.24  | 2.94  | 609    | 1.91  | Madre 2  
|including* | 158.15     | 159.40 | 1.25  | 1.13  | 1,010  | 2.97  |          
|           |            |        |       |       |        |       |          
|EUG07-002  | 190.77     | 191.77 | 1.00  | 0.57  | 5,773  | 15.45 | HW 1     
|           |            |        |       |       |        |       |          
|EUG07-003  | incomplete |        |       |       |        |       |          
|           |            |        |       |       |        |       |          
|EUG07-004  | 106.86     | 108.82 | 1.96  | 1.96  | 683    | 3.12  | Contact  
|           | 121.96     | 122.66 | 0.70  | 0.70  | 1,168  | 5.12  | Madre 1  
|           | 135.28     | 143.66 | 8.38  | 8.38  | 329    | 0.92  | Composite
|including  | 135.28     | 136.75 | 1.47  | 1.47  | 1,033  | 2.88  | Madre 2  
|and        | 138.46     | 140.17 | 1.71  | 1.71  | 179    | 0.51  | Madre 3  
|and        | 142.46     | 143.66 | 1.20  | 1.20  | 622    | 1.52  | Madre 4  
|           |            |        |       |       |        |       |          
|EUG07-005  | 102.32     | 102.58 | 0.26  | 0.24  | 145    | 0.37  | HW 1     
|           | 109.00     | 109.26 | 0.26  | 0.24  | 1,810  | 20.60 | Contact  
|           | 117.75     | 118.23 | 0.48  | 0.45  | 485    | 1.93  | Madre 1  
|           | 126.03     | 131.10 | 5.07  | 4.77  | 203    | 0.82  | Madre 2  
|including  | 126.03     | 127.75 | 1.72  | 1.62  | 324    | 1.16  | Madre 2  
|EUG07-006  | 188.78     | 189.13 | 0.35  | 0.27  | 421    | 0.18  | FW 1     

---

- 63 -

Hole #
      From
      To
      Width
      True
      Silver
      Gold
      ZoneWidth
      g/t
      g/t(m)
      (m)
      (m)
      (m)EUG07-007
      105.72
      105.92
      0.20
      0.17
      210
      1.17
      HW 1EUG07-007
      141.24
      142.80
      1.56
      1.36
      324
      1.20
      Madre 1EUG07-007
      148.76
      150.50
      1.74
      1.51
      165
      0.50
      Madre 2EUG07-007
      191.01
      191.60
      0.59
      0.51
      134
      0.46
      FW 1


*previously reported.

Drill-holes EUG07-008 to 012 were all collared 50 metres
southeast of holes EUG07-001 to 007 on the 345 level cross cut to test the down
dip and strike continuity of the Cata Clavo. All drill holes intersected
significant mineralization in multiple zones with some demonstrating excellent
widths and others, excellent grades.

Hole EUG07-008 intersected 1.7 metres grading 395g/t silver and
2.13g/t gold in the HW1 zone but had to be abandoned prematurely due to
technical reasons. Significant widths of mineralization were intersected in the
Veta Madre zone in holes EUG07-009 and EUG07-010, while in EUG08-011 the Veta
Madre consisted of several mineralized splays. EUG07-009 intersected 7.36 metres
grading 135g/t silver and 0.47g/t gold, while EUG07-010 intersected 10.82 metres
grading 174g/t silver and 0.75g/t gold (including 3.52 metres grading 362g/t
silver and 1.58g/t gold) in the Veta Madre zone. Holes EUG07-008 to 010 were
drilled to intersect the mineralized zones just below the existing workings on
the 430 metre level in order to guide mine development in this area. EUG08-011,
drilled below the previous three, intersected 0.33 metres grading 4,280g/t
silver and 13.1g/t gold and 1.03 metres grading 176g/t silver and 6.01g/t gold
in Veta Madre 1 and 2, respectively.

The HW1 zone was further tested to a vertical depth of 500
metres, in EUG08-012, with three intersections, the best of which returned 1.42
metres grading 1,482g/t silver and 5.14g/t gold. This interval matches well with
the high grade intersection located 50 metres to the northwest and down dip in
previously reported (Feb. 26, 2008) EUG07-002 which intersected 1.0 metre
grading 5,773g/t silver and 15.45g/t gold in the HW1 zone. Highlights are
detailed in the table below and maps and sections can be viewed on the Companys
website at www.greatpanther.com.

Holes EUG08-013 to 016 were also drilled from this second station
  and assays are being compiled. Drilling is now continuing from the third of
  six underground stations, located another 50 metres to the southeast of the
  second site. To date, every hole in the deep drilling at Cata has intersected
  good mineralization and the program is confirming wide spaced historic drill
  data that indicated the extension of silver-gold mineralization in this area
  for at least 150 metres below the existing workings and over a strike length
  of approximately 300 metres. Seven sub-parallel zones of economic note have
  now been identified within a system of intense silicification, brecciation,
  and quartz vein flooding up to 60 metres in thickness.

---

- 64 -

Highlights of drill hole intersections:

Hole #
    From
    To
    Width
    True
    Silver
    Gold
    ZoneWidth(m)
    (m)
    (m)
    (m)
    (g/t)
    (g/t)EUG07-
    90.05
    91.75
    1.70
    1.70
    395
    2.13
    HW 1008EUG07-
    145.47
    152.83
    7.36
    7.36
    135
    0.47
    V.
      Madre009EUG07-
    88.98
    89.58
    0.60
    0.60
    300
    0.95
    HW 1010144.80
    155.62
    10.82
    10.82
    174
    0.75
    V.
      Madreincluding
    144.80
    148.32
    3.52
    3.52
    362
    1.58
    V. MadreEUG08-
    134.96
    143.50
    8.54
    7.69
    89
    1.43
    Contact011145.38
    145.71
    0.33
    0.30
    4,280
    13.10
    V.
      Madre 1148.29
    149.32
    1.03
    0.93
    176
    6.01
    V. Madre 2EUG08-
    140.22
    141.64
    1.42
    0.99
    1,482
    5.14
    HW 1012145.38
    147.13
    1.75
    1.23
    315
    1.44
    HW 1156.96
    162.54
    5.58
    3.91
    213
    0.63
    HW 1


---

- 65 -

3. Mapimi Project

a. Acquisition

On September 11, 2006, the Company signed an option agreement
to purchase 100% of the ownership rights to seventeen mining concessions
collectively known as the Mapimi Project (formerly Km 66) in eastern Durango
State, Mexico. In consideration for the right and purchase option the Company
must make staged payments totaling US$3,000,000 (US$100,000 paid) and issue
500,000 common shares (200,000 shares issued) over a four year period. The
vendors retain a 3% NSR of which, each 0.5% up to a maximum of 2% can be
purchased by the Company for US$500,000.

The Concessions are valid for 50 years from the time of grant
and most are valid until 2053.

b. Location and Accessibility

The Property is situated in the northern plateau region of
Durango State. It is located approximately 66 kilometres west of the town of
Bermejillo and 100 kilometres north-west from the city of Torreon and San Pedro
de las Colonias, in Coahuila State. The property is easily accessible and the
infrastructure is considered excellent, since the property is bisected by paved
highway approximately 100 kilometres from Peñoles smelter at Torreon.

Airports are situated in the city of Torreon as well as the
city of Durango. Both airports have scheduled daily flights to and from Mexico
City, Mazatlan, Monterrey and Houston, Texas.

The municipality of Mapimi is on an electrical power grid and
has telephone services provided by TelMex. Water and drainage systems are also
present.

c. History

In 1995, Minera Apolo, S.A. de C.V. (Apolo) acquired the
property and optioned the property to Coeur dAlene Mines Inc. in late 1996.
Between 1997 and 1998, Coeur DAlene carried out regional and geological mapping
in some areas of the property. They completed a total of 397 metres of
trenching, a gravity survey, 81 reverse circulation drill holes, 22 diamond
drill holes and 422 surface channel samples.

d. Mineralization

Mineralization at Mapimi includes lead, zinc, and silver
minerals with lesser amounts of gold and copper minerals. The mineralization at
Mapimi is associated with hydrothermal breccias and stockworks related to a
cluster of rhyolite domes, and shows a strong similarity to the historic Real de
Angeles District in Zacatecas State, Mexico. An upper, oxidized portion
(~40-60m) of the mineralization at Mapimi consists of jarosite and hematite;
with sulphides consisting of pyrite, silver sulfosalts, sphalerite and galena at
depth.

The breccias have a general orientation of N40E, and a steep
northwest dip. The largest breccia to date has known dimensions of 250 by 45
meters but is open in all directions. More than 20 breccia bodies have been
identified in 5 main sectors. The focus during the late 1990's was on the
Carmen, La Gloria, and Palmitas sector breccias, with no drilling done on the
others. As the topography of the area is very subdued, other breccias may well
have been overlooked and the extensive property contains excellent potential for
additional mineralization.

e. Mineral Resource and Reserve Estimate

During 2006, the Company commissioned Wardrop Engineering
(Wardrop) of Vancouver, B.C. to prepare a NI 43-101 compliant resource
estimate for the property. The independently produced report

---

- 66 -

estimated that the Palmitas and Gloria Zones together contain
an Inferred Mineral Resource of 4,969,800 tonnes at a grade of 59 g/t Ag, 0.13
g/t Au, 0.81% Pb and 1.31% Zn. Wardrop calculated that these grades equate to a
silver equivalent grade of 139 g/t using commodity prices (based upon 3 year
averages) of US$7.70/oz for silver, US$471/oz for gold, US$0.41/lb for lead and
US$0.69/lb for zinc and recoveries of 76%, 70%, 80% and 80%, respectively. This
resource equates to a total of 22.3 million ounces of silver equivalent.

The resource estimate was based upon a comprehensive
exploration program completed on the property by Coeur d'Alene Mines during 1997
and 1998, wherein they drilled 81 reverse circulation holes (7,515 metres &
3,614 samples) and 22 diamond drill holes (2,983 metres & 900 samples). The
geological database also includes 422 surface channel samples. Coeur d'Alene
dropped the property in 1998. The resource includes 2,643,600 tonnes of oxide
material at a grade of 51 g/t Ag, 0.11 g/t Au, 0.73% Pb and 0.98% Zn for a
silver equivalent grade of 113 g/t and 2,326,200 tonnes of sulphide
mineralization at a grade of 68 g/t Ag, 0.16 g/t Au, 0.90% Pb and 1.69% Zn for a
silver equivalent grade of 169 g/t. As the grade of sulphide mineralization is
50% higher than the 40-60 metre-thick oxide zone, the Company expects the
overall grade of the resource to increase over time as the deposit is extended
to depth.

In March, 2008 Wardrop delivered an updated NI 43-101 compliant
mineral resource estimate for the La Gloria / Las Palmitas Zones on the
Companys Mapimi Project in northeastern Durango State, Mexico. The new estimate
effectively upgraded the previous resource of 22.3 million silver equivalent
ounces (Ag Eq Oz) from the Inferred to the Indicated category and added an
additional 6.3 million Ag Eq Oz in the Inferred category for a global resource
of 28.6 million recoverable Ag Eq Oz.

The new estimate includes the twenty-nine core holes,
representing 6,298 metres, completed during Great Panthers Phase I drilling
program in the first half of 2007(see below in Exploration). This program
consisted mostly of fill-in holes focused on the La Gloria Zone and adjacent Las
Palmitas Zone in an effort to confirm, expand, and better delineate the previous
Inferred Mineral Resource of 4,969,800 tonnes at a grade of 59g/t Ag, 0.13g/t
Au, 0.81% Pb and 1.31% Zn estimated in 2006 by Wardrop from reverse circulation
and core drilling of Coeur dAlene Mines Corp., completed in 1997-98 (GPR news
release, September 18, 2006).

The 2007 Phase I drilling at Mapimi has increased the
confidence level of the resource, resulting in a new Indicated Mineral Resource
estimated at 6,585,900 tonnes grading 28g/t silver, 0.09g/t gold, 0.41% lead and
1.14% Zn and an Inferred Mineral Resource at 2,027,900 tonnes grading 34g/t
silver, 0.13g/t gold, 0.54% lead and 0.81% zinc. A breakdown of the resources by
zone, type (oxide or sulphide) and category can be found in the tables below.
The final report itself will be posted on the Companys website and on SEDAR
once it is received from Wardrop (anticipated by early April).

In the new resource estimate, Wardrop has used different
parameters than in 2006, such that the new estimate is considered to be more
robust. In keeping with the previously reported resource estimate, Wardrop has
applied a cut-off grade of 50g/t silver equivalent (Ag Eq). Metal prices and
recoveries used were US$9.55/oz and 76%, respectively, for silver, US$530/oz and
70% for gold, US$0.63/lb and 80% for lead and US$1.00/lb and 80% for zinc.
Statistically higher grade samples were also removed by capping the assay data
at 150g/t for silver, 3.0g/t for gold, and 4.5% for each of lead and zinc.
Wardrop used Ordinary Kriging and Inverse Distance Squared to estimate the
resource, with blocks of 5m X 5m X 5m being used for the three-dimensional
model. Metallurgical recoveries used are the same as for the 2006 resource
estimate, which were based upon tests conducted by Silver Standard Resources
Inc. in 1999 as part of a property review.

The new resource represents a total of 22,297,800 Ag Eq Oz in
  the Indicated category and 6,305,000 in the Inferred category. The uncapped
  resource would represent a total of 23,661,200 Ag Eq Oz in the Indicated category
  and 6,714,200 in the Inferred category. With the benefit of the added drill
  holes, Wardrop has reinterpreted the geological model of the mineralized zones
  and, while this has increased the confidence level, it has placed greater physical
  constraints on the model and, in particular, reduced the interpreted size of
  the Las Palmitas Zone.

---

- 67 -

The delay in releasing the updated resource estimate was due to
the fact that, as part of the review process, it was found that while Great
Panthers Phase I drilling compared favourably with the reverse circulation (RC)
drilling completed by Coeur dAlene, the latters diamond drilling returned
significantly higher silver and lead grades. This apparent inconsistency
necessitated the re-assaying of some of the Coeur dAlene drill core and a
thorough check of all databases, statistics, calculations and interpretations.
The Company is now satisfied that all assays are valid and that the difference
in assay levels between drilling programs is due to the fact that the Coeur
dAlene diamond drill holes were mostly drilled into what is now interpreted as
a higher grade core of the mineralized zone, while their RC holes and Great
Panthers diamond drill holes were mostly drilled outside of this core, on a
more systematic basis.

The effect of the higher commodity prices used in the current
resource estimate compared to those used in 2006 is that lower grade material
now becomes potentially economic, which thereby lowers the average grade of the
resource while increasing the tonnage. Thus, the new resource represents an
increase in tonnage of approximately 73% while the average grade of the
Indicated and Inferred Resources is now 105g/t Ag Eq and 97g/t Ag Eq,
respectively, compared to 139g/t Ag Eq in the 2006 resource. As such, the
estimated recoverable ounces of silver equivalent have increased by
approximately 28%.

Table 1: Resource Grades (Capped)

ROCK GROUP
    GRADE GROUP
    Density
      tonnes/m3
    Tonnage
    Au g/t
    Ag g/t
    Pb %
    Zn %
    Ag Eq g/tOXIDE
    INDICATED
    2.48
    4,272,400
    0.09
    32
    0.46
    0.95
    99INFERRED
    2.48
    927,000
    0.08
    32
    0.50
    0.80
    91SULFIDE
    INDICATED
    2.66
    2,313,400
    0.11
    22
    0.30
    1.50
    118INFERRED
    2.66
    1,100,900
    0.16
    36
    0.57
    0.83
    101TOTAL INDICATED
    
    
    6,585,900
    0.09
    28
    0.41
    1.14
    105TOTAL INFERRED
    
    
    2,027,900
    0.13
    34
    0.54
    0.81
    97


---

- 68 -

Table 2: Contained Metal and Recoverable Ag Eq

ROCK GROUP
    GRADE GROUP
    Tonnage
    Au oz
    Ag oz
    Pb Lbs
    Zn lbs
    Ag Eq grams
    Ag Eq ouncesOXIDE
    INDICATED
    4,272,400
    12,036
    4,349,036
    43,260,764
    89,815,540
    420,944,817
    13,535,203INFERRED
    927,000
    2,440
    967,315
    10,269,078
    16,257,856
    84,707,530
    2,723,715SULFIDE
    INDICATED
    2,313,400
    7,794
    1,652,527
    15,542,659
    76,382,524
    272,518,009
    8,762,637INFERRED
    1,100,900
    5,690
    1,266,355
    13,839,819
    20,063,455
    111,378,052
    3,581,288TOTAL INDICATED
    
    6,585,900
    19,831
    6,001,563
    58,803,423
    166,198,064
    693,462,827
    22,297,840TOTAL INFERRED
    
    2,027,900
    8,130
    2,233,670
    24,108,898
    36,321,311
    196,085,582
    6,305,003


Great Panthers 2007 Phase I drilling determined that the La
Gloria and Las Palmitas Zones are structurally complex and fault-bounded on all
sides, including to depth where a shallow dipping fault system appears to cut
off the mineralization at depths of 100-200 metres. The La Gloria resource
represents approximately 360 metres of strike length with widths of up to 150
metres and may still be open to the southwest. Las Palmitas extends for
approximately 200 metres of strike length and is up to 50 metres wide. The width
of both zones is greater near surface and appears to pinch at depth, a shape
that lends itself well to open pit mining. The level of oxidation lies at 60 to
80 metres below surface.

The work to date on La Gloria and Las Palmitas has resulted in
a well-defined resource that can now be modeled for extraction by open pit
mining methods. An in-house scoping study has been initiated that will examine
basic issues such as permitting, metallurgy, transportation, mining, milling and
construction costs, etc. While this will lay the groundwork for later
feasibility studies, it is still the Companys objective to increase the size of
the overall project resource by drilling targets outside of La Gloria/Las
Palmitas. The Mapimi Project comprises approximately 15,000 hectares, much of
which is still unexplored.

We advise U.S. investors that while these terms Resource
Estimate and Inferred Mineral Resource are recognized and required under
Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize them. U.S. investors are cautioned not to assume that any part of all
of the mineral deposits in this category will ever be converted into reserves.

f. Exploration

Mapimi is viewed as an advanced stage exploration project that
could be developed quickly with the goal of defining a new resource amenable to
open pit mining, thereby significantly enhancing Great Panther's growing
portfolio of silver projects. A first phase exploration program was implemented
in late 2006 and consisted of an airborne geophysical survey and ground induced
polarization geophysical survey follow-up; detailed geological mapping and
re-sampling of outcrops, adits and trenches; followed by a 6,000 meter core
drilling program focused on confirming previous Coeur dAlene drilling results
in the Palmitas and La Gloria zones.

Highlights of the first 11 core holes (2,395 metres) Great Panthers
  2007 drilling program include 155 g/t Ag Eq over 46.75 metres (including 262
  g/t Ag Eq over 16.00 metres and 208 g/t Ag Eq over 3.30 metres) in hole SK07-04
  in the La Gloria Zone and 173 g/t Ag Eq over 62.40 metres in hole SK07-09, also
  in La Gloria. Drilling on the Las Palmitas Zone was highlighted by 147 g/t Ag
  Eq over 16.95 metres in hole SK07-01.

---

- 69 -

Additional details of the intersections, including individual
  assays for silver, gold, lead and zinc are presented in the table of results
  below. A plan map of the Las Palmitas and La Gloria Zones with drill hole locations
  is posted on the Great Panther website at www.greatpanther.com.

Multiple mineralized intervals have been detected within each
of La Gloria and Las Palmitas. They appear to be steeply dipping and elongated
northeast-southwest so holes are typically drilled at angles of 45-60 degrees.
While the mineralization starts at surface, it has been intersected to vertical
depths approaching 200 metres. To date, the holes have been drilled between grid
sections 350N and 550N at a horizontal spacing of approximately 50 metres with
respect to other Great Panther and Coeur dAlene drill holes. They are also
designed to intersect the mineralized zones at a similar vertical spacing. and
are confirming previous results of Coeur dAlene

The mineralization at Mapimi is associated with hydrothermal
breccias and stockworks related to a cluster of rhyolite domes intruding
sandstones, calcareous siltstones, and limestones of the Cretaceous Caracol
Formation. While the upper 40-60 metres is typically oxidized, deeper sulphide
mineralization consists of pyrite, silver sulfosalts, sphalerite and galena. An
alteration halo exhibiting strong silicification and disseminated pyrite extends
outward for hundreds of metres around the silver-lead-zinc zones, providing a
larger target that should be detectable by induced polarization (I.P.)
geophysics.

As the topography of the area is very subdued and 95% of the
property is overburden covered, there is a strong possibility that similar
mineralized breccias may lie under cover and have been overlooked in the past.
The current geophysical program is designed to detect such buried zones and
provide additional targets for drill testing.

Highlights of recent drilling include:

CORE
    
    
    
    
    
    
    
    
    AgHOLE
    ZONE
    FROM
    TO
    LENGTH
    Au
    Ag
    Pb
    Zn
    Eq(m)
    (m)
    (m)
    (g/t)
    (g/t)
    (%)
    (%)
    (g/t)SK07-001
    Palmitas
    55.05
    72.00
    16.95
    0.17
    119.30
    1.59
    0.10
    147and
    139.50
    157.50
    18.00
    0.14
    42.27
    0.43
    0.24
    65SK07-002
    Palmitas
    220.98
    247.67
    26.69
    0.15
    21.01
    0.37
    0.23
    47La
    
    
    
    
    
    
    
    155SK07-004
    Gloria
    77.65
    124.40
    46.75
    0.08
    27.07
    0.41
    1.75including
    95.00
    111.00
    16.00
    0.13
    59.38
    0.94
    2.72
    262and
    121.10
    124.40
    3.30
    0.37
    76.12
    1.16
    1.54
    208La
    
    
    
    
    
    
    
    114SK07-005
    Gloria
    55.95
    102.00
    46.05
    0.15
    14.67
    0.16
    1.35


---

- 70 -

CORE
    
    
    
    
    
    
    
    
    AgHOLE
    ZONE
    FROM
    TO
    LENGTH
    Au
    Ag
    Pb
    Zn
    Eq(m)
    (m)
    (m)
    (g/t)
    (g/t)
    (%)
    (%)
    (g/t)La
    
    
    
    
    
    
    
    126SK07-006
    Gloria
    109.50
    154.30
    44.80
    0.12
    25.48
    0.29
    1.38La
    
    
    
    
    
    
    
    49SK07-008
    Gloria
    127.26
    148.80
    21.54
    0.06
    16.71
    0.32
    0.37La
    
    
    
    
    
    
    
    70SK07-009
    Gloria
    69.60
    74.75
    5.15
    0.06
    28.29
    0.35
    0.53and
    82.60
    145.00
    62.40
    0.12
    32.51
    0.33
    1.96
    173and
    195.20
    211.12
    15.92
    0.25
    29.30
    0.17
    1.15
    115La
    
    
    
    
    
    
    
    79SK07-010
    Gloria
    150.20
    159.15
    8.95
    0.13
    23.41
    0.29
    0.71and
    191.90
    200.80
    8.90
    0.36
    50.70
    0.61
    0.82
    124La
    
    
    
    
    
    
    
    45SK07-011
    Gloria
    20.95
    33.25
    12.30
    0.02
    9.67
    0.12
    0.49


*Silver equivalent ounces (Ag Eq Oz) for the intercepts
above were calculated using prices of US$600/oz for gold, US$12.00/oz for
silver, US$0.60/lb for lead, and US$1.50/lb for zinc and recoveries of 70%, 76%,
80% and 80%, respectively. Wardrop Engineering used the same recoveries but
different pricing in their 2006 resource estimation.

During February 2007, Great Panther contracted Aeroquest
Limited to fly a 550 line kilometre airborne electromagnetic (EM) and magnetic
geophysical survey over the Mapimi project. Numerous EM and magnetic targets
were detected and field work to validate the various features is on-going. The
interpretation of this survey, in conjunction with surface mapping, provided a
geological framework for a detailed I.P. survey.

While some of the geophysical anomalies outlined by the
airborne survey are directly related to regional geological features, others
appear to be related to known mineralization or are spatially associated with
zones of strong alteration. The cluster of rhyolite domes associated with the
silver-lead-zinc mineralization in the La Gloria-Las Palmitas area has a
magnetic response that is replicated in at least two other areas on the
extensive 3,508-hectare property. Each of these anomalies is approximately one
kilometer in diameter.

Highlights of the second batch of drill holes (SK07-012 to 019,
  representing 1,454 metres) include 168 g/t silver equivalent (Ag Eq) over 78.65
  metres in hole SK07-012; 212 g/t Ag Eq over 21.95 metres in hole SK07-015; and
  372 g/t Ag Eq over 32.93 metres in hole SK07-018. All eight holes were drilled
  in the La Gloria Zone.

---

- 71 -

Additional details of intersections from these eight holes,
including individual assays for silver, gold, lead and zinc are presented in the
table of results below. A plan map showing the new La Gloria drill-hole
locations is posted on the Great Panther website at www.greatpanther.com.

Twenty three core holes, representing 4,745 metres, have been
completed to date with assays pending on the last four holes. Results for holes
SK07-001 to 011 were announced on April 16, 2007. Aside from the first three
holes of the program, which were drilled into the smaller Las Palmitas Zone,
drilling by Great Panther has focused on the La Gloria Zone in an effort to
expand and better delineate mineralization intersected by Coeur dAlene Mines
Corp., in 1997-98. Data from Coeurs drilling was used by Wardrop Engineering to
calculate the current NI 43-101 Inferred Mineral Resource on these two zones
(Great Panther news release September 11, 2006), of 22.3 million oz Ag Eq,
contained in 4,969,800 tonnes at a grade of 59 g/t Ag, 0.13 g/t Au, 0.81% Pb and
1.31% Zn (139 g/t Ag Eq).

Consistent with previous drilling, multiple mineralized
intervals have been intersected within the latest holes at La Gloria. The
mineralization consists of sphalerite, galena, pyrite and minor pyrrhotite in
the matrix of hydrothermal breccias and as fracture fillings and disseminations
in porphyritic rhyolite. Silver grades show an excellent correlation with lead,
while zinc and gold do not correlate with any of the other metals. As relative
grades of the four metals can be quite variable, silver equivalents are
calculated primarily for comparative purposes.

The structural fabric of the Mapimi Project appears to be
complex. The rhyolite intrudes sandstones, calcareous siltstones, and limestones
of the Cretaceous Caracol Formation, a common host to many of the world class
silver-lead-zinc deposits throughout the Mexican Silver Belt. Pre-mineral
faulting and fracturing is intense within and adjacent to the mineralized zones,
providing excellent porosity for mineralizing fluids. Post-mineral faulting is
also common and offsets mineralized zones in places. While the La Gloria Zone
appears to be fault-bounded to the northeast, it is still open to the southwest
and Great Panther is currently testing the strike extent of the zone in that
direction.

---

- 72 -

Highlights of recent drilling include:

HOLE
    FROM
    TO
    LENGTH
    Au
    Ag
    Pb
    Zn
    Ag Eq*NUMBER
    (m)
    (m)
    (m)
    (g/t)
    (g/t)
    (%)
    (%)
    (g/t)SK07-012
    42.50
    121.15
    78.65
    0.21
    20.3
    0.20
    2.04
    168SK07-013
    90.30
    96.80
    6.50
    0.39
    40.3
    0.25
    0.53
    88and
    115.20
    141.40
    26.20
    0.04
    9.9
    0.13
    0.54
    50SK07-014
    30.15
    52.65
    22.50
    0.03
    6.4
    0.04
    1.85
    134and
    90.30
    96.80
    6.50
    0.34
    44.4
    0.43
    1.01
    127and
    115.20
    141.40
    26.20
    0.07
    16.2
    0.14
    1.70
    135SK07-015
    53.00
    58.50
    5.50
    0.02
    114.0
    1.18
    0.71
    169and
    87.65
    92.40
    4.75
    0.04
    24.8
    0.42
    1.17
    111and
    117.70
    139.65
    21.95
    0.05
    10.5
    0.14
    2.89
    212SK07-016
    79.15
    84.06
    4.91
    0.21
    51.0
    0.68
    2.15
    212and
    132.00
    135.68
    3.68
    0.12
    61.1
    0.92
    1.13
    154and
    149.10
    156.90
    7.80
    0.22
    42.0
    0.21
    0.90
    107SK07-017
    8.98
    58.20
    49.22
    0.18
    69.1
    0.74
    0.07
    84and
    92.60
    121.96
    29.36
    0.17
    14.7
    0.26
    1.76
    145SK07-018
    18.30
    36.54
    18.24
    0.07
    19.9
    0.31
    1.41
    123and
    83.30
    107.23
    23.93
    0.06
    17.5
    0.21
    5.12
    372SK07-019
    17.88
    57.58
    39.70
    0.10
    62.7
    1.00
    0.31
    100


---

- 73 -

HOLE
    FROM
    TO
    LENGTH
    Au
    Ag
    Pb
    Zn
    Ag Eq*NUMBER
    (m)
    (m)
    (m)
    (g/t)
    (g/t)
    (%)
    (%)
    (g/t)and
    105.75
    108.60
    2.85
    0.27
    25.6
    0.30
    1.95
    171


*Silver equivalent grades (Ag Eq) for the intercepts above
were calculated using prices of US$600/oz for gold, US$12.00/oz for silver,
US$0.60/lb for lead, and US$1.50/lb for zinc and recoveries of 70%, 76%, 80% and
80%, respectively. Wardrop Engineering used the same recoveries but different
pricing in their 2006 resource estimation.

The third batch of ten core holes (2,449 metres) drilled by the
Company on the Mapimi Project (formerly Km 66) in eastern Durango State, Mexico.
Twenty nine core holes, representing 4,745 metres, have been completed to date
ending the Phase 1 drilling program. Following up on the airborne geophysical
program, 103 kilometres of grid were cut and 103 kilometres of induced
polarization (I.P.) geophysical survey completed. The La Gloria zone is part of
the southern tip of a 2400 metre long, by up to 1,200 metre wide northeast -
southwest oriented I.P. anomaly. A second more northern I.P. anomaly with a
length of 1,300 metres, by up to 700 metres wide and oriented northwest 
southeast was also delineated (see web-site drawings).

Highlights of the third batch of drill holes in Great Panthers
2007 drilling program include 166 g/t Ag Eq over 19.46 metres in hole SK07-020;
107 g/t Ag Eq over 36.6 metres, followed by 256 g/t Ag Eq over 55.6 metres in
hole SK07-028; and 110 g/t Ag Eq over 47.52 metres in hole SK07-029, all in La
Gloria zone. A new mineralized zone, named La Gloria East zone was partially
delineated (open to the north), displayed erratic mineralization, but is
associated with intense silicification, brecciation and rhyolite intrusions into
the Caracol Formation sediments. Additional details of the intersections,
including individual assays for silver, gold, lead and zinc are presented in the
table of results below. A plan map showing the new La Gloria drill-hole
locations is posted on the Great Panther website.

Multiple mineralized intervals have been detected within the La
Gloria zone drill holes. They appear to be steeply dipping and elongated
northeast-southwest so holes are typically drilled at angles of 45-60 degrees.
While the mineralization starts at surface, it has been intersected to vertical
depths approaching 200 metres. To date, the holes have been drilled between grid
sections 10000N and 10300N at a horizontal spacing of approximately 50 metres
with respect to other Great Panther and Coeur dAlene drill holes. They are also
designed to intersect the mineralized zones at a similar vertical spacing. The
2007 Great Panther results are confirming previous results of Coeur dAlene and
will be used in the upgrading of the NI 43-101 resource.

---

- 74 -

Highlights of recent drilling include:

Core Hole #
    Zone
    From
    To
    Core Width
    Au
    Ag
    Pb
    Zn
    Ag Eq(m)
    (m)
    (m)
    (g/t)
    (g/t)
    %
    %
    (g/t)SK07- 020
    La Gloria
    3.02
    22.48
    19.46
    0.11
    36
    0.53
    1.75
    166SK07- 020
    La Gloria East
    151.95
    160.04
    8.09
    0.04
    35
    0.41
    0.41
    68SK07- 021
    La Gloria East
    18.20
    25.65
    7.45
    0.34
    65
    0.47
    0.44
    104SK07- 021
    La Gloria East
    151.80
    161.60
    9.80
    0.07
    3
    0.05
    0.79
    60SK07- 022
    La Gloria East
    192.5
    198.73
    6.23
    0.05
    39
    0.07
    0.97
    100La Gloria East
    207
    209.45
    2.45
    0.07
    32
    0.06
    2.45
    197SK07- 023
    La Gloria
    96.50
    101.55
    5.05
    0.03
    15
    0.18
    0.55
    55SK07- 023
    La Gloria
    106.00
    121.15
    15.15
    0.01
    2
    0.03
    0.75
    54SK07- 024
    La Gloria
    52.70
    60.25
    7.55
    0.06
    36
    0.93
    0.49
    89SK07- 025
    La Gloria
    150.68
    156.46
    5.78
    0.01
    1
    0.00
    1.63
    113SK07- 025
    La Gloria
    175.00
    179.94
    4.94
    0.27
    20
    0.80
    0.60
    88SK07- 025
    La Gloria
    188.00
    191.80
    3.80
    0.44
    28
    0.86
    0.84
    118


---

- 75 -

Core Hole #
    Zone
    From
    To
    Core Width
    Au
    Ag
    Pb
    Zn
    Ag Eq(m)
    (m)
    (m)
    (g/t)
    (g/t)
    %
    %
    (g/t)SK07- 026
    La Gloria East
    60.35
    69.61
    9.26
    0.05
    23
    0.50
    0.81
    88SK07- 027
    La Gloria East
      
      
    N.S.R.SK07- 028
    La Gloria
    0.00
    36.60
    36.60
    0.21
    65
    0.87
    0.39
    107La
      Gloria
    36.60
    92.20
    55.60
    0.06
    4
    0.09
    3.63
    256La
      Gloria
    135.00
    148.18
    13.18
    0.13
    14
    0.50
    1.13
    106SK07- 029
    La Gloria
    3.00
    50.52
    47.52
    0.12
    98
    1.11
    0.02
    110SK07- 029
    La Gloria
    55.20
    68.20
    13.00
    0.04
    7
    0.09
    2.01
    147SK07- 029
    La Gloria East
    184.40
    189.25
    4.85
    0.19
    23
    0.12
    1.22
    111SK07- 029
    La Gloria East
    254.50
    262.54
    8.04
    0.10
    17
    0.18
    0.58
    62


*Silver equivalent ounces (Ag Eq Oz) were calculated using
prices of US$600/oz for gold, US$12.00/oz for silver, US$0.60/lb for lead, and
US$1.50/lb for zinc and recoveries of 70%, 76%, 80% and 80%,
respectively.

The Phase II diamond drilling program, which commenced in
October 2007, is testing two large coincident geological, geochemical, and
geophysical anomalies, namely the Central (Bulls Eye) and North Zones. The
mineralization at La Gloria/Las Palmitas consists of disseminated pyrite, galena
and sphalerite hosted within hydrothermal breccias and stockworks, brecciated
sediments and rhyolite associated with a cluster of rhyolite domes. Similar host
rocks and mineralization are now known to be areally extensive on the property
and the widely spaced Phase II drilling has also intersected skarn alteration
and mineralization to the north of La Gloria, suggesting that the latter zone
may be only a peripheral portion of a much larger intrusive-related system.

The strong chargeability responses within the Bulls Eye anomaly
  are interpreted to represent alteration halos of widespread disseminated pyrite,
  containing more discrete zones of silver-gold-lead-zinc mineralization.

---

- 76 -

The La Gloria zone is part of the southern tip of the 2,000
  metre long, by up to 800 metre wide Bulls Eye anomaly. In addition, the 1,000
  metre by 700 metre North Zone displays skarn alteration and lead-zinc-copper
  sulphides on surface and at depth at the contact between rhyolite and limestone,
  suggesting the potential for higher grade, skarn and/or carbonate replacement
  style mineralization. Eighteen holes (numbers 30-47) have now been completed
  in the Phase II program and assay results are being compiled as they come in.

4. San Antonio Project

The San Antonio Project, a gold-copper project, located in the
Guadalupe y Calvo Mining District, State of Chihuahua, Mexico, consists of three
contiguous mining concessions covering in the aggregate 11,711 hectares. These
concessions were staked and are owned 100% by MMR.

The San Antonio property is 50 kilometers NNW of the Guadalupe
y Calvo Mining District in southwest Chihuahua State, which has historically
produced over 2 million ounces of gold; and 80 kilometers SSE of the Batopillas
area (El Sauzal Mine of Kinross Gold, 2005 probable reserve of 1.7 million
ounces gold). Geologically the Company is exploring in a 3 by 17 kilometer area
window of Tertiary lower sequence andesite and felsic volcanics flanked by
barren Tertiary upper sequence ignimbrites and conglomerates.

a. Acquisition - Santo Nino Concessions

Effective February 11, 2004, we entered into the Santo Nino
Option Agreement, which granted us the right and option, for a period of three
years, to purchase 100% of the ownership rights in and to the Santo Nino Mining
Concession located in the Guadalupe y Calvo Mining District, State of Chihuahua,
Mexico from Mr. Alfredo Rodriguez Chávez, as optionor, by making staged cash
payments totalling US $165,000 as follows:

(a) US $20,000 within 10 days of the date of registration at
the Mining registry of the option agreement;

(b) US $50,000 in five payments of US $10,000 each to be made
by the conclusion of each semester following the date of registration of the
option agreement;

(c) US $95,000 within 45 days of the third anniversary of the
date of registration of the option agreement.

The Company made cash payments totaling US$30,000 during the
year ended December 31, 2006. Subsequent to December 31, 2006, the Company paid
an additional US$95,000 thus fulfilling all conditions of the option agreement.

There is no underlying Net Smelter Return royalty or other
royalties and no work commitments on the concession.

On February 2, 2007, we signed an option agreement with Altair
Ventures Inc. (Altair) whereby Altair may exercise its right to earn a 70%
interest in the property by making staggered cash payments of US$200,000
(US$30,000 paid to date), issuing 200,000 Altair common shares (100,000 issued
to date) to Great Panther and incurring a minimum of US$1,000,000 of exploration
expenditures over a three-year period.

b. Acquisition - San Taco Concessions

Effective February 28, 2004, we entered into the San Taco
Option Agreement, which granted us the right and option, for a period of three
years plus 30 days, to purchase 100% of the ownership rights in and to the San
Taco Mining Concessions located in the Guadalupe y Calvo Mining District, State
of Chihuahua, Mexico from Carlos Teodoro Ortiz Rodriquez, Abelardo Garza
Hernanadez and Minera San Miguel de los Tarros, S.A. de C.V., as optionors, by
making staged cash payments totalling US $965,000 as follows:

---

- 77 -

(a) US $50,000 within 30 days of the signing of the option
agreement;

(b) US $75,000 by the first anniversary of the date of signing
the option agreement;

(c) US $100,000 by the second anniversary of the date of
signing the option agreement;

(d) US $740,000 by the third anniversary of the date of signing
the option agreement.

As of December 31, 2005 we had made the US $50,000 payment in
accordance with (a) above and, the US $75,000 payment in accordance with (b)
above.

Subsequent to December 31, 2005, we decided not to actively
commit to further exploration of the San Taco property, and as a result the
value of the property as at December 31, 2005, was determined to be nil. As
such, the acquisition costs associated with the property ($403,634) was expensed
as part of the write down of property cost and the expense was recognized in the
year ended December 31, 2005.

During 2006, we elected to discontinue exploration of the San
Taco property and abandoned the project.

c. Location and Accessibility

The San Antonio project is located in the municipality of
Guadalupe y Calvo, State of Chihuahua, Mexico, approximately 162km S-SW of the
city of Hidalgo de Parral, Chihuahua, and 265km SW of the city of Chihuahua, and
consists of the following active concessions:

Concession
    Size (hectares)
    Expiry DateSanto Niño
    80
    21/04/2036San Antonio
    9,447
    15/04/2010Iran
    2,184
    09/05/2011


Road access to the San Antonio project is via paved highway
from Hidalgo de Parral to the town of Guadalupe y Calvo, a distance of 255km,
and then to Baborigame via a maintained unsurfaced road, a distance of 90km, and
then via 33km of logging and ranch roads to a small ranch in the Arroyo San
Antonio near the center of the project area. Straight line distance from
Baborigame to the project area is 9km.

d. History

The San Antonio prospect lies within the Guadalupe y Calvo
mining region. Earliest recorded mining activity in the region is the discovery
in 1835 of the veins in the San Juan Nepocemo area west of Baborigame. Various
Au-Ag vein deposits were subsequently discovered and commercial mining continued
without interruption until 1940. Since then, only small scale artesenal mining
has been conducted in the region. The San Antonio project lies outside of the
areas of significant mine development, and little is known of the exploration
history of the project. The numerous workings in the Arroyo San Antonio attest
to minor production from the project area.

Neither significant nor modern exploration programs are known
to have been conducted at the property. Anaconda, Barrick Gold and Hemlo Gold
made reconnaissance visits to the property in the 1990's. In the 1980's the
Consejo de Recursos Minerales conducted site specific visits to the Sary, Piedra
Verde, and Santo Niño claims. The property was visited by Robert Archer,
President of our subsidiary, in May of 2003. Mr. Archer collected ten
reconnaissance rock chip samples from mine workings and altered outcrops in the
Arroyo San Antonio.

The property had not been subjected to exploration drilling
prior to our acquisition of the claims.

---

- 78 -

e. Mineralization

Numerous epithermal veins and mineralized structural zones are
exposed in the Arroyo San Antonio. It is not clear if these structures are
faults that juxtaposed rock types, or alternatively the structures formed along
pre-existing lithologic contacts. Mineralized structures vary from 1 to 200 cm
wide. All of these mineralized structures lie within a much broader zone of
pervasive chloritization that is continuously exposed along the Arroyo San
Antonio.

Geologic and mineral occurrence maps indicate that within the
project area at least 12 mineralized structures or veins have been explored or
exploited, and numerous others of unknown extent and importance are present.

(i) Sary Zone

The Sary showing comprises a mineralized fault zone that dips
vertically or steeply to the S-SW. The Sary structure is exposed in a small mine
working on the hillside east of the Arroyo San Antonio. The workings comprise a
short adit perpendicular to the structure, and development/exploration drifts to
the east and west along the structure. The workings were entered and sampled.

(ii) Arroyo Zone

A prominent zone of mineralization is exposed in the Arroyo San
Antonio where the projection of the Hortencia vein intersects the arroyo, where
two faults come in contact.

(iii) Piedra Verde

The Piedra Verde mine is developed on a fault bounded
clast-supported breccia zone. The mineralized structure is exposed on surface
and in small workings on the hillside immediately south of the Arroyo San
Antonio.

The workings comprise a short adit perpendicular to the
structure, and development/exploration drifts to the northwest and southeast
along the structure. The workings were entered and sampled.

(iv) Santo Niño Vein

The Santo Niño mine is developed on a brecciated and quartz
veined fault zone. It is exposed at surface on both sides of the Arroyo San
Antonio and in the mine workings developed on the northwest side of the arroyo.
The workings were entered and sampled.

(v) Santo Niño Stockwork

A zone of stockwork quartz-calcite-pyrite-chalcopyrite
microveinlets cutting chloritic fine grained andesite breccia is exposed along
the Arroyo San Antonio upstream (S-SW) of the Santo Niño mine. The zone is
exposed in outcrops along the arroyo over a length in excess of 30m. Some of the
veinlets contain bladed calcite, a textural feature common at high levels of
epithermal systems.

(vi) El Cordon

The El Cordon showing comprises a shallow prospect at arroyo
level and a 20m adit and open stope developed 30m above arroyo level. The
working is developed along a fault breccia that is localized along the contact
of an andesite dike that crosscuts a quartz eye rich felsic volcanic. The fault
breccia is cut by white sugary quartz veinlets.

f. Exploration

Our 2005 exploration program at San Antonio continued with the
geological mapping and sampling, prospecting and soil sampling from the prior
year. The objective of the program was to identify zones of

---

- 79 -

continuous and potentially economic gold and copper grades
within the mineralized structures (veins) or stockwork zones. Drill targets
meritorious of evaluation had already been identified, but additional geologic
and geochemical surveys will be useful for prioritizing drill targets. The first
phase of a detailed mapping and rock chip geochemical sampling, both on surface
and underground, began, with emphasis on delineating the veins along strike and
determining the extent of the stockwork zone. The first assay results from the
sampling program of the Santo Nino vein were received in June, 2004 and
indicated the presence of strong gold mineralization. The Santo Nino structure
is the first and northernmost of three small underground workings in the San
Antonio project to be sampled. More sampling results in July, 2004 identified a
new area just 75 metres east-northeast of the Santo Nino vein. Historical mining
on these veins was limited and their vertical and lateral extent is unknown as
they have never been drilled. Ongoing exploration work sampled the other
historic workings in detail, along with numerous other structures that have been
found in the area. In addition, the large zone of stockwork and disseminated
mineralization that lies between the veins was systematically sampled in order
to determine the grade and distribution of gold and copper values as field crews
continued to work their way from north to south across the core claims. Work to
date has improved the Company's understanding of the geology of the project
area. Phase One of the exploration program, completed in December, 2004,
provided numerous diamond drill targets on the high grade vein system. A diamond
drill program which commenced in February, 2005 comprised 1,936 metres in 16
holes, and focused on the high grade gold-copper vein system in the central part
of the property.

In addition to the sampling described above, alteration studies
are being conducted in order to help direct us towards areas of greatest
potential within this extensive system and help to define targets for future
diamond drilling.

No field work was done on the property in 2006.

In 2007, Altair Ventures, under the terms of the aforementioned
option agreement, conducted an exploration program with Great Panther as
operator. The focus of the exploration effort was to fully evaluate the numerous
gossans and alteration zones on the project using a combination of geological
mapping, rock sampling, and PIMA surveys. All three techniques, plus satellite
image analysis, will aid the Company in defining priority targets for more
detailed sampling and appraisal as drill targets. Previous exploration, 2004 to
2006, included the collection of 1014 rock samples and 139 PIMA samples, plus
core drilling of the Santo Nino zone.

Highlights from the initial 2007 sampling include 1.5 metres @
7.5g/t gold, 11g/t silver; 0.3 meters @ 300g/t silver, 0.47% lead and 3.62%
zinc; and 1.2 metres @ 268g/t silver, 0.29% lead, and 1.22% zinc. All three
samples are from a newly discovered northeast oriented steeply southeast dipping
vein system located ~800 meters south east of San Cayetano. The new discovery
has been traced on surface for ~400 meters.

Seven (7) key areas of alteration / mineralization have been
identified on the San Antonio project, including the Santo Nino zone
(structurally controlled quartz vein / breccia with gold and copper
mineralization), Gossan zone (silicified, iron oxides (after pyrite) and
brecciated domes), Terras Amarillas zone (extensive argillic alteration, iron
oxides, and silica veins), San Cayatano zone (argillic alteration with
quartz-barite-galena-sphalerite-pyrite veins), La Gringa zone (argillic
alteration with quartz-barite-galena-sphalerite-pyrite veins), La Chiripa zone
(argillic alteration, iron oxides, and silica veins), and the El Rancho Blanco
zone (located between La Chiripa and Terras Amarillas zones and presently being
explored).

PIMA analysis of altered samples from the above areas shows two
distinct populations, a high sulfidation epithermal system in the Gossan zone
with alunite, dickite, prophylite and tourmaline; and the rest of the alteration
zones being low sulfidation in nature with illite, smectite, sericite, chlorite
minerals. In case studies, the hydroxyl low in the analysis of illite varies
with mineralizing fluid temperature, and as the

---

- 80 -

lower temperature mineralizing fluids are associated with
precious metal deposition the Company has been reviewing illite analysis as a
tool for targeting and discerning precious metal rich epithermal events.

Diamond drilling commenced on the San Antonio project in
November, 2007. The program comprised approximately 1,500 metres in 9 holes and
tested a district scale epithermal system that has been identified on the
property.

Previous exploration project led to the recognition of a
vertically-zoned, 12-kilometre long system of mineralization and alteration that
appears to be gold-copper rich near the base, grading to silver-gold-lead-zinc
in the upper portions.

Mapping and sampling in 2007 further defined five primary areas
of alteration / mineralization: 1) the Breccia Gossan Zone (bulk tonnage, high
sulphidation epithermal gold-copper system), 2) the San Cayetano Zone (low
sulphidation quartz-barite-galena-sphalerite-pyrite, silver-gold vein), 3) the
San Cayetano South Zone (low sulphidation quartz-galena-sphalerite-pyrite,
silver-gold vein), 4) the La Gringa Zone (low sulphidation
quartz-galena-sphalerite-pyrite, silver-gold vein) and 5) the La Gringa North
Zone (low sulphidation quartz-galena-sphalerite-pyrite, gold-silver vein).

The Breccia Gossan Zone is a 2,000 by 800 metre area of intense
silica and clay alteration interpreted to represent the middle to lower level of
the mineralizing system at San Antonio, while the vein style mineralization in
the other zones is thought to reflect the upper portions of the system. The
focus of the 2007 diamond drilling program is to evaluate these five key areas
on the project and determine how they are related.

A review of surface chip channel sampling in these areas from
2004/5 and 2007 includes 1.5 metres @ 7.5g/t gold, 11g/t silver; 0.3 metres @
300g/t silver, 0.47% lead and 3.62% zinc; and 1.2 metres @ 268g/t silver, 0.29%
lead, and 1.22% zinc, all from the San Cayetano South Zone. From the La Gringa
North Zone, results from surface include 1.5 metres @ 0.19g/t gold, 289g/t
silver, 0.51% lead, and 0.76% zinc; and 3.0 metres @ 0.99g/t gold, 23g/t silver,
0.26% lead, and 0.18% zinc. The San Cayetano Zone returned values of 1.0 metre @
538g/t silver and 0.24% lead; and 1.2 metres @ 109g/t silver, 0.99% lead, and
0.35% zinc. Further details and a map of the project can be found on the Great
Panther website at www.greatpanther.com.

At the time of this document, results of the diamond drilling
program were not yet available. Field work on the project is being conducted by
Resource Geosciences de Mexico, S.A. de C.V. of Hermosillo, Sonora under
contract to our Mexican subsidiary, Minera Mexicana el Rosario, S.A. de C.V.

5. Virimoa Project

a. Acquisition

On June 13, 2005, we entered into an option agreement to
purchase 100% of the ownership rights in and to two mining claims designated as
the Virimoa Property, also located in the Topia Mining District, State of
Durango, Mexico from Minera Acero del Fuego, S.A. de C.V., as optionor. Under
the terms of the option agreement, we must compensate the optionor of the
Virimoa Property by making four cash payments totalling US$300,000 (US$50,000
paid) over a period of three years. In a concurrent agreement, we are required
to issue a total of 300,000 common shares (100,000 issued) to the optionor. If
we exercise this option, the optionor will retain a 2% NSR, half of which can be
purchased by us for US$1 million.

On June 23, 2006, we paid a second cash instalment of US$30,000
and issued a share allotment of 50,000 pursuant to our June 13, 2005, option
agreement with Minera Aciero del Fuego, S.A. de C.V.

---

- 81 -

On May 30, 2007, the Company provided notice that it was terminating
  the option agreement on the Virimoa property in Durango State. No field work
  was conducted on the property during 2007.

b. Location and Accessibility

The property consists of two exploitation concessions covering
a total area of 148 hectares in the municipality of Canelas in the west central
part of Durango State, Mexico. The Virimoa Property is about 17 kilometres south
of the town of Topia and is accessible from there by gravel road. Otherwise,
access is gained by travelling north for roughly 200 km on paved highway #23
from Durango through the city of Santiago Papasquiaro, and then west on paved
and gravel roads to the town of Canelas, a distance of approximately 150 km.
Total driving time from Durango is 8 hours. Canelas contains numerous stores,
restaurants and small hotels. A small airstrip on the north side of the town is
serviced daily from Culiacán, Sinaloa by small aircraft. Flight time from
Culiacán is less than an hour. In addition, Virimoa is approximately 30
kilometres west of La Ciénega, Mexicos largest gold mine, currently in
production and owned by Compaña Minera Peñoles.

c. Exploration

In March, 2005, fieldwork commenced on the Virimoa Gold
Property with initial exploration comprising detailed and extensive channel
sampling and mapping focused on an exposure of intense iron oxide alteration.
This work attempted to better define the controls on mineralization and to trace
its extent. As the property has good road access, specific drill targets were
generated for a diamond drilling program, the first ever, which was conducted in
April, 2005.

Surface sampling at the Virimoa Property returned 1.11 g/t
gold, 23 g/t silver and 1.32% zinc across 250 metres. The zone includes two
higher grade intervals averaging 4.71 g/t gold, 41 g/t silver and 5.78% zinc
across 25 metres near the southeast end of the cross-section and a gold-silver
zone returning 3.13 g/t gold and 46 g/t silver across 20 metres near the
northwest end. This work has not only confirmed previous sampling results of
1.08 g/t gold, 20.5 g/t silver and 1.66% zinc obtained by the vendor across the
same exposure but the consistency of the results is quite remarkable. Great
Panther's sampling however, extended and improved upon the higher grade zone at
the southeast end, which was previously reported as returning 3.38 g/t Au, 26.2
g/t Ag and 4.93% Zn over 16 metres.

Mineralization consists of a closely spaced stockwork of
massive quartz-pyrite+/-sphalerite+/-arsenopyrite veinlets and veins that can
locally exceed several tens of centimetres in width. Disseminated pyrite is
common between the veinlets. Intense iron oxide and argillic alteration of the
host andesitic volcanics is exposed for more than 350 metres across the major
structural trend, including the zone reported above. Along strike, however, the
zone disappears under cover, such that its length is not yet known.

Great Panther's sampling was conducted along an irregular but
continuous traverse line along the bank of a creek and the mineralization
reported above actually comprised 57 continuous five-metre chip samples
representing a tot al length of 285 metres. It is believed to represent a
horizontal straight line distance of 250 metres, estimated to be close to the
true width of the zone. Samples were assayed at ALS Chemex Labs in Vancouver by
fire assay and either atomic absorption (in the case of the Au and Zn) or
gravimetric (for Ag) finish.

A short diamond drilling program, completed in 2005, has outlined
  the presence of multiple zones of gold-silver-copper-zinc mineralization across
  a width of more than 250 metres. The drilling, comprising 856 metres in four
  holes, was designed to complete a cross section under a zone of mineralization
  exposed on surface that returned 1.11 g/t gold, 23 g/t silver and 1.32% zinc
  across 250 metres from continuous channel sampling. As reported on April 26,
  2005 this zone included two higher grade intervals averaging 4.71 g/t gold,
  41 g/t silver and 5.78% zinc across 25 metres near the southeast end of the
  cross-section and a gold-silver zone returning 3.13 g/t gold and 46 g/t silver
  across 20 metres near the northwest end.

---

- 82 -

Holes 05-VIR01 and 02 were drilled from the same location under
the southeast zone, with holes 05-VIR03 and 04 being drilled behind them in
order to complete a line across the entire mineralized area. Hole 05-VIR04 was
drilled under the northwest zone. The distribution of grade and extent of the
mineralization along strike has not yet been tested. More than a dozen discrete
zones have been outlined, many of which contain copper mineralization not
observed on surface. Although gold and zinc grades were lower in the drilling
than on surface, the drilling displayed a marked zonation to the mineralization
from higher copper in the northwest to higher gold and zinc in the southeast and
this zonation likely also holds true in a vertical sense. Silver values are more
consistent throughout but the best correlation is seen with copper, whereas the
weakest correlation is observed between copper and zinc, as seen in the table
below. As such, copper-silver mineralization may be stronger at depth whereas
gold and zinc appear to be enriched at higher levels. As the surface
mineralization was sampled in a creek exposure in a valley, the mineralization
strikes into the hill on both sides, thereby preserving the upper levels of the
system and, hopefully the gold-zinc enriched portion.

Mineralization consists of a closely spaced stockwork of
massive quartz-pyrite+/-sphalerite+/-arsenopyrite and
chalcopyrite+/-tetrahedrite veinlets and veins with disseminated pyrite in
between. These veins carry higher grades, such as 11.1 g/t Au, 458 g/t Ag, 9.47%
Cu and 0.45 % Zn over 0.3m in Hole 05-VIR01 and 8.71 g/t Au, 544 g/t Ag, 6.95 %
Cu and 3.28 % Zn over 0.3m in Hole 05-VIR02, but elsewhere mineralization is
much more consistent, giving wide zones of lower grade material that may be
amenable to bulk tonnage mining methods. Intense iron oxide and sericite
alteration of the host dacite volcanics is exposed for more than 350 metres on
surface before the zone disappears under cover.

No field work was done on the property in 2006 or 2007.

ITEM
4A            Unresolved
Staff Comments

None

ITEM
5               Operating
and Financial Review and Prospects

The information in this section is presented in accordance with
Canadian generally accepted accounting principles, and has been reconciled to
United States generally accepted accounting principles. The following discussion
of our financial condition and results of operations for the fiscal years ended
December 31, 2007, December 31, 2006 and December 31, 2005 and should be read in
conjunction with our consolidated financial statements and related notes
included elsewhere in this registration statement in accordance with Item 8 
"Financial Information".

Critical Accounting Estimates

The accounting estimates believed to require the most
difficult, subjective or complex judgements, and which are the most critical to
our reporting of results of operations and financial position, are as follows:

Amortization

The Companys mineral properties and related plant and
equipment are amortized based upon estimates of useful lives not to exceed the
life of the mine (5 years) to which the assets relate. These estimates may
change in circumstances where the assets useful life may change based upon new
information.

Site Restoration Costs

Upon the completion of any mining activities, the Company will
customarily be required to undertake environmental reclamation activities in
accordance with local and/or industry standards. The estimated

---

- 83 -

costs of these reclamation activities are dependent on labour
costs, the environmental impacts of the Companys operations, the effectiveness
of the chosen reclamation techniques, and on applicable government environmental
standards. Changes in these factors could cause a significant change in the
reclamation obligation.

Stock-based Compensation Expense

From time to time, the Company may grant share purchase options
to directors, employees and service providers. The Company uses the
Black-Scholes option pricing model to estimate a value for these options. This
model, and other models which are used to value options, require inputs such as
expected volatility, expected life to exercise and interest rates. Changes to
any of these inputs could cause a significant change in the stock-based
compensation expense charged in a period.

Income Taxes

The Company uses the liability method which takes into account
the differences between financial statement treatment and tax treatment of
certain transactions, assets and liabilities. Future tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Valuation allowances are established
to reduce future tax assets when there is potential that some or all of the
assets will not be realized. Estimates of future taxable income and the
continuation of ongoing prudent tax planning arrangements have been considered
in assessing the utilization of available tax losses. Changes in circumstances
and assumptions and clarifications of uncertain tax regimes may require changes
to the valuation allowances associated with the Companys future tax
liabilities.

*A.*       *Operating Results*

The Company, in its transformation from a company concentrating
on exploration to a company now focused on the mining of precious and base
metals, generated net sales of $17,487,070 in 2007 compared to $7,069,442 in
2006, an increase of 147%. This revenue from mining operations resulted from the
sale of metal concentrates derived from the mining and subsequent processing of
mineralization from its Topia and Guanajuato operations. Revenue for the year
has grown on a quarter-by-quarter basis as production levels have steadily
increased at both operations. Revenue from operations grew from $4,173,562 in
the first quarter to approximately $5,267,117 million by the fourth quarter.
This increase can be attributed to increased production levels at the two mining
operations. Combined output at Topia and Guanajuato was 1,336,629 silver
equivalent ounces (Ag Eq oz) in 2007, compared with 638,860 Ag Eq oz in 2006.
This increase in output along with increased metal prices during 2007
contributed to the year over year increase in the Companys revenue. Silver,
gold and lead prices increased over 16%, 15% and 100%, respectively, year over
year.

Overall cost of sales for the 2007 fiscal year was $16,116,633
compared with $7,199,047 in 2006. Cost of sales increased primarily due to
increased output. Cash costs per silver ounce remained relatively unchanged from
2006 levels (improvements in Guanajuatos cost per ounce were offset by an
increase in Topias cost per ounce). The Company anticipated improved
efficiencies during 2007, however, smelting and refining rates increased in 2007
for both mines, compounded by increased production mining costs and lower ore
grades from the Topia operations. As efficiencies are created in the Companys
operations, and with start-up costs associated with bringing both operations
back into production now behind us, management anticipates improved margins in
the 2008 fiscal year.

The production guidance for 2008 of 1.75 million Ag Eq oz,
(1.10 million from Guanajuato and 0.65 million from Topia), represents an
improvement over 2007 in excess of 30%. This projected increase is mainly the
result of higher ore grades, with the mining being subject to strict grade
control procedures and focused in drill delineated areas, and improved
processing performance. Total costs are projected to be similar to 2007 levels
and unit costs will be reduced accordingly.

---

- 84 -

Amortization and depletion of mineral properties, plant and
equipment increased by $2,181,899 in 2007 to $3,603,668 compared with $1,421,769
in 2006. The increase is largely due to the fact that the Guanajuato plant
facilities, building and plant rehabilitation were not in service during the
first half of 2006 and as such, no amortization expense was recognized during
that period. Capital additions during 2006 and 2007 have also resulted in
increased amortization in 2007.

Mineral property exploration costs in 2007 were $6,803,104
compared to $3,968,083 and $2,340,398 in 2006 and 2005, respectively. The
increased costs are largely attributed to the Companys ongoing development of
its mineral properties to better define its resources. The Company signed an
option agreement for the Mapimi property in September 2006 and spent significant
funds developing these resources in 2007. With the high demand for qualified
drillers, geologists and other mining related personnel, many companies like
Great Panther are incurring higher than normal costs for these services because
of the general shortage of qualified individuals. The Company anticipates
spending approximately $8.6 million on its 2008 exploration program which
includes deep drilling at Guanajuato and continued work at Mapimi and Topia.

Overall, general & administrative expenses (G&A)
(incurred) was $4,672,362 for 2007 compared to $4,408,631 in 2006 and $2,139,236
in 2005. This small increase is not reflective of the growth of the Company in
the past twelve months. During the year, the Company added two new senior
management positions and significantly increased the depth of the accounting and
financial reporting department. The Vancouver office has experienced substantial
growth in personnel necessitating the move to additional larger premises. The
Company anticipates incurring approximately $5.2 million in general and
administrative expenses in 2008. The increase over 2007 is largely due to a full
years impact of the changes made in 2007 related to the Companys growth, as
described above.

Accounting, compliance and audit related costs in 2007 were significantly
  higher than in 2006. This increased cost is largely attributed to the complexity
  of the Companys accounting and audit processes with full operating subsidiaries
  in Mexico. The Company added personnel in both Mexico and Canada as the growth
  of the Companys accounting functions necessitated the increase in staffing
  levels. Additional costs were also incurred as a result of documenting and testing
  the Companys internal controls related to the Sarbanes-Oxley Act (Sox),
  a regulatory requirement of the United States Securities and Exchange Commission.
  External audit costs increased in 2007 as an integrated audit, which includes
  an attestation of the effectiveness of internal controls, was required in 2007
  pursuant to Sox.

Insurance costs increased during 2007 primarily due to the
increased cost of insuring Mexican property, plant and equipment. The increase
was a result of higher insurance rates in Mexico, in general, as well as capital
additions made there.

The above increases were partially offset by lower investor
relations costs in 2007 compared with 2006. During 2006, the Company graduated
from the TSX Venture Exchange to the more senior TSX. The Company implemented an
aggressive marketing strategy to promote the Company in the United States and
Europe and, in so doing, incurred significant incremental costs in 2006 which
were not incurred in 2007. Expenditures in investor relations are necessary to
attract new investors and to inform current shareholders of the Companys
progress.

The Company also incurred non-cash stock-based compensation
expense of $1,129,500 in 2007 compared with $4,672,774 and $357,298 in 2006 and
2005, respectively. The Company grew exponentially in 2006 which resulted in the
larger than usual expense in that year. Some stock-based compensation expense
was incurred in 2007 as the Company continues to need to attract and retain
quality individuals.

Interest expense was $1,035,577 in 2007, compared to $830,236
in 2006 and $357,011 in 2005. The increase over 2006 is due to the issuance of
two 8% per annum convertible notes totaling $4.05 million in July 2007. Interest
expense paid increased by $209,317 in 2007 compared with 2006. This was
partially offset by a decrease in interest accretion.

---

- 85 -

The Company incurred a foreign exchange loss of $1,440,802 in
2007, compared to a gain of $10,358 in 2006 and a loss of $19,294 in 2005. The
Canadian dollar strengthened relative to the Mexican peso during 2007. As such,
a foreign exchange loss was incurred on the revaluation of the Mexican
subsidiaries monetary assets and liabilities at the current exchange rate at
year end.

The provision for income taxes was $2,571,473 in 2007, compared
to $110,016 in 2006 and incomes taxes recoverable of $370,514 in 2005. The large
increase is due to a future income tax liability of $2,421,504 being recorded in
the fourth quarter of 2007. A new tax in Mexico, referred to as a Flat Tax,
was enacted in 2007 and came into effect on January 1, 2008. Flat tax works as
an alternative minimum tax. Taxpayers are required to pay the higher of the
amount due under either income tax or flat tax. The Companys subsidiary MMR is
forecast to pay flat tax. As the tax basis of fixed assets is significantly
reduced and tax losses originating from prior years are not deductible under
flat tax, this has given rise to an excess of book value over tax value which
results in a future income tax liability. The Company is pursuing tax planning
opportunities in Mexico to minimize taxes paid in the future.

Overall, the loss for the twelve months ended December 31, 2007
(FY07) was $19,700,861 compared to $15,084,437 and $5,231,685 for the twelve
month periods ending December 31, 2006 and December 31, 2005, respectively, for
the above-noted reasons.

*B.*       *Liquidity
and Capital Resources*

The Company currently has mining operations that are generating
cash flow, and towards the end of 2007, the economic viability of the operations
began to be realized. The financial success of the Company relies on
managements ability to continue the successful exploration, development and
operation of its mines, to develop its exploration properties and achieve
profitable operations.

In order to finance its operations, exploration activities and
corporate overhead, the Company is dependent on investor sentiment remaining
positive towards the gold and silver exploration business generally, and
specifically towards Great Panther. Many factors have an influence on investor
sentiment, including a positive climate for mineral exploration, a companys
track record and the experience and calibre of a companys management. There is
no certainty that equity funding, if required, would be available to finance the
Companys future activities.

Cash and Financial Conditions

The Company had a cash (and cash equivalents) balance of
$5,357,977 as at December 31, 2007 as compared to $9,208,048 as at December 31,
2006. This decrease is largely attributed to expenses incurred in exploration
and the purchase of capital assets and the rehabilitation of the mines. The
decrease is partially offset by the proceeds of the exercise of warrants and
options, a convertible note financing, and positive operational cash flow now
being generated by the two mines.

The Company had working capital of $10,659,942 as at December
31, 2007 compared with working capital of $12,533,156 as at December 31, 2006.
There is no assurance that working capital and the anticipated exercise of
outstanding warrants, together with net revenues from increasing production,
will be adequate to fund the Companys activities and to cover corporate
overhead for the next twelve months, especially if the Company proceeds with
significant exploration activities.

Great Panther does not have access to any lines of credit, nor
other arrangements in place, to borrow funds. The Company also does not have any
off-balance sheet financing arrangements. At this time, Great Panther does not
use hedges or other financial derivatives.

---

- 86 -

Operating Activities

Cash flow used in operating activities, after working capital
adjustments, was $12,483,969 in 2007 compared to $11,433,341 in 2006 and
$5,378,857 in 2005. The increase in 2007 over 2006 of $1,050,628 was primarily
due to a year over year increase in mineral property exploration expenditures.
This was partially offset by increased revenue net of cost of sales (excluding
amortization and depletion), as well as the timing of amounts receivable and
payable.

Investing Activities

For the twelve months ended December 31, 2007, the Company had
a net cash outflow from investing activities, primarily for the purchase of
mineral properties and capital assets, of $3,362,263 compared with $5,736,570 in
2006. A significant investment was made in 2006 in the rehabilitation and
modernization of the Companys two mines sites.

Financing Activities

For the twelve months ended December 31, 2007, the Company
raised proceeds of $8,725,054 through the exercise of warrants, and $678,000
through the exercise of options.

On July 13, 2007, the Company completed financing agreements
for cash proceeds of $4,050,000. The financing consists of 8% per annum
unsecured convertible notes maturing July 14, 2011 that are convertible into
common shares of the Company at the holders option at a price of $2.25.

The Company made repayments of long-term debt during the twelve
months ended December 31, 2007 of $1,456,893.

Subsequent to December 31, 2007, the Company entered into an
agreement to purchase two scoop trams for a total purchase price of US$866,923,
to be financed over 24 months at an interest rate of 9.93% . The Company also
received proceeds of $360,000 on the further exercise of options.

Reconciliation to United States Generally Accepted
Accounting Principles

A description of US GAAP and practices prescribed by the US
Securities and Exchange Commission (collectively US GAAP) that result in
material measurement differences from Canadian GAAP are as follows:

(a) ****Income
taxes:

The Company follows the asset and liability method of
accounting for income taxes which is also in accordance with Statement of
Financial Accounting Standards Board No. 109 Accounting for Income Taxes (SFAS
109). Under Canadian GAAP, future tax assets and liabilities are recorded at
substantially enacted tax rates. Under US GAAP, deferred tax assets and
liabilities are recorded at enacted tax rates. In 2007, there were no
differences between enacted and substantially enacted rates. For each of the
years ended December 31, 2006 and 2005, net future tax assets are fully offset
by a valuation allowance as it is not more likely than not that the future tax
assets would be realized. As a result, the application of US GAAP in accounting
for income taxes does not result in any material measurement differences from
Canadian GAAP for future tax assets or liabilities.

(b)****
Stock-based compensation:

The Company adopted the new recommendations of the Canadian
Institute of Chartered Accountants with respect to the accounting for
stock-based compensation on January 1, 2002 as described in note 2(h).

---

- 87 -

Statement of Financial Accounting Standards Board No. 123,
Accounting for Stock-Based Compensation (SFAS 123) became effective for
US GAAP purposes for fiscal years beginning after December 15, 1995. For fiscal
years ending prior to December 31, 2003, as allowed by SFAS 123, the Company
followed the intrinsic value principles of APB Opinion 25, Accounting for
Stock Issued to Employees and related interpretations, in measuring
compensation expense for employee options. Under the intrinsic value method,
compensation cost is the excess, if any, of the quoted market value of the stock
at the measurement date, which is generally the grant date, over the amount an
employee must pay to acquire the stock. The application of APB 25 resulted in
compensation expense of $15,000 being recognized for employees in the year ended
December 31, 2001 under US GAAP and no similar expense was required under
Canadian GAAP. Effective January 1, 2003, the Company adopted the fair value
recognition provisions of SFAS 123 whereby the fair value of the stock options
granted to employees was expensed. Under the modified prospective method of
adoption selected by the Company under the provisions of Statement of Financial
Accounting Standards Board No. 148 Accounting for Stock-Based
Compensation-Transition and Disclosure (SFAS 148), employee compensation
cost recognized in 2003 is the same as that which would have been recognized had
the provisions of SFAS 123 been applied from its original effective date.
Results of prior years have not been restated.

Effective January 1, 2006, the Company adopted Statement of
Financial Accounting Standard (SFAS 123R) Share Based Payment using the modified
prospective method for all employee awards granted, modified or settled after
the effective date using the fair value measurement method of this standard. For
unvested employee equity awards as of the effective date, compensation is to be
recognized based upon the grant date fair value determined under SFAS 123,
adjusted to reflect the estimated impact of forfeitures. Upon adoption of SFAS
123R, there was no cumulative effect adjustment required. Non-employee awards
are accounted for under the fair value method under both Canadian and US GAAP.

There were no significant differences in accounting for
stock-based compensation between Canadian GAAP and US GAAP during the three
years ended December 31, 2007.

(c) ****Elimination
of deficit:

During the year ended December 31, 1999, the Company reduced
its paid-up capital by $6,211,205 to eliminate the deficit at March 31, 1999. In
order to effect these reductions, it was not necessary to revalue the assets of
the Company. As a consequence, all conditions under the US GAAP
quasi-reorganization rules were not met and the recapitalization of the deficit
would not be recorded.

(d)****
Convertible note payable:

Under Canadian GAAP, the proceeds of the financing allocated to
the estimated fair value of the conversion feature of the debt is recorded as an
equity component of the debt (note 7(b)). Under US GAAP, a value is assigned to
the conversion feature only if the effective conversion rate is less than the
market price of the common stock at the date of issuance. Accordingly, no value
would be assigned under US GAAP to the conversion feature on the convertible
notes issued in 2007 and 2006.

Applying US GAAP, the convertible notes at December 31, 2007
would be recorded at face value for a total of $6,070,000 and no value would be
assigned to equity components of the convertible notes. In addition, accretion
on the calculated debt discounts on the convertible notes under Canadian GAAP
aggregating $377,812 (2006 - $149,799, 2005 - nil) for the year ended December
31, 2007 would not have been recorded, reducing interest expense by an
equivalent amount.

The amounts in the consolidated balance sheets that differ
significantly from those reported under Canadian GAAP are as follows:

---

- 88 -

|                                     |  | December
      31, 2007 |   |  | December 31, 2006 |  
|------------------------------------ |  | ----------------------- | - |  | ----------------- | -
|                                     |  |                         |   |  |                   |  
|                                     |  | Canadian                |   |  | US                |  
|                                     |  |                         |   |  |                   |  
|                                     |  | GAAP                    |   |  | GAAP              |  
|                                     |  |                         |   |  |                   |  
|Convertible note payable             |  | 4,028,611               |   |  | 6,070,000         |  
|                                     |  |                         |   |  |                   |  
|Share capital                        |  | 56,988,447              |   |  | 63,199,652        |  
|                                     |  |                         |   |  |                   |  
|Contributed surplus                  |  | 6,261,116               |   |  | 6,276,116         |  
|                                     |  |                         |   |  |                   |  
|Equity component of convertible note |  | 2,569,000               |   |  | -                 |  
|                                     |  |                         |   |  |                   |  
|Deficit                              |  | (44,628,039             | ) |  | (50,326,633       | )

(e) ****Statement
of operations presentation:

The consolidated statement of operations includes a write down
of the San Taco mineral property in other expenses. Under US GAAP, this amount
would be disclosed as an operations expense.

(f) ****Recent
accounting pronouncements:

| | (i)   | In September 2006, FASB issued SFAS No. 157, Fair
      Value Measurementto define fair value, establish a framework for
      measuring fair value and to expand disclosures about fair value
      measurements. The statement only applies to fair value measurements that
      are already required and is effective for fiscal years beginning after
      November 15, 2007. 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.                                                                                                                                                                                                                                                                    
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii)  | In February 2007, FASB issued SFAS No. 159, Fair Value
      Option for Financial Assets and Liabilitieswhich permits entities to
      choose to measure various financial instruments and certain other items at
      fair value. The statement is effective for fiscal years beginning after
      November 15, 2007. 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.                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (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.
      This statement specifies that non-controlling interests are to be treated
      as a separate component of equity, with increases and decreases in the
      parents ownership interest as capital transactions. 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 and is to be applied prospectively to all
      non-controlling interests, including any that arose before the effective
      date. 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.                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (iv)  | In December 2007, the FASB issued a revised standard on
      accounting for business combinations SFAS
141(R).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

- 89 -

The major changes to accounting for business combinations are
summarized as follows:

- all business acquisitions would be measured at fair value
- most acquisition-related costs would be recognized as expenses as incurred
  (they would no longer be part of the purchase consideration)
- 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

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.

(g)****
Reconciliation:

The effect of the measurement differences between Canadian GAAP
and US GAAP on the consolidated balances sheets and statements of operations and
cash flows is summarized as follows:

| | *(i)*  | Share capital and contributed surplus:                     |   |             |   |   |             |  
| | ------ | ---------------------------------------------------------- | - | ----------- | - | - | ----------- | -
| |        |                                                            |   | 2007        |   |   | 2006        |  
| |        |                                                            |   |             |   |   |             |  
| |        | Share capital and contributed surplus, under               |   |             |   |   |             |  
| |        | Canadian GAAP                                              | $ | 63,249,563  |   | $ | 52,471,009  |  
| |        | Adjustment for stock-based compensation for                |   |             |   |   |             |  
| |        | employees (note 13(b))                                     |   | 15,000      |   |   | 15,000      |  
| |        | Reversal of recapitalization of deficit (note 13(c))       |   | 6,211,205   |   |   | 6,211,205   |  
| |        | Share capital and contributed surplus, under               |   |             |   |   |             |  
| |        | US GAAP                                                    | $ | 69,475,768  |   | $ | 58,697,214  |  
| | *(ii)* | Deficit:                                                   |   |             |   |   |             |  
| |        |                                                            |   | 2007        |   |   | 2006        |  
| |        |                                                            |   |             |   |   |             |  
| |        | Deficit, under Canadian GAAP                               | $ | (44,628,039 | ) | $ | (24,927,178 | )
| |        | Adjustment for stock-based compensation for                |   |             |   |   |             |  
| |        | employees (note 13(b))                                     |   | (15,000     | ) |   | (15,000     | )
| |        | Reversal of recapitalization of deficit (note
      13(c)) |   | (6,211,205  | ) |   | (6,211,205  | )
| |        | Interest accreted on convertible loan note (note 13(a))    |   | 527,611     |   |   | 149,799     |  
| |        | Deficit, under US GAAP                                     | $ | (50,326,633 | ) | $ | (31,003,584 | )

---

- 90 -

| | (iii) | Loss and loss per share:                |   |             |   |   |             |   |   |            |  
| | ----- | --------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
| |       |                                         |   | 2007        |   |   | 2006        |   |   | 2005       |  
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       | Loss for the year, under                |   |             |   |   |             |   |   |            |  
| |       | Canadian GAAP                           | $ | (19,700,861 | ) | $ | (15,084,437 | ) | $ | (5,231,685 | )
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       | Interest accreted on convertible        |   |             |   |   |             |   |   |            |  
| |       | loan note (note 13(d))                  |   | 377,812     |   |   | 149,799     |   |   | -          |  
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       | Loss for the year, under US GAAP        | $ | (19,323,049 | ) | $ | (14,934,638 | ) | $ | (5,231,685 | )
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       | Basic and diluted loss per share, under |   |             |   |   |             |   |   |            |  
| |       | US GAAP                                 | $ | (0.27       | ) | $ | (0.25       | ) | $ | (0.22      | )
| |       |                                         |   |             |   |   |             |   |   |            |  
| |       | Weighted average number of common       |   |             |   |   |             |   |   |            |  
| |       | shares, basic and diluted               |   | 72,227,455  |   |   | 59,720,424  |   |   | 23,986,543 |  

***C.***       
***Research and Development***

We do not currently, and did not previously, have research and
development policies in place. Over the past three fiscal years, we spent
approximately $719,406 on due diligence for various other mining properties.

***D.***      
***Trend Information***

Our business is mining of precious metals deposits, principally
gold and silver, so the price of these commodities has a direct impact on our
prospects for success and our ability to raise capital. The recent trend for the
price of gold and silver has been positive and has remained steady at relatively
high historical prices. Management believes that the current trend will continue
for the foreseeable future. History has shown, however, that there can be no
such assurances.

***E.***      
***Off-balance Sheet Arrangements***

We do not have any off-balance sheet arrangements.

***F.***      
***Tabular Disclosure of Contractual Obligations***

The following table outlines the contractual obligations of our
Company:

Payments
        by PeriodContractual Obligations
      Total
      Less than 1 
        year
      1  3 Years
      4  5 Years
      After 5 
        YearsLong-Term Debt
      $6,158,625
      $88,625
      $2,020,000
      $4,050,000
      -Operating Leases
      $178,000
      $112,000
      $66,000
      -
      -Purchase Obligations
      $3,600,000
      $1,146,000
      $1,636,000
      $818,000Total Long-Term Debt
      $9,936,625
      $1,346,625
      $3,722,000
      $4,868,000
      -


***G.***      
***Safe Harbor***

Not applicable.

---

- 91 -

**ITEM
6**              **Directors, Senior Management and Employees**

***A.***       ***Directors Officers and Senior Management***

The information below sets forth the names and business
experience of each of our directors, officers and senior management, as of the
date hereof:

Name
    Present Position Great Panther
    Present Position Minera Mexican el
      Rosario
    Present Position Alberta
      Subsidiary
    Present Position Metalicos
      de Durango
    Present Position Minera de
      Villa Seca
    Present Position Exploraciones Minera
      el RosairoKaare G. Foy
    Executive Chairman, Director
    Director
    Director
    Director
    Director
    DirectorRobert A. Archer
    President, CEO, Director
    President
    n/a
    Director
    Director
    DirectorMalcolm A. Burne
    Director
    n/a
    Director
    n/a
    n/a
    n/aJohn T. Kopcheff
    Director
    n/a
    n/a
    n/a
    n/a
    n/aA. Michael Turko
    Director
    n/a
    n/a
    n/a
    n/a
    n/aWendy M. Ratcliffe
    Corporate Secretary
    Director
    n/a
    n/a
    n/a
    n/aF. Ramos Sanchez
    Vice President - Business
      Development
    Director
    n/a
    Director
    Director
    DirectorRobert Brown
    Vice President - Exploration
    n/a
    n/a
    n/a
    n/a
    DirectorCharles Brown
    Chief Operating Officer
    Chief Operating Officer
    n/a
    Chief Operating Officer
    Chief Operating Officer
    n/aRaakel Iskanius
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer


Business Experience, Function and Area of Experience

**Kaare G. Foy**

As our Executive Chairman and a director, Mr. Foy is
responsible for the financial and corporate management and supervision of the
affairs and business of our Company and our subsidiaries.

Following graduation from Monash University in Australia, Mr.
Foy became an Associate of the Australian Society of Accountants and a Member of
the Australian Institute of Directors. In 1995, he emigrated to reside
permanently in Canada. For most of his career, he has specialized in company
"turnarounds," and has more than 30-years experience serving on the boards of
publicly listed companies in Australia, Canada and the United Kingdom, including
Loscam Materials Handling Limited in Australia, and Greenchip Investments PLC in
the United Kingdom.

Mr. Foy is also Executive Chairman and a director of Cangold
Limited, Executive Chairman, Chief Financial Officer and a director of Monarch
Energy Limited, the President of Oceanic Management Limited, and a director of
Golden Prospect Precious Metals Limited, an AIM-listed company.

---

- 92 -

Robert A. Archer

As our President, Chief Executive Officer and a director, Mr.
Archer is responsible for the day-to-day operations of our Company and for the
development of our strategic direction. Also, as the President of our Mexican
subsidiary, he is responsible for the management and supervision of its affairs
and business in Mexico.

Mr. Archer has more than 27-years experience working for mining
companies throughout North America, namely Newmont Exploration of Canada Ltd.,
Rio Algom Exploration Inc., Placer Dome Canada Ltd. and Noranda Exploration Inc.
He also served as President of Consolidated Magna Ventures Ltd.

Mr. Archer is the President of R. A. Archer & Associates
and Platoro Resource Corp. He also serves as President and Chief Executive
Officer and is a director of Cangold Limited, a company publicly listed on the
TSX Venture Exchange. He is also a non-executive director of Altair Ventures
Incorporated, a company also publicly listed on the TSX Venture Exchange.

Malcolm A. Burne

Mr. Burne was our Chairman, President and Chief Executive
Officer from June 3, 1987 until April 27, 2004. Mr. Burne has been a director
since June 3, 1987. As a non-executive director, he is also a member of our
Audit Committee.

He has been a self-employed business banker since 1962. Malcolm
Burne is a director and Executive Chairman of Ambrian Capital PLC, Samson
Exploration NL and Jubilee Platinum PLC. He also holds Board positions with
publicly listed companies in Australia, Canada and Europe, including Mano River
Resources Inc. and Golden Prospect Precious Metals Limited, a mineral
investments and gold fund company listed on the AIM Exchange in London, United
Kingdom.

Mr. Burne is an independent director.

John T. Kopcheff

Mr. Kopcheff has been a director of our Company since August
2001. As a non-executive director, Mr. Kopcheff is responsible for the corporate
governance of our Company, and is Chairman of our Audit Committee.

He is Managing Director of Victoria Petroleum NL, an oil and
gas company publicly listed on the main board of the Australian Stock Exchange.

Mr. Kopcheff is an independent director.

A. Michael Turko

Mr. Turko was appointed to the Board of Directors of the
Company on July 7, 2006 and is a member of the Companys Audit Committee.

Mr. Turko obtained his Bachelor of Science (Geology) degree at
the University of British Columbia in 1981. In 1993 he became President and CEO
of Gulf Shores Resources Ltd., a company listed on the TSX Venture Exchange,
with interests in petroleum properties in the North Sea, Texas, Alberta,
Manitoba and Newfoundland, a position he currently holds. Mr. Turko also
controls several successful private oil and gas companies, and was recently
appointed President and Chief Executive Officer of Monarch Energy Limited, a
company listed on the TSX Venture Exchange.

Mr. Turko is an independent director.

---

- 93 -

Wendy Ratcliffe

Ms. Ratcliffe has been our Corporate Secretary since August
2001. She is responsible for making all necessary regulatory filings for our
Company and our subsidiaries. Ms. Ratcliffe is also Corporate Secretary of
Cangold Limited and Monarch Energy Limited, companies listed on the TSX Venture
Exchange.

Ing. Francisco Ramos Sanchez

Ing. Francisco Ramos Sanchez was appointed as Vice President of
Business Development in November 2007. He is responsible for seeking out new
business opportunities for Great Panther and initiating planning and permitting
issues for the advancement of the Mapimi Project in Durango. He was formerly
Vice President of Operations from April 2004 through November 2007.

Prior to that, Ing. Ramos was the Vice President, Operations of
our subsidiary MMR, since June 1998. With more than 30-years of experience in
the mining industry, Ing. Ramos is a Mexican mining engineer and metallurgist
based in Queretaro, Mexico. He obtained a Master's Degree in Mining Engineering
from the University of Guanajuato and has worked with senior mining companies
such as Peñoles, IMMSA and Minera Autlan. He has consulted for a number of
junior to mid-size companies from Canada , Mexico and the United States. He is
also the general director of Minco Ingenieria y Construcciones de Queretaro, S.
de R.L. de C.V.

Robert Brown

Mr. Brown has been our Vice President, Exploration since April
30, 2004. He is responsible for overseeing all exploration activities undertaken
by our Company, and has particular experience in the immediate area of our
Company's projects in the Sierra Madre Region of Mexico.

Mr. Brown is a Professional Engineer with a degree in
Engineering Geology from Queen's University. His 28-years of experience in the
mining industry includes 15-years with Lac Minerals in Canada, culminating in
the position of Exploration Manager. For more than 13 years, he held senior
management positions in the junior sector, working on projects throughout the
Americas, Eastern Europe and Indonesia, primarily in gold and silver
exploration.

Charles Brown

Mr. Brown has been our Chief Operating Officer since August
2007. He is a seasoned professional with more than 30 years experience
successfully operating and developing mines both in Canada and internationally,
from operating small gold mines in Ontario and Venezuela to being Managing
Director of Tara Mines Ltd in Ireland, where he was responsible for one of the
world's largest underground zinc mines.

Most recently he was the Project Manager for Newgold Inc.
during its underground exploration and development program, leading to the
completion of a positive feasibility study.

Mr. Brown graduated from Nottingham University, U.K. with an
honours degree in Mining Engineering.

Raakel Iskanius

Ms. Iskanius has been our Chief Financial Officer since May
2007. As our CFO, Ms. Iskanius is responsible for all aspects of the Company's
financial management, including financial reporting, analysis of operations and
regulatory compliance.

---

- 94 -

Ms. Iskanius has more than 17 years of experience as a finance
professional with the vast majority of her career spent in natural gas utility
and multi-branch sectors. A Chartered Accountant, Ms. Iskanius has worked for
companies across North America including Terasen Gas Inc., KPMG and The Loewen
Group Inc.

Ms. Iskanius qualified as a Certified General Accountant in
1995 and received her Chartered Accountant designation in 1999.

Ms. Iskanius is also the Chief Financial Officer of Cangold
Limited, a company publicly listed on the TSX Venture Exchange.

Family Relationships

There are no family relationships between any of the persons
named above.

Other Relationships

There are no arrangements or understandings between any major
shareholder, customer, supplier or others, pursuant to which any of the
above-named persons were selected as directors or members of senior management.

***B.***      
***Compensation***

Other than as set forth in the table below, none of our
executive officers was paid or earned compensation for performing his duties
during the fiscal year ended December 31, 2007. The value of perquisites and
other personal benefits, securities and property for the executive officers that
do not exceed the lesser of $50,000 or 10% of the total of the annual salary and
bonus are not reported herein.

During our last three financial years ended, the following
persons were or are our executive officers:

Name
    Principal Position
    From
    ToMalcolm A. Burne
    President and Chief Executive Officer
    n/a
    April 27, 2005Robert A. Archer
    President and Chief Executive Officer
    April 27, 2005
    PresentKaare G. Foy
    Executive Chairman Chief Financial
      Officer
    April 27, 2005 June 10,
      1996
    Present May 22, 2007Ing. Francisco Ramos Sánchez
    Vice President, Business Development
    April 30, 2004
    PresentRobert F. Brown
    Vice President, Exploration
    April 30, 2004
    PresentCharles Brown
    Chief Operating Officer
    August 15, 2007
    PresentRaakel Iskanius
    Chief Financial Officer
    May 22, 2007
    Present


---

- 95 -

Summary Compensation Table

Annual Compensation
      Long Term CompensationAwards
      PayoutsName
      Year
      Salary 
        ($)
      Bonus 
        ($)
      Other 
        Annual 
        Compen- 
        sation 
        ($)
      Securities 
        Under 
        Options 
        Granted 
        (#)
      Restricted 
        Shares or 
        Restricted 
        Share 
        Units ($)
      LTIP 
        Payouts 
        ($)
      All Other 
        Compen- 
        sation 
        ($)Malcolm A. Burne
      2007 
        2006 
        2005
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/A
      N/A 
        N/A 
        N/ARobert A. Archer
      2007 
        2006 
        2005
      30,000 (1) 
        30,000 (1) 
        15,000 (1)
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        275,000 (6)
        125,000 (2)(12)
      nil 
        nil 
        nil
      N/A 
        N/A 
        N/A
      291,886 (4)
        197,750 (4)
        170,880 (4)(15)Kaare G. Foy
      2007 
        2006 
        2005
      30,000 (1) 
        30,000 (1) 
        15,000 (1)
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        355,000 (9)
        125,000 (2)(13)
      nil 
        nil 
        nil
      N/A 
        N/A 
        nil
      301,420 
        291,560 (3)
        190,468 (5)Ing. Francisco Ramos 
        Sánchez
      2007 
        2006 
        2005
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        225,000 (10)
        100,000 (2)
      nil 
        nil 
        nil
      N/A 
        N/A 
        nil
      264,783(7)
        162,628 (7)
        102,076 (7)Robert F. Brown
      2007 
        2006 
        2005
      149,400 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        175,000 (11)
        75,000 (2)(14)
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      113,095 (8)
        109,950 (8)
        84,407 (8)Charles Brown
      2007 
        2006 
        2005
      180,000 
        N/A 
        N/A
      nil 
        N/A 
        N/A
      nil 
        N/A 
        N/A
      250,000 (18)
        N/A 
        N/A
      nil 
        N/A 
        N/A
      nil 
        nil 
        nil
      2,803 
        N/A 
        N/ARaakel Iskanius
      2007 
        2006 
        2005
      132,000 
        N/A 
        N/A
      nil 
        N/A 
        N/A
      nil 
        N/A 
        N/A
      250,000 (17)
        N/A 
        N/A
      nil 
        N/A 
        N/A
      nil 
        nil 
        nil
      30,869 (16)
        N/A 
        N/A


|(1) | Directors' fees.                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                               
|(2) | Exercisable at $0.45 per share until 2010.                                                                                                                                                                                    
|    |                                                                                                                                                                                                                               
|(3) | Of this amount, $190,500 was paid as a management fee and
      $ 101,060 was paid for rent and other services to Oceanic Management, a
      company controlled by Kaare G. Foy.                                             
|    |                                                                                                                                                                                                                               
|(4) | Consulting fees and other benefits paid to Platoro
      Resource Corp., a company controlled by Robert A. Archer.                                                                                                            
|    |                                                                                                                                                                                                                               
|(5) | Of this amount, $112,080 was paid as a management fee;
      $78,388 was paid for consulting accounting, rent, secretarial and other
      services to Oceanic Management Limited, a company controlled by Kaare G.
      Foy.
|    |                                                                                                                                                                                                                               
|(6) | Of this amount, 125,000 are exercisable at $0.90 until
      January 5, 2011 and 150,000 are exercisable at $2.65 until December 6,
      2011.                                                                               
|    |                                                                                                                                                                                                                               
|(7) | Consulting fees paid to Francisco Ramos
Sánchez.                                                                                                                                                                              
|    |                                                                                                                                                                                                                               
|(8) | Consulting fees and other benefits paid to R.F.B.
      Geological, a company wholly-owned by Robert F.
Brown.                                                                                                                

---

- 96 -

|(9)  | Of this amount, 205,000 are exercisable at $0.90 until
      January 5, 2011 and 150,000 are exercisable at $2.65 until December 6,
      2011.                                                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                    
|(10) | Of this amount, 125,000 are exercisable at $0.90 until
      January 5, 2011 and 100,000 are exercisable at $2.65 until December 6,
      2011.                                                    
|     |                                                                                                                                                                                                    
|(11) | Of this amount, 100,000 are exercisable at $0.90 until
      January 5, 2011 and 75,000 are exercisable at $2.65 until December 6,
      2011.                                                     
|     |                                                                                                                                                                                                    
|(12) | Exercised as to 25,000 common shares on December 19,
      2006.                                                                                                                                   
|     |                                                                                                                                                                                                    
|(13) | Exercised as to 100,000 common shares on April 28,
      2006.                                                                                                                                     
|     |                                                                                                                                                                                                    
|(14) | Exercised as to 20,000 common shares on September 12,
      2006, 20,000 common shares on January 17, 2007, and 10,000 common shares
      on June 1, 2007.                                        
|     |                                                                                                                                                                                                    
|(15) | Of this amount, $261,541 was paid for consulting fees and
      other benefits and $ 39,879 was paid for rent and other services to
      Oceanic Management, a company controlled by Kaare G. Foy.
|     |                                                                                                                                                                                                    
|(16) | Consulting fees paid to Raakel Iskanius.                                                                                                                                                           
|     |                                                                                                                                                                                                    
|(17) | Exercisable at $2,00; 150,000 until June 5, 2012 and
      100,000 until September 10, 2012.                                                                                                       
|     |                                                                                                                                                                                                    
|(18) | Exercisable at $2.00 until September 10,
  2012.                                                                                                                                                   

Compensation of Directors

During the financial year ended December 31, 2007, the
remuneration paid to directors in their capacity as directors of our Company was
as follows:

Kaare G. Foy
    $30,000Robert A. Archer
    $30,000Malcolm A. Burne
    $30,000John T. Kopcheff
    $30,000A. Michael Turko
    $30,000


We have an incentive stock option plan in which directors are
eligible to participate. No stock options were granted to directors during the
year ended December 31, 2007.

***C.***       ***Board Practices***

The election and retirement of our directors are provided for
in our by-laws. An election of directors takes place at each annual meeting of
shareholders and all the directors then in office retire but, if qualified, are
eligible for re-election. A director retains office only until the election of
his successor. The number of directors to be elected at such meeting is the
number of directors then in office, unless the directors or the shareholders
otherwise determine. The election is by ordinary resolution of shareholders. If
an election of directors is not held at the proper time, the incumbent directors
continue in office until their successors are elected. Our last annual general
meeting was held on June 28, 2007.

Our by-laws also permit the directors to add additional
directors to the board between annual general meetings as long as the number
appointed does not exceed one-third of the number directors elected at the last
annual general meeting. Individuals appointed as directors to fill casual
vacancies created on the board or added as additional directors hold office like
any other director until the next annual general meeting at which time they may
be re-elected or replaced.

Our officers are re-elected at a directors' meeting following
each annual general meeting.

The members of our audit committee include John T. Kopcheff,
Malcolm A. Burne and A. Michael Turko. The audit committee reviews and approves
the scope of the audit procedures employed by our

---

- 97 -

independent auditors, reviews the results of the auditor's
examination, the scope of audits, the auditor's opinion on the adequacy of
internal controls and quality of financial reporting and our accounting and
reporting principles, policies and practices, as well as our accounting,
financial and operating controls. The audit committee also reports to the board
of directors with respect to such matters and recommends the selection of
independent auditors. Before financial statements that are to be submitted to
the shareholders at an annual general meeting are considered by the board of
directors, such financial statements are submitted to the audit committee for
review with the independent auditors, following which the report of the audit
committee on the financial statements is submitted to the board of directors.

The members of the nominating and corporate governance
committee are A. Michael Turko, Malcolm A. Burne and John T. Kopcheff. The
mandate of the nominating and corporate governance committee is to identify
individuals qualified to be nominated for election as directors of the Company
or any of the Board's committees, evaluate the qualifications and independence
of each member of the Board and its committees and recommend to the Board any
appropriate changes in the composition of the Board and any of its committees,
evaluate the performance of the Board and its committees; and develop and
recommend to the Board corporate governance principles.

The members of the compensation committee are Malcolm A. Burne,
John T. Kopcheff and A. Michael Turko. The compensation committee reviews and
approves the total compensation package for the Corporations senior executives
including, without limitation, their base salaries, annual incentives, deferred
compensation, stock options and other equity-based compensation, incentive
compensation, special benefits, perquisites, and incidental benefits.

In 2006, we entered into the following consulting services
contracts with certain of our directors, or companies controlled by them:

On March 22, 2006, we entered into an Executive Consulting
Services Agreement, effective January 1, 2006, with Platoro Resource Corp., a
company controlled by Robert A. Archer, the President, Chief Executive Officer
and a director of our Company. Under the agreement, Platoro Resource Corp.
agreed to provide to our Company the continued services of Robert A. Archer as
President and Chief Executive Officer to devote so much of his time and
attention and abilities as is reasonably necessary for the proper performance of
his duties, which shall not be less than 180 days per year. The agreement has a
term of 5 years. As compensation for the services provided, we agreed to pay
Platoro Resource Corp. a fee, payable monthly, of $700 (the daily fee) for
each day devoted by Mr. Archer exclusively to the interests of our Company. On
January 8, 2007, a resolution was passed by the board of directors, increasing
Mr. Archers daily fee to $1,000 for each day of service. The amount of the
daily fee is to be reviewed by our Company not later than December 31 in each
year and any increase shall be not less than 5% of the fee paid in the previous
year. Platoro Resource Corp. is entitled to a bonus based on the performance of
Mr. Archer. The criteria for and the awarding of a performance bonus is
exclusively within the discretion of our compensation committee or our
independent directors, if there is no compensation committee. The amount of a
performance bonus in any year will be up to a maximum of 100% of the total daily
fees paid to Platoro Resource Corp. in that year. In the event of a change of
control of our Company, or the involuntary termination of the agreement without
cause, or a constructive dismissal, or other fundamental change resulting in Mr.
Archer ceasing to be the President and Chief Executive Officer of our Company,
then Platoro Resource Corp. is entitled to receive from our Company a payment
equal to 360 times the daily fee at the then-current rate, 2 times the average
of any performance bonus awarded in the previous 2 years and the equivalent of 2
years of benefits and other compensation, if any.

On March 22, 2006, we entered into an Executive Consulting
Services Agreement, effective January 1, 2006, with Oceanic Management Limited,
a company controlled by Kaare G. Foy, the Executive Chairman and a director of
our Company. Under the agreement Oceanic Management Limited has agreed to
provide to our Company the continued services of Kaare G. Foy as Executive
Chairman to devote so much of his time and attention and abilities as is
reasonably necessary for the proper performance of his duties, which shall not
be less than 180 days per year. The agreement has a term of 5 years. As

---

- 98 -

compensation for the services provided, we agreed to pay
Oceanic Management Limited a fee, payable monthly, of $700 (the daily fee) for
each day devoted by Mr. Foy exclusively to the interests of our Company. On
January 8, 2007, a resolution was passed by the board of directors, increasing
Mr. Foys daily fee to $1,000 per day of services. The amount of the daily fee
will be reviewed by our Company not later than December 31 in each year and any
increase shall be not less than 5% of the fee paid in the previous year. Oceanic
Management Limited is entitled to a bonus based on the performance of Mr. Foy.
The criteria for and the awarding of a performance bonus is exclusively within
the discretion of our compensation committee or our independent directors, if
there is no compensation committee. The amount of a performance bonus in any
year will be up to a maximum of 100% of the total daily fees paid to Oceanic
Management Limited in that year. In the event of a change of control of our
Company, or the involuntary termination of the agreement without cause, or a
constructive dismissal, or other fundamental change resulting in Mr. Foy ceasing
to be the Executive Chairman of our Company, then Oceanic Management Limited is
entitled to receive from our Company a payment equal to 360 times the daily fee
at the then-current rate, 2 times the average of any performance bonus awarded
in the previous 2 years and the equivalent of 2 years of benefits and other
compensation, if any.

On March 22, 2006, we entered into an Executive Consulting
Services Agreement, effective January 1, 2006, with Francisco Ramos Sànchez, the
Vice President, Operations of our Company. Under the agreement our Company
continues the engagement of Mr. Ramos as Vice President, Operations to devote so
much of his time and attention and abilities as is reasonably necessary for the
proper performance of his duties, which shall not be less than 180 days per
year. The agreement has a term of 5 years. As compensation for the services
provided, our Company has agreed to pay Mr. Ramos a fee, payable monthly, of
$550 (the daily fee) for each day devoted by Mr. Ramos exclusively to the
interests of our Company. Mr. Ramos agreement was amended on January 8, 2007 to
increase his daily fee to $800 per day. The amount of the daily fee will be
reviewed by our Company not later than December 31 in each year and any increase
shall be not less than 5% of the fee paid in the previous year. Mr. Ramos is
entitled to a bonus based on his performance. The criteria for and the awarding
of a performance bonus is exclusively within the discretion of our compensation
committee or our independent directors, if there is no compensation committee.
The amount of a performance bonus in any year will be up to a maximum of 100% of
the total daily fees paid to Mr. Ramos in that year. In the event of a change of
control of our Company, or the involuntary termination of the agreement without
cause, or a constructive dismissal, or other fundamental change resulting in Mr.
Ramos ceasing to be the Vice President, Operations of our Company, then Mr.
Ramos is entitled to receive from our Company a payment equal to 360 times the
daily fee at the then-current rate, 2 times the average of any performance bonus
awarded in the previous 2 years and the equivalent of 2 years of benefits and
other compensation, if any.

***D.***       ***Employees***

During the fiscal year ended December 31, 2007, we had 134
(2006  63) direct employees as outlined below. Prior to 2007, the majority of
the Companys workforce was independent contractors rendering services to the
different subsidiaries.

Company
    2007
    2006Great Panther Resources Ltd.
    15
    NilMinera Mexicana el Rosario, S.A. de C.V.
    Nil
    NilMetalicos de Durango, S.A. de
      C.V.
    46
    35Minera de Villa Seca, S.A. de C.V.
    56
    28Exploraciones Mineras El
      Rosario, S.A.
    17
    N/Ade
      C.V.TOTAL
    134
    63


---

- 99 -

We do not currently have a collective bargaining arrangement
with any labour union or association.

***E.***      
***Share Ownership***

Our authorized share capital consists of an unlimited number of
common shares without par value, an unlimited number of Class A preferred shares
without par value issuable in series, and an unlimited number of Class B
preferred shares without par value issuable in series.

As of March 20, 2008, we had the following securities issued
and outstanding:

- 81,144,352 common shares;

- Incentive stock options for the
purchase of up to 5,280,000 of our common shares; and

- warrants for the purchase of up to
4,101,374 of our common shares.

Of the above securities, our directors and officers owned the
  following common shares as of March 20, 2008:

Name Office Held
      Number of Common Shares Beneficially
        Owned
      Percentage(1)Robert A. Archer, Director, President & CEO
      1,790,100 (2)
      1.98%Charles P. Brown.
        COO
      250,000 (3)
      0.28%Robert F. Brown,
        VP Exploration
      260,000 (4)
      0.29%Malcolm A. Burne,
        Director
      790,033 (5)
      0.87%Kaare G. Foy, Director & Executive Chairman
      668,600 (6)
      0.74%Raakel Iskanius,
        CFO
      260,000 (7)
      0.29%John T. Kopcheff,
        Director
      530,000 (8)
      0.59%Wendy M. Ratcliffe,
        Corporate Secretary
      225,000 (9)
      0.25%Francisco Ramos
        Sanchez, VP Operations
      1,500,000 (10)
      1.66%A. Michael Turko,
        Director
      50,000 (11)
      0.06%


(1)        Based on
81,144,352 common shares issued and outstanding, and 9,381,374 shares issuable
upon the exercise of issued and outstanding incentive stock options and warrants
which are exercisable within 60 days of March 20, 2008.

(2)        Includes
1,355,100 of our common shares owned by Robert A. Archer, 60,000 of our common
shares owned by Platoro Resource Corp., a company controlled by Robert A.
Archer, incentive stock options to purchase up to 100,000 of our common shares
at an exercise price of $0.45 per share expiring July 26, 2010, incentive stock
options to purchase up to 125,000 of our common shares at an exercise price of
$0.90 per share expiring January 5, 2011; and incentive stock options to
purchase up to 150,000 of our common shares at an exercise price of $2.65 per
share expiring December 6, 2011.

---

- 100 -

(3)        Includes
incentive stock options to purchase up to 250,000 of our common shares at an
exercise price of $2.00 per share expiring September 10, 2012.

(4)        Includes
incentive stock options to purchase up to 85,000 of our common shares at an
exercise price of $0.45 per share expiring May 25, 2009 as to 60,000 and
February 27, 2010 as to 25,000, incentive stock options to purchase up to
100,000 of our common shares at an exercise price of $0.90 per share expiring
January 5, 2011, and incentive stock options to purchase up to 75,000 of our
common shares at an exercise price of $2.65 per share expiring December 6, 2011.

(5)        Includes 284,133
of our common shares owned by Malcolm A. Burne, 55,900 of our common shares
owned by First Investors Guarantee Ltd, a company controlled by Malcolm A.
Burne, incentive stock options to purchase up to 275,000 of our common shares at
an exercise price of $0.45 per share expiring February 8, 2009 as to 150,000,
February 27, 2010 as to 25,000 and July 26, 2010 as to 100,000, incentive stock
options to purchase up to 125,000 of our common shares at an exercise price of
$0.90 per share expiring January 5, 2011, and incentive stock options to
purchase up to 50,000 of our common shares at an exercise price of $2.65 per
share expiring December 6, 2011.

(6)        Includes 42,400
of our common shares owned by Kaare G. Foy, 246,200 of our common shares owned
by Oceanic Management Limited, a company controlled by Kaare G. Foy, incentive
stock options to purchase up to 25,000 of our common shares at an exercise price
of $0.45 per share expiring February 8, 2009, incentive stock options to
purchase up to 205,000 of our common shares at an exercise price of $0.90 per
share expiring January 5, 2011, and incentive stock options to purchase up to
150,000 of our common shares at an exercise price of $2.65 per share expiring
December 6, 2011.

(7)        Includes 10,000
of our common shares, incentive stock options to purchase up to 250,000 of our
common shares at an exercise price of $2.00 per share expiring June 5, 2012 as
to 150,000 and September 10, 2012 as to 100,000.

(8)        Includes 80,000
of our common shares, incentive stock options to purchase up to 275,000 of our
common shares at an exercise price of $0.45 per share expiring February 8, 2009
as to 150,000, February 27, 2010 as to 25,000 and July 26, 2010 as to 100,000,
incentive stock options to purchase up to 125,000 of our common shares at an
exercise price of $0.90 per share expiring January 5, 2011, and incentive stock
options to purchase up to 50,000 of our common shares at an exercise price of
$2.65 per share expiring December 6, 2011.

(9)        Includes
incentive stock options to purchase up to 120,000 of our common shares at an
exercise price of $0.45 per share expiring February 8, 2009 as to 70,000,
February 27, 2010 as to 25,000 and July 26, 2010 as to 25,000, incentive stock
options to purchase up to 30,000 of our common shares at an exercise price of
$0.52 per share expiring April 5, 2009, incentive stock options to purchase up
to 25,000 of our common shares at an exercise price of $0.90 per share expiring
January 5, 2011, and incentive stock options to purchase up to 50,000 of our
common shares at an exercise price of $2.65 per share expiring December 6, 2011.

(10)        Includes
1,075,000 of our common shares, incentive stock options to purchase up to
200,000 of our common shares at an exercise price of $0.45 per share expiring
February 8, 2009 as to 100,000, February 27, 2010 as to 25,000 and July 26, 2010
as to 75,000, incentive stock options to purchase up to 125,000 of our common
shares at an exercise price of $0.90 per share expiring January 5, 2011, and
incentive stock options to purchase up to 100,000 of our common shares at an
exercise price of $2.65 per share expiring December 6, 2011.

(11)        Includes
incentive stock options to purchase up to 50,000 of our common shares at an
exercise price of $2.65 per share expiring December 6, 2011.

The voting rights attached to the common shares owned by our
officers and directors do not differ from those voting rights attached to shares
owned by people who are not officers or directors of our Company.

---

- 101 -

Stock Option Plan

We have an incentive stock option plan that provides for the
grant of incentive stock options to purchase our common shares to our directors,
officers and key employees and other persons providing ongoing services to us.
Our stock option plan is administered by our board of directors. The maximum
number of our common shares which may be reserved and set aside for issuance
under our stock option plan is equal to 10% of the number of common shares
outstanding from time to time on a non-diluted basis. Each option upon its
exercise entitles the grantee to one common share. The exercise price of common
shares subject to an option will be determined by the board of directors at the
time of grant and will be not less than the discounted market price of the
common shares at the date of grant, as determined under the policies of the
Toronto Stock Exchange. Options may be granted under our stock option plan for
an exercise period of up to five years from the date of grant of the option or
such lesser periods as may be determined by our board of directors.

On March 7, 2008, the Board of Directors approved the adoption
of a Shareholder Rights Plan (the "Plan") as part of its procedures for dealing
with any parties who may seek to acquire control of the Company through a
take-over bid or other transaction. To implement the Plan, the Board of
Directors of the Company authorized the issue of one Right in respect of each
common share of the Company outstanding to holders of record on March 7, 2008.
Until the occurrence of certain specific events, the Rights will trade with the
common shares of the Company.

The Rights become exercisable only when a person, including any
party related to it or acting jointly with it, acquires or announces its
intention to acquire 20% or more of the outstanding common shares of the Company
without complying with the "Permitted Bid" provisions of the Plan. Under the
Plan, a Permitted Bid is a bid made to all shareholders on identical terms and
conditions that is open for at least 60 days. If at the end of 60 days more than
50% of the outstanding shares, other than those owned by the offeror and certain
persons related to the offeror or acting jointly with it, have been tendered,
the offeror may take up and pay for the shares but must extend the bid for a
further 10 business days to allow all other shareholders to tender. Should a
non-permitted acquisition occur, each Right would entitle each holder of common
shares (other than the offeror and certain parties related to the offeror or
acting jointly with it) to purchase additional common shares of the Company at a
50% discount to the market price at the time. Although the Plan has become
effective upon its adoption by the Board of Directors, in accordance with stock
exchange requirements it will be submitted to shareholders of the Company for
ratification at the next annual shareholders meeting. If ratified, the Plan will
continue until the annual general meeting of shareholders in 2012. The Plan is
subject to acceptance by the Toronto Stock Exchange.

During the year ended December 31, 2007, and subsequently, we
  granted the following stock options:

Name
    Number of Options
    Exercise Price
    Expiry DateOctavio Francisco
      Mendez Arellano
    100,000 (1)
    $2.00
    June
      5, 2012Charles P. Brown
    250,000
    $2.00
    September 10, 2012Arturo Loya Cano
    75,000
    $2.65
    March 11, 2012Carlos Contreras
    15,000
    $2.65
    March 11, 2012Luis Ponce
      Fernandez
    100,000
    $2.00
    June
      5, 2012Paula Mariana
      Fregonese
    25,000
    $2.65
    March 11, 2012Alyssa Gardner
    50,000 (1)
    $2.00
    June
      5, 2012


---

- 102 -

Name
    Number of Options
    Exercise Price
    Expiry DatePablo Gomez
    50,000
    $2.00
    September 10, 2012David Hladky
    75,000
    $2.00
    June
      5, 2012Raakel Iskanius
    150,000 100,000
    $2.00 $2.00
    June 5, 2012 September 10, 2012Betty Joy Leblanc
    50,000 (1)
    $2.65
    March 11, 2012Gustavo Alonso
      Almodovar Soriano
    50,000
    $2.00
    September 10, 2012William M.
      Vanderwall
    50,000
    $2.00
    June
      5, 2012Deborah Young
    100,000
    $2.00
    September 10, 2012


(1)        During the year
ended December 31, 2007, the incentive stock options were cancelled 30 days
after resignation.

**ITEM
7**             
**Major Shareholders and Related Party Transactions**

***A.***      
***Major Shareholders***

As of March 20, 2008, Computershare Trust Company of Canada,
our registrar and transfer agent, reported that we had 81,144,352 common shares
issued and outstanding. Of those common shares, 75,449,084 common shares were
registered to Canadian residents (97 shareholders); 4,643,432 common shares were
registered to residents of the United States (230 shareholders); and 1,051,836
common shares were registered to residents of other foreign countries (67
shareholders). There are no persons known to us to be the beneficial owners of
more than five (5%) of those common shares.

To the best of our knowledge, we are not directly or indirectly
owned or controlled by another corporation, by any foreign government or by any
other natural or legal person.

There are no arrangements known to us, the operation of which
may at a subsequent date result in a change in the control of our Company.

***B.***      
***Related Party Transactions***

Other than as disclosed below or elsewhere in this annual
report, to the best of our knowledge, there have been no material transactions
or loans from the commencement of our 2007 fiscal year to the date of this
annual report between our Company and: (a) enterprises that directly or
indirectly through one or more intermediaries, control or are controlled by, or
are under common control with, our Company; (b) associates; (c) individuals
owning, directly or indirectly, an interest in the voting power of our Company
that gives them significant influence over our Company, and close members of any
such individual's family; (d) key management personnel of our Company, including
directors and senior management of our Company and close members of such
individuals' families; and (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.

---

- 103 -

During the year ended December 31, 2007, we entered into the
following transactions with related parties:

|                                                     |   | 2007    |  |   | 2006    |  |   | 2005    | 
|---------------------------------------------------- | - | ------- |  | - | ------- |  | - | ------- | 
|                                                     |   |         |  |   |         |  |   |         | 
|Consulting fees paid or accrued to
      companies   |   |         |  |   |         |  |   |         | 
|controlled by directors of the Company               | $ | 539,000 |  | $ | 388,250 |  | $ | 295,760 | 
|                                                     |   |         |  |   |         |  |   |         | 
|Consulting fees paid or accrued to companies         |   |         |  |   |         |  |   |         | 
|controlled by officers of the
      Company          |   | 395,943 |  |   | 272,578 |  |   | 186,483 | 
|                                                     |   |         |  |   |         |  |   |         | 
|Cost recoveries received or accrued from a           |   |         |  |   |         |  |   |         | 
|company with a common director of                    |   |         |  |   |         |  |   |         | 
|the Company                                          |   | 631,117 |  |   | -       |  |   | -       | 
|                                                     |   |         |  |   |         |  |   |         | 
|Office and administration fees paid or
      accrued |   |         |  |   |         |  |   |         | 
|to a company controlled by a director of             |   |         |  |   |         |  |   |         | 
|the Company                                          |   | 39,879  |  |   | 101,060 |  |   | 78,388  | 
|                                                     |   |         |  |   |         |  |   |         | 

As at December 31, 2007, $74,401 (2006  nil; 2005 - $14,080)
was due to companies controlled by officers and directors of the Company.
Amounts due from a company with a common director were $400,742 (2006  nil,
2005 - nil).

**ITEM
8**             
**Financial Information**

Our financial statements are stated in Canadian dollars and are
prepared in accordance with Canadian generally accepted accounting principles
with a reconciliation to United States generally accepted accounting principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in Canadian dollars.

Financial Statements filed as part of this Annual Report

|- | Report of Independent Registered
      Public Accounting Firm dated March 20, 2008.                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                   
|- | Consolidated balance sheets for
      the fiscal years ended December 31, 2007, and 2006.                                                         
|  |                                                                                                                                                   
|- | Consolidated statements of
      operations and comprehensive loss and deficit for the fiscal years ended
      December 31, 2007, 2006, and 2005.
|  |                                                                                                                                                   
|- | Consolidated statements of cash
      flows for the fiscal years ended December 31, 2007, 2006, and 2005.                                         
|  |                                                                                                                                                   
|- | Notes to consolidated financial
      statements                                                                                                  

The audited financial statements as at December 31, 2007 and
2006, and for each of the years ended December 31, 2007, 2006, and 2005 can be
found under Item 17 "Financial Statements".

---

- 104 -

Legal Proceedings

A legal proceeding was launched in 2006 by five dissident
members of the Sociedad Cooperativa Minero Metalurgica Sante Fe (the
"Cooperativa") against the administration of the Cooperativa. Minera Mexicana el
Rosario, S.A. de C.V. ("MMR") and one of MMRs officers were named in the
lawsuit. The lawsuit alleged that the sale of the Guanajuato mine assets should
be nullified on the basis that the proceedings leading to the approval of the
sale did not meet specific requirements as set out in the bylaws of the
Cooperativa. The lawsuit was abandoned late in the second quarter of 2007 and
was officially confirmed by the Court, after which the lawsuit cannot be
re-initiated by the five dissidents.

On August 16, 2007, Minera de Villa Seca, S.A. de C.V. received
a notice of assessment from the Instituto Mexicano Del Seguro Social (the
Mexican Social Security Institute (IMSS)) for approximately $347,000 of
additional social security contributions due and penalties thereon. On November
9, 2007, the Company appealed this assessment and pledged a small piece of
unused property at the Guanajuato mine as a guarantee. The guarantee will be
removed upon successful appeal of the claim or by payment of the amount owing to
the IMSS.

Unpaid IMSS amounts are required to be adjusted for the
National Consumer Price Index and penalties increase over the passage of time.
The value of the claim at December 31, 2007 is $516,000. This has not been
provided for since management believes that this assessment is without merit and
will not have a material adverse impact on our financial position, results of
operations or cash flows.

Dividend Distributions

Holders of our common shares are entitled to receive such
dividends as may be declared from time to time by our board, in its discretion,
out of funds legally available for that purpose. We intend to retain future
earnings, if any, for use in the operation and expansion of our business and do
not intend to pay any cash dividends in the foreseeable future.

Significant Changes

Other than as disclosed in this annual report, no significant
change has occurred in our Company's financial statements since the financial
year ended December 31, 2007.

**ITEM
9**             
**The Offer and Listing**

***A.***      
***Offer and Listing Details***

Price History

On June 18, 1980, our common shares were listed on the TSX
Venture Exchange (formerly known as the CDNX, and the Vancouver Stock Exchange).
Our common shares traded on the TSX Venture Exchange under the symbol "GPR", and
we were classified by the TSX Venture Exchange as a Tier 2 company.

On October 2, 2003, our common share capital was consolidated
on the basis of one new common share for each ten old common shares.

On February 28, 2006, we were elevated to Tier 1 of the TSX
Venture Exchange.

On November 3, 2006, we received conditional approval for our
TSX listing.

---

- 105 -

On November 14, 2006, our common shares became listed on the
TSX.

The annual high and low market prices for our common shares for
the five most recent full fiscal years were as follows:

Year Ended
    High
    LowDecember 31, 2003*
    $0.60
    $0.01December 31, 2004
    $0.77
    $0.33December 31, 2005
    $1.17
    $0.36December 31, 2006
    $2.79
    $0.90December 31, 2007
    $2.53
    $1.07


*Our common shares were consolidated on October 2, 2003
on the basis of one new common share for each ten old common shares. Figures for
previous periods have not been restated.

The high and low market prices for our common shares for each
full financial quarter for the three most recent full fiscal years were as
follows:

Quarter Ended
    High
    LowMarch 31, 2005
    $0.55
    $0.36June 30, 2005
    $0.53
    $0.41September 30, 2005
    $0.65
    $0.46December 31, 2005
    $1.17
    $0.53March 31, 2006
    $1.90
    $0.80June 30, 2006
    $2.55
    $1.40September 30, 2006
    $2.22
    $1.48December 31, 2006
    $2.79
    $1.52March 31, 2007
    $2.36
    $1.77June 30, 2007
    $2.20
    $1.60September 30, 2007
    $2.15
    $1.07December 31, 2007
    $1.75
    $1.09


The high and low market prices for our common shares for each
of the most recent six months, from October, 2007 through February, 2008 were as
follows:

---

- 106 -

Month Ended
    High
    LowSeptember 30, 2007
    $1.62
    $1.30October 31, 2007
    $1.65
    $1.16November 30, 2007
    $1.75
    $1.09December 31, 2007
    $1.35
    $1.10January 31, 2008
    $1.43
    0.87February 28, 2008
    $1.68
    $0.85


The transfer of our common shares is managed by our transfer
agent, Computershare Trust Company of Canada.

***B.***      
***Plan of Distribution***

Not applicable.

***C.***      
***Markets***

Our common shares trade on the Toronto Stock Exchange (TSX)
under the symbol "GPR" effective November 14, 2006. Our CUSIP number is 39115T
106.

***D.***      
***Selling Shareholders***

Not applicable.

***E.***      
***Dilution***

Not applicable

***F.***      
***Expenses of the Issue***

Not applicable.

**ITEM
10**             
**Additional Information**

***A.***      
***Share Capital***

Not applicable

***B.***      
***Memorandum and Articles of Association***

The information required by this section is incorporated by
reference from our Registration Statement on Form 20-F, filed on August 10,
2004.

***C.***      
***Material Contracts***

Our material contracts entered into up to the date of filing
our Registration Statement on Form 20-F are incorporated by reference from our
Registration Statement on Form 20-F, which was filed on August 10, 2004.

---

- 107 -

Since the date of filing our Registration Statement on Form
20-F, we have entered into the following additional material contracts:

On January 4, 2005, we signed a letter of intent with Minera
Acero del Fuego, S.A. de C.V. for an option to purchase 100% of the ownership
rights in and to two mining claims designated as the Virimoa Property located in
the Topia Mining District, State of Durango, Mexico. The project consists of two
concessions comprising 148 hectares and hosts a zone of intense alteration,
exposed for more than 350 metres. Terms of the agreement call for our Company to
make four staged cash payments and share issuances totaling US$300,000 ($50,000
paid) and 300,000 shares (150,000 issued), over a period of three years, to the
property owner. If the option is exercised, the property owner will retain a 2%
NSR, half of which can be purchased for US$1,000,000. The Option Agreement was
signed on June 13, 2005. In May 2007, the Company chose to forfeit all rights
and options to the property. No payments were made in 2007.

On June 30, 2005, we entered into an agreement with Compañia
Minera de Canelas y Topia S.A. de C.V(the vendor) to purchase 100% of
the ownership rights in and to all the fixed assets, machinery, equipment and
Topia Silver-Lead-Zinc Mine located in the Municipality of Topia, State of
Durango, Mexico. We exercised our option to acquire the mine, which includes a
200 tonne per day mill and complete mining infrastructure, after a 7,436 metre
surface diamond drilling program completed by our Company in 2004-05 indicated
that the property had significant potential to host additional resources.

Upon signing the agreement for the Topia Silver-Lead-Zinc Mine,
we paid a total of US$540,165 to the vendor and to two divisions of Peñoles, the
latter being part of the assumed debt. The balance of the purchase price,
approximately US$1.76 million, is divided between the vendor (US$946,000 paid)
and La Cienega, a division of Peñoles. While the debt to the vendor will be paid
in stages over the next three years, the debt to La Cienega will be paid
effectively from the proceeds of production as a 10% Net Smelter Return (NSR)
royalty, until the debt is fully repaid, at which time the NSR ceases. We have
the option of paying out the debt in full at any time. As at December 31, 2007,
no obligations remained.

On October 25, 2005, we signed a formal purchase agreement with
the Sociedad Cooperativa Minero Metalúrgica Santa Fe de Guanajuato to acquire a
100% interest in a group of producing silver-gold mines in Guanajuato, Mexico.
The three principal mines in the Companys acquisition, the Valenciana, Cata and
Rayas, occupy the heart of the 25 kilometre long Veta Madre (Mother Lode)
structure that controls the majority of the silver-gold mineralization in the
Guanajuato District. The total purchase price was US$7,250,000 which included
1,107 hectares in two main properties, the 1,200 tonne-per-day plant, workshops
and administration facilities, complete mining infrastructure, mining equipment,
and certain surface rights (real estate). At December 31, 2006, all payments and
other contractual obligations have been met.

On September 11, 2006, we signed a letter of intent to acquire
100% in the Mapimi Project (formerly Km66). The agreement is subject to a 3%
NSR to the present property owners. Each 0.5% of the NSR, up to a maximum of 2%,
can be purchased for US$500,000. As part of the agreement, Great Panther is
required to make 6 staged cash payments and share issuances totaling
US$3,000,000 (US$300,000 paid) and 500,000 shares (400,000 issued) over the
subsequent 4 years.

On February 2, 2007, the Company entered into an option
agreement with Altair Ventures Incorporated (Altair). Terms of the agreement
allow Altair to acquire a 70% interest in the four mining claims named San
Antonio, Iran, Chiripa, and Santo Nino by making scheduled cash payments
totaling US$200,000 (US$30,000 received), issuing a total of 200,000 shares of
Altair (100,000 received) and fulfilling certain work commitments on the
property over a three year period.

***D.***      
***Exchange Controls***

There are no government laws, decrees or regulations in Canada
  which restrict the export or import of capital or which affect the remittance
  of dividends, interest or other payments to non-resident holders of our common
  shares. Any remittances of dividends to United States residents and to other
  non-residents are, however, subject to withholding tax. See "Taxation" below.

---

- 108 -

***E.***      
***Taxation***

Canadian Federal Income Taxation

We consider that the following summary fairly describes the
principal Canadian federal income tax consequences applicable to a holder of our
common shares who at all material times deals at arm's length with our Company,
who holds all common shares as capital property, who is resident in the United
States, who is not a resident of Canada and who does not use or hold, and is not
deemed to use or hold, his common shares of our Company in connection with
carrying on a business in Canada (a "non-resident holder"). It is assumed that
the common shares will at all material times be listed on a stock exchange that
is prescribed for purposes of the Income Tax Act (Canada) (the "ITA") and
regulations thereunder. Investors should be aware that the Canadian federal
income tax consequences applicable to holders of our common shares will change
if, for any reason, we cease to be listed on a prescribed stock exchange.
Accordingly, holders and prospective holders of our common shares should consult
with their own tax advisors with respect to the income tax consequences of them
purchasing, owing and disposing of our common shares should we cease to be
listed on a prescribed stock exchange.

This summary is based upon the current provisions of the ITA,
the regulations thereunder, the Canada-United States Tax Convention as amended
by the Protocols thereto (the "Treaty") as at the date of the registration
statement and the currently publicly announced administrative and assessing
policies of the Canada Revenue Agency (the "CRA"). This summary does not take
into account Canadian provincial income tax consequences. This description is
not exhaustive of all possible Canadian federal income tax consequences and does
not take into account or anticipate any changes in law, whether by legislative,
governmental or judicial action. This summary does, however, take into account
all specific proposals to amend the ITA and regulations thereunder, publicly
announced by the Government of Canada to the date hereof.

This summary does not address potential tax effects relevant to
our Company or those tax considerations that depend upon circumstances specific
to each investor. Accordingly, holders and prospective holders of our common
shares should consult with their own tax advisors with respect to the income tax
consequences to them of purchasing, owning and disposing of common shares in our
Company.

Dividends

The ITA provides that dividends and other distributions deemed
to be dividends paid or deemed to be paid by a Canadian resident corporation
(such as our Company) to a non-resident of Canada shall be subject to a
non-resident withholding tax equal to 25% of the gross amount of the dividend or
deemed dividend. Provisions in the ITA relating to dividend and deemed dividend
payments to and gains realized by non-residents of Canada, who are residents of
the United States, are subject to the Treaty. The Treaty may reduce the
withholding tax rate on dividends as discussed below.

Article X of the Treaty as amended by the US-Canada Protocol
ratified on November 9, 1995 provides a 5% withholding tax on gross dividends or
deemed dividends paid to a United States corporation which beneficially owns at
least 10% of the voting stock of the company paying the dividend. In cases where
dividends or deemed dividends are paid to a United States resident (other than a
corporation) or a United States corporation which beneficially owns less than
10% of the voting stock of a company, a withholding tax of 15% is imposed on the
gross amount of the dividend or deemed dividend paid. We would be required to
withhold any such tax from the dividend and remit the tax directly to CRA for
the account of the investor.

---

- 109 -

The reduction in withholding tax from 25%, pursuant to the
Treaty, will not be available:

(a)        if the shares in
respect of which the dividends are paid formed part of the business property or
were otherwise effectively connected with a permanent establishment or fixed
base that the holder has or had in Canada within the 12 months preceding the
disposition, or

(b)        the holder is a
U.S. LLC which is not subject to tax in the U.S.

The Treaty generally exempts from Canadian income tax dividends
paid to a religious, scientific, literary, educational or charitable
organization or to an organization exclusively administering a pension,
retirement or employee benefit fund or plan, if the organization is resident in
the U.S. and is exempt from income tax under the laws of the U.S.

Capital Gains

A non-resident holder is not subject to tax under the ITA in
respect of a capital gain realized upon the disposition of one of our shares
unless the share represents "taxable Canadian property" to the holder thereof.
Our common shares will be considered taxable Canadian property to a non-resident
holder only if:

(a)        the non-resident
holder;

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

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

owned not less than 25% of the issued shares of any class or
series of our Company at any time during the five year period preceding the
disposition. In the case of a non-resident holder to whom shares of our Company
represent taxable Canadian property and who is resident in the United States, no
Canadian taxes will generally be payable on a capital gain realized on such
shares by reason of the Treaty unless:

(a)        the value of such
shares is derived principally from real property (including resource property)
situated in Canada,

(b)        the holder was
resident in Canada for 120 months during any period of 20 consecutive years
preceding, and at any time during the 10 years immediately preceding, the
disposition and the shares were owned by him when he ceased to be a resident of
Canada,

(c)        they formed part
of the business property or were otherwise effectively connected with a
permanent establishment or fixed base that the holder has or bad in Canada
within the 12 months preceding the disposition, or

(d)        the holder is a
U.S. LLC which is not subject to tax in the U.S.

If subject to Canadian tax on such a disposition, the
taxpayer's capital gain (or capital loss) from a disposition is the amount by
which the taxpayer's proceeds of disposition exceed (or are exceeded by) the
aggregate of the taxpayer's adjusted cost base of the shares and reasonable
expenses of disposition. For Canadian income tax purposes, the "taxable capital
gain" is equal to one-half of the capital gain.

United States Federal Income Taxation

The following is a discussion of the material United States
Federal income tax consequences, under current law, applicable to a U.S. Holder
(as defined below) of our common shares who holds such shares as capital assets.
This discussion does not address all potentially relevant Federal income tax
matters and it does not address consequences peculiar to persons subject to
special provisions of Federal income tax

---

- 110 -

law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local, or foreign tax consequences. (See "Canadian Federal Income Tax
Consequences" above).

The following discussion is based on 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 any recently proposed legislation which, if enacted,
could be applied, possibly on a retroactive basis, at any time.

The discussion below does not address potential tax effects
relevant to our cCompany or those tax considerations that depend upon
circumstances specific to each investor. In addition, this discussion does not
address the tax consequences that may be relevant to particular investors
subject to special treatment under certain U.S. Federal income tax laws, such
as, dealers in securities, tax-exempt entities, banks, insurance companies and
non-U.S. Holders. Purchasers of the common stock should therefore satisfy
themselves as to the overall tax consequences of their ownership of the common
stock, including the State, local and foreign tax consequences thereof (which
are not reviewed herein), and should consult their own tax advisors with respect
to their particular circumstances.

U.S. Holders

As used herein, a "U.S. Holder" includes a beneficial holder of
common shares of our Ccompany who is a citizen or resident of the United States,
a corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, any trust if a US court
is able to exercise primary supervision over the administration of the trust and
one or more US persons have the authority to control all substantial decisions
of the trust, any entity created or organized in the United States which is
taxable as a corporation for U.S. tax purposes and any other person or entity
whose ownership of common shares of our Company is effectively connected with
the conduct of a trade or business in the United States. A U.S. Holder does not
include persons subject to special provisions of Federal income tax law, such as
tax-exempt organizations, qualified retirement plans, financial institutions,
insurance companies, real estate investment trusts, regulated investment
companies, broker-dealers, non-resident alien individuals or foreign
corporations whose ownership of our common shares is not effectively connected
with the conduct of a trade or business in the United States and shareholders
who acquired their shares through the exercise of employee stock options or
otherwise as compensation.

Dividend Distribution on Shares of our Company

U.S. Holders receiving dividend distributions (including
constructive dividends) with respect to the common shares of our Ccompany are
required to include in gross income for United States Federal income tax
purposes the gross amount of such distributions to the extent that we have
current or accumulated earnings and profits, without reduction for any Canadian
income tax withheld from such distributions. Such Canadian tax withheld may be
deducted or may be credited against actual tax payable, subject to certain
limitations and other complex rules, against the U.S. Holder's United States
Federal taxable income. See "Foreign Tax Credit" below. To the extent that
distributions exceed our current or accumulated earnings and profits, they will
be treated first as a return of capital to the extent of the shareholder's basis
in the common shares of our Ccompany and thereafter as gain from the sale or
exchange of the common shares of our Ccompany. Preferential tax rates for net
long term capital gains may be applicable to a U.S. Holder which is an
individual, estate or trust.

In general, dividends paid on our common shares will not be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations.

---

- 111 -

Foreign Tax Credit

A U.S. Holder who pays (or who has had withheld from
distributions) Canadian income tax with respect to the ownership of our common
shares may be entitled, at the election of the U.S. Holder, to either a
deduction or a tax credit for such foreign tax paid or withheld. This election
is made on a year-by-year basis and generally applies to all foreign income
taxes paid by (or withheld from) the U.S. Holder during that year. There are
significant and complex limitations which apply to the credit, among which is
the general limitation that the credit cannot exceed the proportionate share of
the U.S. Holder's United States income tax liability that the U.S. Holder's
foreign source income bears to his or its world-wide taxable income. In
determining the application of this limitation, the various items of income and
deduction must be classified into foreign and domestic sources. Complex rules
govern income such as "passive income", "high withholding tax interest",
"financial services income", "shipping income" and certain other classifications
of income. A U.S. Holder who is treated as a domestic U.S. corporation owning
10% or more of our voting stock is also entitled to a deemed paid foreign tax
credit in certain circumstances for the underlying foreign tax of our Company
related to dividends received or Subpart F income received from us. (See the
discussion below of Controlled Foreign Corporations). The availability of the
foreign tax credit and the application of the limitations on the foreign tax
credit are fact specific and holders and prospective holders of our common
shares should consult their own tax advisors regarding their individual
circumstances.

Disposition of Common Shares

If a "U.S. Holder" is holding shares as a capital asset, a gain
or loss realized on a sale of our common shares will generally be a capital gain
or loss, and will be long-term if the shareholder has a holding period of more
than one year. However, gains realized upon sale of our common shares may, under
certain circumstances, be treated as ordinary income, if we were determined to
be a "collapsible corporation" within the meaning of Code Section 341 based on
the facts in existence on the date of the sale (See below for definition of
"collapsible corporation"). The amount of gain or loss recognized by a selling
U.S. Holder will be measured by the difference between (i) the amount realized
on the sale and (ii) his tax basis in our common shares. Capital losses are
deductible only to the extent of capital gains. However, in the case of
taxpayers other than corporations (U.S.)$3,000 ($1,500 for married individuals
filing separately) of capital losses are deductible against ordinary income
annually. In the case of individuals and other non-corporate taxpayers, capital
losses that are not currently deductible may be carried forward to other years.
In the case of corporations, capital losses that are not currently deductible
are carried back to each of the three years preceding the loss year and forward
to each of the five years succeeding the loss year.

A "collapsible corporation" is a corporation that is formed or
availed principally to manufacture, construct, produce, or purchase prescribed
types or property that the corporation holds for less than three years and that
generally would produce ordinary income on its disposition, with a view to the
stockholders selling or exchanging their stock and thus realizing gain before
the corporation realizes two thirds of the taxable income to be derived from
prescribed property. Prescribed property includes: stock in trade and inventory;
property held primarily for sale to customers in the ordinary course of
business; unrealized receivables or fees, consisting of rights to payment for
non-capital assets delivered or to be delivered, or services rendered or to be
rendered to the extent not previously included in income, but excluding
receivables from selling property that is not prescribed; and property gain on
the sale of which is subject to the capital gain/ordinary loss rule. Generally,
a shareholder who owns directly or indirectly 5 percent or less of the
outstanding stock of the corporation may treat gain on the sale of his shares as
capital gain.

Other Considerations for U.S. Holders

In the following circumstances, the above sections of this
discussion may not describe the United States Federal income tax consequences
resulting from the holding and disposition of common shares of the

---

- 112 -

Registrantour company. Our management is of the opinion that
there is little, if not, any likelihood that we will be deemed a "Foreign
Personal Holding Company", a "Foreign Investment Company" or a "Controlled
Foreign Corporation" (each as defined below) under current and anticipated
conditions.

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total
combined voting power or the total value of our outstanding shares is owned,
actually or constructively, by five or fewer individuals who are citizens or
residents of the United States and 60% or more of our gross income for such year
was derived from certain passive sources (e.g., from dividends received from its
subsidiaries), we would be treated as a "foreign personal holding company". In
that event, U.S. Holders that hold common shares in our capital would be
required to include in income for such year their allocable portion of our
passive income which would have been treated as a dividend had that passive
income actually been distributed.

Foreign Investment Company

If 50% or more of the combined voting power or total value of
our outstanding shares are held, actually or constructively, by citizens or
residents of the United States, United States domestic partnerships or
corporations, or estates or trusts other than foreign estates or trusts (as
defined by the Code Section 7701(a)(31)), and we are found to be engaged
primarily in the business of investing, reinvesting, or trading in securities,
commodities, or any interest therein, it is possible that we might be treated as
a "foreign investment company" as defined in Section 1246 of the Code, causing
all or part of any gain realized by a U.S. Holder selling or exchanging our
common shares to be treated as ordinary income rather than capital gains.

Passive Foreign Investment Company

A U.S. Holder who holds stock in a foreign corporation during
any year in which such corporation qualifies as a passive foreign investment
company ("PFIC") is subject to U.S. federal income taxation of that foreign
corporation under one of two alternative tax methods at the election of each
such U.S. Holder.

Section 1297 of the Code defines a PFIC as a corporation that
is not formed in the United States and, for any taxable year, either (i) 75% or
more of its gross income is "passive income," which includes interest, dividends
and certain rents and royalties or (ii) the average percentage, by value (or, if
the company is a controlled foreign corporation or makes an election, adjusted
tax basis), of its assets that produce or are held for the production of
"passive income" is 50% or more. For taxable years of U.S. persons beginning
after December 31, 1997, and for tax years of foreign corporations ending with
or within such tax years, the Taxpayer Relief Act of 1997 provides that publicly
traded corporations must apply this test on a fair market value basis only. The
Registrant believes that it is a PFIC.

As a PFIC, each U.S. Holder must determine under which of the
alternative tax methods it wishes to be taxed. Under one method, a U.S. Holder
who elects in a timely manner to treat the Registrant our company as a Qualified
Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will
be subject, under Section 1293 of the Code, to current federal income tax for
any taxable year in which we our company qualifies as a PFIC on his pro-rata
share of our companys (i) "net capital gain" (the excess of net long-term
capital gain over net short-term capital loss), which will be taxed as long-term
capital gain to the Electing U.S. Holder and (ii) "ordinary earnings" (the
excess of earnings and profits over net capital gain), which will be taxed as
ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's
taxable year in which (or with which) our taxable year ends, regardless of
whether such amounts are actually distributed. Such an election, once made shall
apply to all subsequent years unless revoked with the consent of the IRS.

A QEF election also allows the Electing U.S. Holder to (i)
generally treat any gain realized on the disposition of his common shares (or
deemed to be realized on the pledge of his common shares) as

---

- 113 -

capital gain; (ii) treat his share of our net capital gain, if
any, as long-term capital gain instead of ordinary income, and (iii) either
avoid interest charges resulting from PFIC status altogether (see discussion of
interest charge below), or make an annual election, subject to certain
limitations, to defer payment of current taxes on his share of our annual
realized net capital gain and ordinary earnings subject, however, to an interest
charge. If the Electing U.S. Holder is an individual, such an interest charge
would be not deductible.

The procedure a U.S. Holder must comply with in making an
timely QEF election will depend on whether the year of the election is the first
year in the U.S. Holder's holding period in which we are our company is a PFIC.
If the U.S. Holder makes a QEF election in such first year, (sometimes referred
to as a "Pedigreed QEF Election"), then the U.S. Holder may make the QEF
election by simply filing the appropriate documents at the time the U.S. Holder
files its tax return for such first year. If, however, we our company qualified
as a PFIC in a prior year, then the U.S. Holder may make an "Unpedigreed QEF
Election" by recognizing as an "excess distribution" (i) under the rules of
Section 1291 (discussed below), any gain that he would otherwise recognize if
the U.S. Holder sold his stock on the qualification date (Deemed Sale Election)
or (ii) if we are a controlled foreign corporation ("CFC"), the Holder's pro
rata share of the corporation's earnings and profits (Deemed Dividend Election)
(But see "Elimination of Overlap Between Subpart F Rules and PFIC Provisions").
The effect of either the deemed sale election or the deemed dividend election is
to pay all prior deferred tax, to pay interest on the tax deferral and to be
treated thereafter as a Pedigreed QEF as discussed in the prior paragraph. With
respect to a situation in which a Pedigreed QEF election is made, if we our
company no longer qualifies as a PFIC in a subsequent year, normal Code rules
and not the PFIC rules will apply.

If a U.S. Holder has not made a QEF Election at any time (a
"Non-electing U.S. Holder"), then special taxation rules under Section 1291 of
the Code will apply to (i) gains realized on the disposition (or deemed to be
realized by reason of a pledge) of his common shares and (ii) certain "excess
distributions", as specially defined, by our Company. An "excess distribution"
is any current-year distribution in respect of PFIC stock that represents a
rateable portion of the total distributions in respect of the stock during the
year that exceed 125 percent of the average amount of distributions in respect
of the stock during the three preceding years.

A Non-electing U.S. Holder generally would be required to
pro-rate all gains realized on the disposition of his common shares and all
excess distributions over the entire holding period for the common shares. All
gains or excess distributions allocated to prior years of the U.S. Holder (other
than years prior to our first taxable year during such U.S. Holder's holding
period and beginning after January, 1987 for which it was a PFIC) would be taxed
at the highest tax rate for each such prior year applicable to ordinary income.
The Non-electing U.S. Holder also would be liable for interest on the deferred
tax liability for each such prior year calculated as if such liability had been
due with respect to each such prior year. A Non-electing U.S. Holder that is an
individual is not allowed a deduction for interest on the deferred tax
liability. The portions of gains and distributions that are not characterized as
"excess distributions" are subject to tax in the current year under the normal
tax rules of the Internal Revenue Code.

If we are, our company is a PFIC for any taxable year during
which a Non-electing U.S. Holder holds common shares, then we will continue to
be treated as a PFIC with respect to such common Shares, even if it is no longer
by definition a PFIC. A Non-electing U.S. Holder may terminate this deemed PFIC
status by electing to recognize gain (which will be taxed under the rules
discussed above for Non-Electing U.S. Holders) as if such common shares had been
sold on the last day of the last taxable year for which it was a PFIC.

Under Section 1291(f) of the Code, the Department of the
Treasury has issued proposed regulations that would treat as taxable certain
transfers of PFIC stock by Non-electing U.S. Holders that are generally not
otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations,
and transfers at death. If a U.S. Holder makes a QEF Election that is not a
Pedigreed Election (i.e., it is made after the first year during which we are
our company is a PFIC and the U.S. Holder holds our shares) (a "Unpedigreed

---

- 114 -

Election"), the QEF rules apply prospectively but do not apply
to years prior to the year in which the QEF first becomes effective. U.S.
Holders should consult their tax advisors regarding the specific consequences of
making a Non-Pedigreed QEF Election.

Certain special, generally adverse, rules will apply with
respect to the common shares while our company is we are a PFIC whether or not
it is treated as a QEF. For example under Section 1297(b)(6) of the Code (as in
effect prior to the Taxpayer Relief Act of 1997), a U.S. Holder who uses PFIC
stock as security for a loan (including a margin loan) will, except as may be
provided in regulations, be treated as having made a taxable disposition of such
stock.

The foregoing discussion is based on currently effective
provisions of the Code, existing and proposed regulations thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. Any such change could affect the validity of this discussion. In
addition, the implementation of certain aspects of the PFIC rules requires the
issuance of regulations which in many instances have not been promulgated and
which may have retroactive effect. There can be no assurance that any of these
proposals will be enacted or promulgated, and if so, the form they will take or
the effect that they may have on this discussion. Accordingly, and due to the
complexity of the PFIC rules, U.S. Holders of the Registrant our common shares
are strongly urged to consult their own tax advisors concerning the impact of
these rules on their investment in our Ccompany. For a discussion of the impact
of the Taxpayer Relief Act of 1997 on a U.S. Holder of a PFIC, see
"Mark-to-Market Election For PFIC Stock Under the Taxpayer Relief Act of 1997"
and "Elimination of Overlap Between Subpart F Rules and PFIC Provisions" below.

Mark-to-Market Election for PFIC Stock Under the Taxpayer
Relief Act of 1997

The Taxpayer Relief Act of 1997 provides that a U.S. Holder of
a PFIC may make a mark-to-market election with respect to the stock of the PFIC
if such stock is marketable as defined below. This provision is designed to
provide a current inclusion provision for persons that are Non-Electing Holders.
Under the election, any excess of the fair market value of the PFIC stock at the
close of the tax year over the Holder's adjusted basis in the stock is included
in the Holder's income. The Holder may deduct any excess of the adjusted basis
of the PFIC stock over its fair market value at the close of the tax year.
However, deductions are limited to the net mark-to-market gains on the stock
that the Holder included in income in prior tax years, or so called "unreversed
inclusions". For purposes of the election, PFIC stock is marketable if it is
regularly traded on (1) a national securities exchange that is registered with
the SEC, (2) the national market system established under Section II A of the
Securities Exchange Act of 1934, or (3) an exchange or market that the IRS
determines has rules sufficient to ensure that the market price represents
legitimate and sound fair market value.

A Holder's adjusted basis of PFIC stock is increased by the
income recognized under the mark-to-market election and decreased by the
deductions allowed under the election. If a U.S. Holder owns PFIC stock
indirectly through a foreign entity, the basis adjustments apply to the basis of
the PFIC stock in the hands of the foreign entity for the purpose of applying
the PFIC rules to the tax treatment of the U.S. owner. Similar basis adjustments
are made to the basis of the property through which the U.S. persons hold the
PFIC stock.

Income recognized under the mark-to-market election and gain on
the sale of PFIC stock with respect to which an election is made is treated as
ordinary income. Deductions allowed under the election and loss on the sale of
PFIC with respect to which an election is made, to the extent that the amount of
loss does not exceed the net mark-to-market gains previously included, are
treated as ordinary losses. The U.S. or foreign source of any income or losses
is determined as if the amount were a gain or loss from the sale of stock in the
PFIC.

If PFIC stock is owned by a CFC (discussed below), the CFC is
  treated as a U.S. person that may make the mark-to-market election. Amounts
  includible in the CFC's income under the election are treated as foreign personal
  holding company income, and deductions are allocable to foreign personal holding
  company income.

---

- 115 -

The above provisions apply to tax years of U.S. persons
beginning after December 31, 1997, and to tax years of foreign corporations
ending with or within such tax years of U.S. persons.

The rules of Code Section 1291 applicable to non-qualified
funds as discussed above generally do not apply to a U.S. Holder for tax years
for which a mark-to-market election is in effect. If Code Section 1291 is
applied and a mark-to-market election was in effect for any prior tax year, the
U.S. Holder's holding period for the PFIC stock is treated as beginning
immediately after the last tax year of the election. However, if a taxpayer
makes a mark-to-market election for PFIC stock that is a non-qualified fund
after the beginning of a taxpayer's holding period for such stock, a
co-ordination rule applies to ensure that the taxpayer does not avoid the
interest charge with respect to amounts attributable to periods before the
election.

Controlled Foreign Corporation Status

If more than 50% of the voting power of all classes of stock or
the total value of the stock of our Ccompany is owned, directly or indirectly,
by U.S. Holders, each of whom own after applying rules of attribution 10% or
more of the total combined voting power of all classes of stock of our Ccompany,
we would be treated as a "controlled foreign corporation" or "CFC" under Subpart
F of the Code. This classification would bring into effect many complex results
including the required inclusion by such 10% U.S. Holders in income of their pro
rata shares of "Subpart F income" (as defined by the Code) of our Ccompany and
our earnings invested in "U.S. property" (as defined by Section 956 of the
Code). In addition, under Section 1248 of the Code if we are considered a CFC at
any time during the five year period ending with the sale or exchange of its
stockshares, gain from the sale or exchange of common shares of our Ccompany by
such a 10% U.S. Holder of our common stock at any time during the five year
period ending with the sale or exchange is treated as ordinary dividend income
to the extent of our earnings and profits attributable to the stock sold or
exchanged. Because of the complexity of Subpart F, and because we may never be a
CFC, a more detailed review of these rules is beyond of the scope of this
discussion.

Elimination of Overlap Between Subpart F Rules and PFIC
Provisions

Under the Taxpayer Relief Act of 1997, a PFIC that is also a
CFC will not be treated as a PFIC with respect to certain 10% U.S. Holders. For
the exception to apply, (i) the corporation must be a CFC within the meaning of
section 957(a) of the Code and (ii) the U.S. Holder must be subject to the
current inclusion rules of Subpart F with respect to such corporation (i.e., the
U.S. Holder is a "United States Shareholder," see "Controlled Foreign
Corporation," above). The exception only applies to that portion of a U.S.
Holder's holding period beginning after December 31, 1997. For that portion of a
United States Holder before January 1, 1998, the ordinary PFIC and QEF rules
continue to apply.

As a result of this new provision, if we were ever to become a
CFC, U.S. Holders who are currently taxed on their pro rata shares of Subpart F
income of a PFIC which is also a CFC will not be subject to the PFIC provisions
with respect to the same stock if they have previously made a Pedigreed QEF
Election. The PFIC provisions will however continue to apply to U.S Holders for
any periods in which Subpart F does not apply (for example he is no longer a 10%
Holder or we are no longer a CFC) and to U.S. Holders that did not make a
Pedigreed QEF Election unless the U.S. Holder elects to recognize gain on the
PFIC shares held in our Ccompany as if those shares had been sold.

ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE
COMMON SHARES OF OUR COMPANY.

---

- 116 -

***F.***      
***Dividends and Paying Agents***

Not applicable.

***G.***      
***Statements by Experts***

Not applicable.

***H.***      
***Documents on Display***

Documents concerning our Company referred to in this annual
report may be viewed during normal business hours at our office at 2100, 1177
West Hastings Street, Vancouver, British Columbia, Canada, V6E 2K3 by making an
appointment.

***I.***      
***Subsidiary Information***

As at the date of this annual report, we have five wholly-owned
subsidiaries: (i) Minera Mexicana el Rosario, S.A. de C.V.; (ii) New Age
Investments Inc.; (iii) Metalicos de Durango, S.A. de C.V.; (iv) Minera de Villa
Seca, S.A. de C.V.; and (v) Exploraciones Minera El Rosario, S.A. de C.V.

**ITEM
11**              **Quantitative and Qualitative Disclosures About Market Risk**

The Company has foreign operations which gives rise to foreign
currency risk. Revenues are received in United States currency and expenditures
are either due in United States currency or Mexican currency. As a Canadian
company, however, the reporting and functional currency of our Company and our
subsidiaries is the Canadian dollar. Therefore, are exposed to some exchange
rate risk. At December 31, 2007, the Company has not entered into any
derivatives or other financial instruments to mitigate the risk of foreign
currency fluctuations.

**ITEM
12**             
**Description of Securities Other Than Equity Securities**

***A.***      
***Debt Securities***

Not applicable.

***B.***      
***Warrants and Rights***

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.

---

- 117 -

**ITEM
15**             
**Controls and Procedures**

Our disclosure controls and procedures are designed to ensure
that information required to be disclosed in our reports filed under Canadian
and U.S. securities regulations is recorded, processed, summarized and reported
within the time periods specified and is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

An evaluation was carried out under the supervision of, and
with the participation of, our management, including our Chief Executive officer
and our Chief Financial Officer, of the effectiveness of our disclosure controls
and procedures (as such term is defined in the Exchange Act, as amended, Rules
13a-15(e) and 15d-15(e)) as of December 31, 2007. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of December 31, 2007.

Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the
Exchange Act).

Under the supervision and with the participation of our
Company's Chief Executive Officer and Chief Financial Officer, management
conducted an evaluation of the effectiveness of our internal control over
financial reporting, as of December 31, 2007, based on the framework set forth
in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this
evaluation, management concluded that our internal control over financial
reporting was effective as of December 31, 2007.

KPMG LLP (KPMG), an independent registered public accounting
firm, who audited and reported on our consolidated financial statements, has
issued an attestation report on the effectiveness of our internal control over
financial reporting as of December 31, 2007. The attestation report is included
with the consolidated financial statements in this Annual Report on Form
20-F.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over
financial reporting during the quarter ended December 31, 2007 that have
materially affected, or are reasonably likely to affect our internal control
over financial reporting.

**ITEM
16**             
**Reserved**

**ITEM
16A**          **Audit
Committee Financial Expert**

Our board of directors has determined that one member of our
Company's audit committee, Mr. John T. Kopcheff, possesses the educational and
professional qualifications as well as the experience to qualify as an "audit
committee financial expert" as defined in Item 401(e) of Regulation S-B. The
disclosure regarding Mr. Kopcheff in Item 6A is hereby incorporated by
reference. Mr. Kopcheff is "independent" as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as
amended. In addition, we believe that the other members of our board of
directors are collectively capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting.

---

- 118 -

**ITEM 16B**     
     **Code of Ethics**

Code of Ethics

Effective June 30, 2005 (amended August 2007), our Company's
Board of Directors adopted a Code of Business Conduct and Ethics that applies
to, among other persons, our Companys Chief Executive Officer, President, Chief
Financial Officer, Chief Operating Officer and Controller. Our Code of Business
Conduct and Ethics sets forth written standards that are designed to deter
wrongdoing and to promote:

(1) honest and ethical conduct, including the ethical handling
of actual or apparent conflicts of interest between personal and professional
relationships;

(2) 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 made by us;

(3) compliance with applicable governmental laws, rules and
regulations;

(4) the prompt internal reporting of violations of the Code of
Business Conduct and Ethics to an appropriate person or persons identified in
the Code of Business Conduct and Ethics; and

(5) accountability for adherence to the Code of Business
Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other
things, that all of our Company's personnel shall be accorded full access to our
president, the Board of Directors, or the Audit Committee with respect to any
matter which may arise relating to the Code of Business Conduct and Ethics.
Further, all of our Company's personnel are to be accorded full access to our
Company's board of directors and our audit committee if any such matter involves
an alleged breach of the Code of Business Conduct and Ethics by our president or
secretary.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our Company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our Company's President or
Secretary. If the incident involves an alleged breach of the Code of Business
Conduct and Ethics by the President or Secretary, the incident must be reported
to any member of our Board of Directors. Any failure to report such
inappropriate or irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our Company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
Company's Code of Business Conduct and Ethics by another.

**ITEM
16C**           **Principal Accountant Fees and Services**

Audit Fees

Our board of directors appointed KPMG LLP, Chartered
Accountants, as independent auditors to audit our financial statements for the
fiscal year ended December 31, 2007. The aggregate fees billed by KPMG LLP,
Chartered Accountants, for professional services rendered for the audit of our
2007 annual financial statements included in this annual report for the year
ended December 31, 2007 were $327,180 compared to $243,149 for the year ended
December 31, 2006 (of which $93,149 was expensed in 2007), and $80,000 for the
year ended December 31, 2005.

---

- 119 -

Audit Related Fees

The aggregate fees billed for professional services by KPMG
LLP, Chartered Accountants, that are reasonably related to the performance of
the audit or review of our financial statements and which are not reported under
the caption "Audit Fees" above, were $nil for the year ended December 31, 2007,
compared to $27,500 for the year ended December 31, 2006 and $nil for the year
ended December 31, 2005.

Tax Fees

The aggregate fees billed for tax compliance, tax advice and
tax planning by KPMG LLP, Chartered Accountants, were $3,300 for the year ended
December 31, 2007, compared to $3,400 for the year ended December 31, 2006, and
compared to $3,175 for the year ended December 31, 2005.

All Other Fees

The aggregate fees billed by KPMG LLP, Chartered Accountants,
for other non-audit professional services, other than those services listed
above, were $4,600 for the year ended December 31, 2007 compared to $nil for the
year ended December 31, 2006, and $18,200for the year ended December 31,
2005.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before KPMG LLP, Chartered Accountants, is
engaged by us or our subsidiaries to render any auditing or permitted non-audit
related service, the engagement be:

|- | Approved by our audit committee; or                                                                                                                                                                                                                                                                                                                                                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                     
|- | Entered into pursuant to pre-approval policies and
      procedures established by the audit committee, provided the policies and
      procedures are detailed as to the particular service, the audit committee
      is informed of each service, and such policies and procedures do not
      include delegation of the audit committee's responsibilities to
      management.

The audit committee pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
pre-approved by the audit committee.

The audit committee has considered the nature and amount of the
fees billed by KPMG LLP, Chartered Accountants, and believes that the provision
of the services for activities unrelated to the audit is compatible with
maintaining KPMG LLP, Chartered Accountants, independence.

**ITEM
16D.**            **Exemption
from the Listing Standards for Audit Committees**

Not Applicable.

**ITEM
16E**             
**Purchases of Equity Securities of the Company and Affiliated Purchasers**

Not Applicable.

---

- 120 -

PART III

**ITEM
17**              **Financial Statements**

Financial Statements Filed as Part of the Annual Report:

|- | Report of Independent Registered
      Public Accounting Firm dated March 20, 2008.                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                   
|- | Consolidated balance sheets
      for the fiscal years ended December 31, 2007, and 2006.                                                         
|  |                                                                                                                                                   
|- | Consolidated statements of
      operations and comprehensive loss and deficit for the fiscal years ended
      December 31, 2007, 2006, and 2005.
|  |                                                                                                                                                   
|- | Consolidated statements of
      cash flows for the fiscal years ended December 31, 2007, 2006, and 2005.                                         
|  |                                                                                                                                                   
|- | Notes to consolidated financial
      statements                                                                                                  

**ITEM
18**              **Financial Statements**

Refer to Item 17 - Financial Statements.

**ITEM
19**             
**Exhibits**

The following exhibits are being filed as part of this annual
report, or are incorporated by reference where indicated:

|1.  | Articles of Incorporation and
    By-laws:                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                              
|1.1 | Continuation Application under the Business
      Corporation Act(British Columbia) (incorporated by reference from our
      Registration Statement on Form 20-F, filed on August 10, 2004).
|    |                                                                                                                                                                                              
|1.2 | Certificate of Continuation dated July 9, 2004
      (incorporated by reference from our Registration Statement on Form 20-F,
      filed on August 10, 2004).                               
|    |                                                                                                                                                                                              
|1.3 | Notice of Articles (incorporated by reference from our
      Registration Statement on Form 20-F, filed on August 10, 2004).                                                                 
|    |                                                                                                                                                                                              
|1.4 | Bylaws (incorporated by reference from our Registration
      Statement on Form 20-F, filed on August 10, 2004).                                                                             
|    |                                                                                                                                                                                              
|2.  | Instruments Defining Rights of Security
    Holders                                                                                                                                          
|    |                                                                                                                                                                                              
|2.1 | Form of Series A Warrant (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10,
  2004).                                                         
|    |                                                                                                                                                                                              
|2.2 | Form of Series B Warrant (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10,
  2004).                                                         
|    |                                                                                                                                                                                              
|2.3 | Form of Series C Warrant (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10,
  2004).                                                         
|    |                                                                                                                                                                                              
|2.4 | Form of Series D Warrant (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10,
  2004).                                                         

---

- 121 -

|2.5   | Form of Series E Warrant (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10, 2004)                                                                                                                                                                                                                           
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                             
|2.6*  | Shareholder Rights Plan (incorporated
        by reference from our Registration Statement on Form 20- F, filed on August
        10, 2004, amended March 7, 2008).                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.    | Material Contracts                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.1   | Share Purchase Agreement dated December 9, 2003 with
      Robert A. Archer and Ing. Francisco Ramos Sánchez (incorporated by
      reference from our Registration Statement on Form 20-F, filed on August
      10, 2004).                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.2   | Option Agreement dated February 11, 2004 between our
      subsidiary, Minera Mexicana el Rosario, S.A. de C.V. and Eduardo Rodriguez
      Chávez, acting in representation of Alfredo Rodriguez Chávez (incorporated
      by reference from our Registration Statement on Form 20-F, filed on August
      10, 2004).                                    
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.3   | Agreement dated February 18, 2004 between our subsidiary,
      Minera Mexicana el Rosario, S.A. de C.V. and Cia. Minera des Canelas y
      Topia, S.A. de C.V., MET-MEX Peñoles, S.A. de C.V. and Minera Mexicana la
      Ciénega, S.A. de C.V. (incorporated by reference from our Registration
      Statement on Form 20-F, filed on August 10, 2004).
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.4   | Agreement dated February 28, 2004 between our subsidiary,
      Minera Mexicana el Rosario, S.A. de C.V. and Carolos Teodoro Ortiz
      Rodriquez, Abelardo Garza Hernanadez and Minera San Miguel de los Tarros,
      S.A. de C.V. (incorporated by reference from our Registration Statement on
      Form 20-F, filed on August 10, 2004).             
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.5   | Letter of Intent dated January 19, 2005 with Minera Acero
      del Fuego, S.A. de C.V. (Virimoa Project) (incorporated by reference from
      our Registration Statement on Form 20-F, filed on July 15, 2005).                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.6   | Letter of Intent dated January 4, 2005 between our
      Company and Compania Minera de Canelas y Topia, S.A. de C.V.                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.7   | Purchase Agreement dated June 30, 2005 between our
      Company and Compania Minera de Canelas y Topia, S.A. de C.V.                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.8   | Purchase Agreement dated October 25, 2005 between our
      Company and the Sociedad Coopertiva Minero Metalúrgics Santa Fe de
      Guanajuato.                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.9   | Letter of Intent dated April 26, 2006 between our Company
      and Minera Apollo S.A. de C.V.                                                                                                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.10  | Letter of Intent dated December 7, 2006 between our
      Company and Altair Ventures Incorporated                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                             
|4.11* | Option Agreement dated February
        2, 2007 between our Company and Altair Ventures Incorporated                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                             
|8.    | Subsidiaries                                                                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                             
|8.1   | Minera Mexicana el Rosario, S.A. de C.V. (incorporated by
      reference from our Registration Statement on Form 20-F, filed on August
      10, 2004).                                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                             
|8.2   | New Age Investments Inc. (incorporated by reference from
      our Registration Statement on Form 20-F, filed on August 10, 2004).                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                             
|8.3   | Metalicos de Durango, S.A. de C.V.                                                                                                                                                                                                                                                                                                                          

---

- 122 -

|8.4   | Minera de Villa Seca, S.A. de C.V.                                                                                                                                                 
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                    
|8.5   | Exploraciones Minera el Rosario, S.A. de C.V.                                                                                                                                      
|      |                                                                                                                                                                                    
|11.   | Code of Ethics                                                                                                                                                                     
|      |                                                                                                                                                                                    
|11.1* | Code of Ethics (incorporated
        by reference from our Registration Statement on Form 20-F, filed on July
        15, 2005, updated August 2007).                              
|      |                                                                                                                                                                                    
|12.   | 302 Certification                                                                                                                                                                  
|      |                                                                                                                                                                                    
|12.1* | Section 302 Certification under
        Sarbanes-Oxley Act of 2002 for Robert A. Archer.                                                                                           
|      |                                                                                                                                                                                    
|12.2* | Section 302 Certification under
        Sarbanes-Oxley Act of 2002 for Raakel S. Iskanius.                                                                                         
|      |                                                                                                                                                                                    
|13.   | 906 Certification                                                                                                                                                                  
|      |                                                                                                                                                                                    
|13.1* | Section 906 Certification under
        Sarbanes-Oxley Act of 2002 for Robert A. Archer.                                                                                           
|      |                                                                                                                                                                                    
|13.2* | Section 906 Certification under
        Sarbanes-Oxley Act of 2002 for Raakel S. Iskanius.                                                                                         
|      |                                                                                                                                                                                    
|15.   | Additional Exhibits                                                                                                                                                                
|      |                                                                                                                                                                                    
|15.1  | Summary Report on the San Antonio Gold Prospect dated
      November 2003 (incorporated by reference from our Registration Statement
      on Form 20-F, filed on August 10, 2004).
|      |                                                                                                                                                                                    
|15.2  | Summary Report on the Topia Project dated November 20,
      2003 (incorporated by reference from our Registration Statement on Form
      20-F, filed on August 10, 2004).        

***       *Filed
herewith.*

*____________________________*

i This definition was obtained from the Canadian
Institute of Mining, Metallurgy, and Petroleum, and was adopted August 20, 2000.

ii This definition was obtained from the Canadian
  Institute of Mining, Metallurgy, and Petroleum, and was adopted August 20, 2000.

iiiOctober 12, 2006 press release.

---

- 123 -

**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.

**Great Panther Resources Limited**
  (Registrant)

/s/ Robert A. Archer
  Robert A. Archer
  President and Chief Executive Officer 
  (Principal Executive Officer)

/s/ Raakel S. Iskanius
  Raakel S. Iskanius
  Chief Financial Officer
  (Principal Financial Officer and Principal Accounting Officer)

Date: March 31, 2008

---





GREAT PANTHER RESOURCES LIMITED

CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDEDDECEMBER 31, 2007 and 2006Expressed in Canadian Dollars





---

GREAT PANTHER RESOURCES LIMITED

MANAGEMENTS STATEMENT OF RESPONSIBILITY
  FORFINANCIAL REPORTING

The management of Great Panther Resources Limited is responsible
  for the presentation and preparation of the accompanying consolidated financial
  statements of Great Panther Resources Limited and all related financial information
  contained in this Annual Report, including Managements Discussion and
  Analysis.

The consolidated financial statements have been prepared in accordance
  with Canadian generally accepted accounting principles. They include certain
  amounts that are based on estimates and judgments of management. Financial information
  presented elsewhere in the Annual Report is consistent with that contained in
  the consolidated financial statements.

Management is responsible for establishing and maintaining adequate
  internal control over financial reporting. Under the supervision and with the
  participation of the Companys Chief Executive Officer and Chief Financial
  Officer, management has a process in place to evaluate internal control over
  financial reporting based on the criteria established by the Committee of Sponsoring
  Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
  Framework. We, as Chief Executive Officer and Chief Financial Officer, will
  certify our annual filings with the CSA and SEC as required in Canada by Multilateral
  Instrument 52-109 and in the United States as required by the Securities Exchange
  Act of 1934.

The Companys Audit Committee is appointed by the Board
  of Directors annually and is comprised of three independent directors. The Audit
  Committee meets quarterly to review the Companys consolidated financial
  statements and Managements Discussion and Analysis, and on an annual basis,
  the independent auditors report. The Audit Committee recommends to the
  Board of Directors the external auditors to be appointed by the shareholders
  at each annual meeting and reviews the independence and effectiveness of their
  work. The independent auditors have unrestricted access to the Company, the
  Audit Committee, and the Board of Directors.

MANAGEMENTS REPORT ON INTERNAL CONTROL
  OVERFINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate
  internal control over financial reporting, as such term is defined in Rules
  13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the Exchange
  Act).

Under the supervision and with the participation of our Company's
  Chief Executive Officer and Chief Financial Officer, management conducted an
  evaluation of the effectiveness of our internal control over financial reporting,
  as of December 31, 2007, based on the framework set forth in Internal Control-Integrated
  Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
  Commission (COSO). Based on this evaluation, management concluded that our internal
  control over financial reporting was effective as of December 31, 2007.

KPMG LLP, an independent registered public accounting firm, has
  audited the effectiveness of our internal control over financial reporting as
  of December 31, 2007, as stated in their report which appears herein.

|Robert A. Archer      | Raakel S. Iskanius   
|----------------------- | -----------------------
|Chief Executive Officer | Chief Financial Officer
|                        |                        
|March 20, 2008          | March 20, 2008         

---

KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada


REPORT OF INDEPENDENT REGISTERED PUBLIC 
  ACCOUNTING FIRM

To the Shareholders and Board of Directors of Great Panther Resources
  Limited

We have audited Great Panther Resources Limiteds (the "Company")
  internal control over financial reporting as of December 31, 2007, based on
  the criteria established in Internal ControlIntegrated Frameworkissued
  by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).The Company's management is responsible for maintaining effective internal
  control over financial reporting and for its assessment of the effectiveness
  of internal control over financial reporting included in the accompanying Managements
  Report on Internal Control over Financial Reporting. Our responsibility is to
  express an opinion the Company's internal control over financial reporting based
  on our audit.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  effective internal control over financial reporting was maintained in all material
  respects. Our audit included obtaining an understanding of internal control
  over financial reporting, assessing the risk that a material weakness exists,
  and testing and evaluating the design and operating effectiveness of internal
  control based on the assessed risk. Our audit also included performing such
  other procedures as we considered necessary in the circumstances. We believe
  that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process
  designed to provide reasonable assurance regarding the reliability of financial
  reporting and the preparation of financial statements for external purposes
  in accordance with generally accepted accounting principles. A company's internal
  control over financial reporting includes those policies and procedures that
  (1) pertain to the maintenance of records that, in reasonable detail, accurately
  and fairly reflect the transactions and dispositions of the assets of the company;
  (2) provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of financial statements in accordance with generally accepted
  accounting principles, and that receipts and expenditures of the company are
  being made only in accordance with authorizations of management and directors
  of the company; and (3) provide reasonable assurance regarding prevention or
  timely detection of unauthorized acquisition, use, or disposition of the company's
  assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
  reporting may not prevent or detect misstatements. 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.

KPMG LLP, a Canadian limited
  liability partnership is the Canadian 
  member firm of KPMG International, a Swiss cooperative.

---

In our opinion, the Companymaintained, in all material
  respects, effective internal control over financial reporting as of December
  31, 2007, based on the criteria established in Internal ControlIntegrated
  Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
  Commission (COSO).

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the consolidated
  balance sheets of the Company as of December 31, 2007 and 2006, and the related
  consolidated statements of operations and comprehensive loss, deficit and cash
  flows for each of the years in the three-year period ended December 31, 2007
  and our report dated March 20, 2008 expressed an unqualified opinion on those
  consolidated financial statements.

Chartered Accountants



Vancouver, Canada 
  March 20, 2008







KPMG LLP, a Canadian limited
  liability partnership is the Canadian 
  member firm of KPMG International, a Swiss cooperative.

---

KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada


REPORT OF INDEPENDENT REGISTERED PUBLIC 
  ACCOUNTING FIRM

To the Board of Directors of Great Panther Resources Limited

We have audited the accompanying consolidated balance sheets
  of Great Panther Resources Limited (the Company) as of December
  31, 2007 and 2006 and the related consolidated statements of operations and
  comprehensive loss, deficit and cash flows for each of the years in the three-year
  period ended December 31, 2007. These consolidated financial statements are
  the responsibility of the Companys management. Our responsibility is to
  express an opinion on these consolidated financial statements based on our audit.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. 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 audit provides
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as of December 31, 2007 and 2006 and the 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.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in note 1 to the consolidated financial statements, the Company has suffered
  recurring losses and operating cash flow deficiencies that raise substantial
  doubt about its ability to continue as a going concern. Managements plans
  in regard to these matters are also described in note 1. The consolidated financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

Canadian generally accepted accounting principles vary in certain
  significant respects from US generally accepted accounting principles. Information
  relating to the nature and effect of such differences is presented in Note 18
  to the consolidated financial statements.

KPMG LLP, a Canadian limited
  liability partnership is the Canadianmember firm of KPMG International, a Swiss cooperative.

---

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the Companys
  internal control over financial reporting as of December 31, 2007, based on
  the criteria established in Internal ControlIntegrated Frameworkissued
  by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
  and our report dated March 20, 2008 expressed an unqualified opinion on the
  effectiveness of the Companys internal control over financial reporting.

Chartered Accountants



Vancouver, Canada 
  March 20, 2008









KPMG LLP, a Canadian limited
  liability partnership is the Canadianmember firm of KPMG International, a Swiss cooperative.

---

GREAT PANTHER RESOURCES LIMITEDConsolidated Balance Sheets 
  (Expressed in Canadian Dollars) 
  December 31, 2007 and 2006

|                                                          |   | 2007        |   |   | 2006        |  
|--------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                          |   |             |   |   |             |  
|Assets                                                    |   |             |   |   |             |  
|                                                          |   |             |   |   |             |  
|Current assets:                                           |   |             |   |   |             |  
|Cash and cash equivalents                                 | $ | 5,357,977   |   | $ | 9,208,048   |  
|Marketable
      securities                               |   | 39,795      |   |   | -           |  
|Amounts receivable, (note
      5)                        |   | 5,879,243   |   |   | 4,120,584   |  
|Income taxes
      recoverable                            |   | 363,220     |   |   | -           |  
|Inventories (note 6)                                      |   | 748,473     |   |   | 605,127     |  
|Prepaid expenses, deposits
      and advances             |   | 576,589     |   |   | 821,614     |  
|                                                          |   | 12,965,297  |   |   | 14,755,373  |  
|                                                          |   |             |   |   |             |  
|Mineral properties,
      plant and equipment (note 8)    |   | 18,087,813  |   |   | 17,376,886  |  
|                                                          |   |             |   |   |             |  
|                                                          | $ | 31,053,110  |   | $ | 32,132,259  |  
|                                                          |   |             |   |   |             |  
|                                                          |   |             |   |   |             |  
|Liabilities and Shareholders Equity                      |   |             |   |   |             |  
|                                                          |   |             |   |   |             |  
|Current liabilities:                                      |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities            | $ | 2,216,730   |   | $ | 911,928     |  
|Income taxes
      payable                                |   | -           |   |   | 127,475     |  
|Current portion of long-term debt (note 10(a))            |   | 88,625      |   |   | 1,182,814   |  
|                                                          |   | 2,305,355   |   |   | 2,222,217   |  
|Long-term liabilities:                                    |   |             |   |   |             |  
|Long-term
      debt (note 10(a))                         |   | -           |   |   | 104,127     |  
|Convertible loan notes (note
      10(b))                 |   | 4,028,611   |   |   | 1,163,799   |  
|Asset retirement
      obligations (note 11)              |   | 1,101,171   |   |   | 92,285      |  
|Future income tax liability (note 14)                     |   | 2,421,504   |   |   | -           |  
|                                                          |   | 9,856,641   |   |   | 3,582,428   |  
|                                                          |   |             |   |   |             |  
|Shareholders equity:                                     |   |             |   |   |             |  
|Capital stock (note 12)                                   |   | 56,988,447  |   |   | 46,393,145  |  
|Contributed
      surplus (note 12(c))                    |   | 6,261,116   |   |   | 6,077,864   |  
|Equity component of convertible
      note (note 10(b))   |   | 2,569,000   |   |   | 1,006,000   |  
|Accumulated
      other comprehensive income              |   | 5,945       |   |   | -           |  
|Deficit                                                   |   | (44,628,039 | ) |   | (24,927,178 | )
|                                                          |   | 21,196,469  |   |   | 28,549,831  |  
|                                                          |   |             |   |   |             |  
|Continuing operations (note 1)                            |   |             |   |   |             |  
|Commitments and contingencies (notes 7, 9, 10, 11 and 16) |   |             |   |   |             |  
|Subsequent events (note 17)                               |   |             |   |   |             |  
|                                                          |   |             |   |   |             |  
|                                                          | $ | 31,053,110  |   | $ | 32,132,259  |  

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

|Robert A.
      Archer | Director | Kaare G. Foy | Director
|------------------------ | -------- | -------------- | --------

1

---

GREAT PANTHER RESOURCES LIMITEDConsolidated Statements of Operations and Comprehensive Loss 
  (Expressed in Canadian dollars)

Years ended December 31, 2007, 2006 and 2005

|                                                         |   | 2007        |   |   | 2006        |   |   | 2005       |  
|-------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|Revenues:                                                |   |             |   |   |             |   |   |            |  
|Mineral sales                                            | $ | 17,487,070  |   | $ | 7,069,442   |   | $ | -          |  
|Cost of sales (excluding amortization                    |   |             |   |   |             |   |   |            |  
|and depletion)                                           |   | 16,116,633  |   |   | 7,119,047   |   |   | -          |  
|                                                         |   | 1,370,437   |   |   | (49,605     | ) |   | -          |  
|                                                         |   |             |   |   |             |   |   |            |  
|Expenses:                                                |   |             |   |   |             |   |   |            |  
|Amortization and depletion of mineral                    |   |             |   |   |             |   |   |            |  
|properties,
      plant and equipment                    |   | 3,603,668   |   |   | 1,421,769   |   |   | 12,579     |  
|Accretion on asset retirement obligation                 |   | 22,704      |   |   | -           |   |   | -          |  
|Mineral property exploration expenditures
      (note 9) |   | 6,803,104   |   |   | 3,968,083   |   |   | 2,340,398  |  
|General and administrative                               |   | 4,672,362   |   |   | 4,408,631   |   |   | 2,139,236  |  
|Stock-based compensation                                 |   | 1,129,500   |   |   | 4,672,774   |   |   | 357,298    |  
|                                                         |   | 16,231,338  |   |   | 14,471,257  |   |   | 4,849,511  |  
|                                                         |   | (14,860,901 | ) |   | (14,520,862 | ) |   | (4,849,511 | )
|                                                         |   |             |   |   |             |   |   |            |  
|Other income (expenses):                                 |   |             |   |   |             |   |   |            |  
|Interest income                                          |   | 207,892     |   |   | 366,319     |   |   | 27,251     |  
|Interest expense                                         |   | (1,035,577  | ) |   | (830,236    | ) |   | (357,011   | )
|Write-down of mineral property acquisition               |   |             |   |   |             |   |   |            |  
|costs                                                    |   | -           |   |   | -           |   |   | (403,634   | )
|Foreign
      exchange gain (loss)                       |   | (1,440,802  | ) |   | 10,358      |   |   | (19,294    | )
|                                                         |   | (2,268,487  | ) |   | (453,559    | ) |   | (752,688   | )
|                                                         |   |             |   |   |             |   |   |            |  
|Loss before provision for income taxes                   |   | (17,129,388 | ) |   | (14,974,421 | ) |   | (5,602,199 | )
|                                                         |   |             |   |   |             |   |   |            |  
|Provision for income taxes (note 14)                     |   | (2,571,473  | ) |   | (110,016    | ) |   | 370,514    |  
|                                                         |   |             |   |   |             |   |   |            |  
|Loss for the year                                        |   | (19,700,861 | ) |   | (15,084,437 | ) |   | (5,231,685 | )
|                                                         |   |             |   |   |             |   |   |            |  
|Other comprehensive income, net of tax:                  |   |             |   |   |             |   |   |            |  
|Unrealized gain on marketable securities                 |   | 5,945       |   |   | -           |   |   | -          |  
|                                                         |   |             |   |   |             |   |   |            |  
|Comprehensive loss
      for the year                    | $ | (19,694,916 | ) | $ | (15,084,437 | ) | $ | (5,231,685 | )
|                                                         |   |             |   |   |             |   |   |            |  
|Diluted and basic loss per share (note 2(m))             | $ | (0.27       | ) | $ | (0.25       | ) | $ | (0.22      | )
|                                                         |   |             |   |   |             |   |   |            |  
|Weighted average number of common                        |   |             |   |   |             |   |   |            |  
|shares outstanding                                       |   | 72,227,455  |   |   | 59,720,424  |   |   | 23,986,543 |  

See accompanying notes to consolidated financial statements.

2

---

GREAT PANTHER RESOURCES LIMITEDConsolidated Statements of Deficit 
  (Expressed in Canadian dollars)

Years ended December 31, 2007, 2006 and 2005

|                           |   | 2007        |   |   | 2006        |   |   | 2005       |  
|-------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                           |   |             |   |   |             |   |   |            |  
|Deficit, beginning of year |   | (24,927,178 | ) |   | (9,842,741  | ) |   | (4,611,056 | )
|                           |   |             |   |   |             |   |   |            |  
|Loss for the year          |   | (19,700,861 | ) |   | (15,084,437 | ) |   | (5,231,685 | )
|Deficit, end of year       | $ | (44,628,039 | ) | $ | (24,927,178 | ) | $ | (9,842,741 | )

See accompanying notes to consolidated financial statements.

3

---

GREAT PANTHER RESOURCES LIMITEDConsolidated Statements of Cash Flows 
  (Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

|                                                      |   | 2007        |   |   | 2006        |   |   | 2005       |  
|----------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                                                      |   |             |   |   |             |   |   |            |  
|Cash flows used in operating activities:              |   |             |   |   |             |   |   |            |  
|Loss for the year                                     | $ | (19,700,861 | ) | $ | (15,084,437 | ) | $ | (5,231,685 | )
|Items not
      involving cash:                       |   |             |   |   |             |   |   |            |  
|Amortization and depletion of mineral                 |   |             |   |   |             |   |   |            |  
|properties, plant and equipment                       |   | 3,603,668   |   |   | 1,421,769   |   |   | 12,579     |  
|Foreign exchange gain on debt                         |   | (778        | ) |   | (12,395     | ) |   | (119,478   | )
|Stock-based compensation                              |   | 1,129,500   |   |   | 4,672,774   |   |   | 357,298    |  
|Shares issued for mineral exploration                 |   |             |   |   |             |   |   |            |  
|expenditures                                          |   | 246,000     |   |   | 613,000     |   |   | 50,000     |  
|Future income tax                                     |   | 2,421,504   |   |   | (17,459     | ) |   | (370,514   | )
|Write-down of mineral property acquisition costs      |   | -           |   |   | -           |   |   | 403,634    |  
|Interest accretion on debt discount                   |   | 259,355     |   |   | 378,363     |   |   | 357,011    |  
|Interest accretion on convertible note payable        |   | 377,812     |   |   | 149,799     |   |   | -          |  
|Accretion on asset retirement obligations             |   | 22,704      |   |   | -           |   |   | -          |  
|Changes in
      non-cash operating working capital:  |   |             |   |   |             |   |   |            |  
|Amounts receivable                                    |   | (1,758,659  | ) |   | (3,119,463  | ) |   | (733,324   | )
|Inventories                                           |   | (143,346    | ) |   | (605,127    | ) |   | -          |  
|Prepaid expenses and deposits                         |   | 245,025     |   |   | (637,702    | ) |   | (133,758   | )
|Accounts payable and accrued liabilities              |   | 1,304,802   |   |   | 680,062     |   |   | 29,380     |  
|Income taxes                                          |   | (490,695    | ) |   | 127,475     |   |   | -          |  
|Net cash
      used in operating activities           |   | (12,483,969 | ) |   | (11,433,341 | ) |   | (5,378,857 | )
|                                                      |   |             |   |   |             |   |   |            |  
|Cash flows used in investing activities:              |   |             |   |   |             |   |   |            |  
|Marketable securities                                 |   | (33,850     | ) |   | -           |   |   | -          |  
|Mineral properties
      and capital expenditures     |   | (3,328,413  | ) |   | (5,736,570  | ) |   | (941,840   | )
|Purchase of net assets of
      Topia mine            |   | -           |   |   | -           |   |   | (888,405   | )
|Purchase of net assets
      of Guanajuato mines      |   | -           |   |   | -           |   |   | (4,428,416 | )
|Net cash used in investing
      activities           |   | (3,362,263  | ) |   | (5,736,570  | ) |   | (6,258,661 | )
|                                                      |   |             |   |   |             |   |   |            |  
|Cash flows from financing activities:                 |   |             |   |   |             |   |   |            |  
|Due to directors
      and related parties            |   | -           |   |   | -           |   |   | (37,654    | )
|Issuance of shares for cash,
      net of issue costs |   | -           |   |   | 13,866,639  |   |   | 13,874,042 |  
|Proceeds
      on issuance of convertible note        |   | 4,050,000   |   |   | 2,020,000   |   |   | -          |  
|Repayment of long-term debt                           |   | (1,456,893  | ) |   | (4,897,504  | ) |   | -          |  
|Proceeds
      received on exercise of warrants       |   | 8,725,054   |   |   | 9,224,170   |   |   | 1,136,555  |  
|Proceeds on exercise of options                       |   | 678,000     |   |   | 869,257     |   |   | 36,000     |  
|Net cash from financing
      activities              |   | 11,996,161  |   |   | 21,082,562  |   |   | 15,008,943 |  
|                                                      |   |             |   |   |             |   |   |            |  
|Increase (decrease) in cash and cash equivalents      |   | (3,850,071  | ) |   | 3,912,651   |   |   | 3,371,425  |  
|                                                      |   |             |   |   |             |   |   |            |  
|Cash and cash equivalents, beginning of year          |   | 9,208,048   |   |   | 5,295,397   |   |   | 1,923,972  |  
|                                                      |   |             |   |   |             |   |   |            |  
|Cash and cash equivalents, end of year                | $ | 5,357,977   |   | $ | 9,208,048   |   | $ | 5,295,397  |  

4

---

GREAT PANTHER RESOURCES LIMITEDConsolidated Statements of Cash Flows, Continued
  (Expressed in Canadian dollars)

Years ended December 31, 2007, 2006 and 2005

|                                                    |   | 2007    |  |   | 2006    |  |   | 2005      | 
|--------------------------------------------------- | - | ------- |  | - | ------- |  | - | --------- | 
|                                                    |   |         |  |   |         |  |   |           | 
|Supplementary cash flow information:                |   |         |  |   |         |  |   |           | 
|Income taxes paid                                   | $ | 640,664 |  | $ | -       |  | $ | -         | 
|Interest
      expense paid                         |   | 330,517 |  |   | 121,200 |  |   | -         | 
|Interest income received                            |   | 198,504 |  |   | 302,074 |  |   | 27,251    | 
|                                                    |   |         |  |   |         |  |   |           | 
|Non-cash financing and investing transactions:      |   |         |  |   |         |  |   |           | 
|Mineral property
      addition upon recognition    |   |         |  |   |         |  |   |           | 
|of asset retirement
      obligation                |   | 986,182 |  |   | 92,285  |  |   | -         | 
|Warrants
      and options issued for financing fee |   | -       |  |   | 251,500 |  |   | 606,183   | 
|Assumption of debt on purchase
      of             |   |         |  |   |         |  |   |           | 
|net
      assets of Topia mine                      |   | -       |  |   | -       |  |   | 1,430,937 | 
|Assumption of debt on purchase
      of             |   |         |  |   |         |  |   |           | 
|net
      assets of Guanajuato mines                |   | -       |  |   | -       |  |   | 3,918,747 | 
|Assumption of debt on purchase
      of mining      |   | -       |  |   | 231,260 |  |   | -         | 
|concession                                          |   |         |  |   |         |  |   |           | 
|Shares issued and funds received in prior years     |   | -       |  |   | 49,910  |  |   | -         | 

See accompanying notes to consolidated financial statements.

5

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|1. | Nature of continuing operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Great Panther Resources Limited (the
        Company) was continued under the Business Corporations Act (Yukon)
        on March 22, 1996 and continued under the Business Corporations Act (British
        Columbia) on July 9, 2004. On October 2, 2003, the Company changed its
        name from Great Panther Inc. to Great Panther Resources Limited and the
        common shares were consolidated whereby ten common shares were exchanged
        for one new common share.                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company is in the business of acquisition,
        development and exploration, and operation of mineral properties and mines
        in Mexico. Of the properties in which the Company has an interest, the
        Topia and Guanajuato mines were in production at the balance sheet dates.
        The Companys other mineral property interests are in the exploration
        stage and it has not yet been determined as to whether these properties
        contain ore reserves that are economically viable. Costs associated with
        these exploration stage properties have been expensed.     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | These financial statements have been prepared
        on a going concern basis, which assumes the realization of assets and
        liquidation of liabilities in the normal course of business. During the
        years ended December 31, 2007 and 2006, the Company recorded losses of
        approximately $19,701,000 and $15,084,000 respectively, and used cash
        in operations of approximately $12,484,000 and $11,433,000, respectively.
        As at December 31, 2007, the Company had an accumulated deficit of approximately
        $44,628,000 and a working capital balance of $10,660,000.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Companys ability to continue on
        as a going concern is dependent on the achievement of profitable operations,
        the existence of economically recoverable mineral reserves and the ability
        to raise adequate financing from lenders, shareholders and other investors
        to support its business activities. These consolidated financial statements
        do not include any adjustments that might result from the outcome of these
        uncertainties.                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

6

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|   |                                             
|   | (b)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (c)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (d)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (e)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (f)                                         
|   |                                             
|   |                                             
|   |                                             
|   |                                             

7

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------

Once commercial production has commenced,
  production facilities and equipment, stated at cost, are depreciated using the
  straight-line method or units-of-production method, if sufficient reserve information
  is available, over their estimated useful lives, not to exceed the life of the
  mine (5 years) to which the assets relate. As at December 31, 2007, the Company
  did not have a reliable estimate of reserves and therefore did not use the units-of-production
  method.

Maintenance and repairs are charged
  to operations as incurred. When assets are retired or sold, the costs and related
  accumulated depreciation are eliminated from the accounts and any resulting
  gain or loss is reflected in operations.

Capital assets held at the parent company
  are recorded at cost less accumulated depreciation, calculated using the following
  basis:

| | Computer equipment     | 30% declining balance                   
| | ---------------------- | ----------------------------------------
| | Furniture and fixtures | 20% declining balance                   
| | Office equipment       | 20% declining balance                   
| | Leasehold improvements | straight-line over the term of the lease

| | (g) | Impairment of long-lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company reviews and evaluates its long-lived assets,
        including mineral properties, plant and equipment, for impairment when
        events or changes in circumstances indicate that the related carrying
        amounts may not be recoverable. Recoverability of assets to be held and
        used is measured by a comparison of the carrying amount of an asset to
        its estimated undiscounted future cash flows expected to be generated
        by the asset. Measurement of an impairment loss is based on the excess
        of carrying value over the estimated fair value of the asset.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | At each reporting period and whenever events or circumstances
        indicate that an asset's fair value may not be at least equal to its carrying
        value, management of the Company reviews the net carrying value. These
        reviews involve consideration of the fair value of each property to determine
        whether a permanent impairment in value has occurred and whether any asset
        write-down is necessary. The Company considers metals prices, cost of
        production, proven and probable reserves and salvage value of the property
        and equipment in its valuation.   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Management's estimates are subject to risks and uncertainties
        of changes affecting the recoverability of the Company's investment in
        its mineral property, plant, equipment and mine development. Management's
        estimates of these factors are based on current conditions. Nonetheless,
        it is reasonably possible that in the near term, changes that could adversely
        affect management's estimate of net cash flows expected to be generated
        from its properties could occur which may necessitate a write-down for
        asset impairment.                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (h) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company accounts for stock-based payments granted
        to non-employees after January 1, 2002 and employees after January 1,
        2003 using the fair value based method. Under the fair value based method,
        compensation cost is measured at the fair value as the awards are earned
        and services performed and charged to operations over the service period
        which normally is the period during which the options vest.                                                                                                                                                           

8

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|   |                                             
|   | (i)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (j)                                         
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   | (k)                                         
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   | (l)                                         
|   |                                             
|   |                                             

9

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------

| |     | change in tax rates is included in operations in the
        period in which the change is substantively enacted. The amount of future
        income tax assets recognized is limited to the amount that is, in managements
        estimation, more likely than not to be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (m) | Loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Basic loss per share is computed by dividing net loss
        by the weighted average number of common shares outstanding during the
        reporting period. Diluted loss per share is computed similar to basic
        loss per share except that the weighted average shares outstanding are
        increased to include additional shares from the assumed exercise of stock
        options and warrants, if dilutive. The number of additional shares is
        calculated by assuming that outstanding stock options or warrants were
        exercised and that the proceeds from such exercises were used to acquire
        shares of common stock at the average market price during the reporting
        period. Diluted loss per share is the same as basic loss per share because
        the effect on the basic loss per share of outstanding options and warrants
        is anti-dilutive.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (n) | Comparative figures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Certain comparative figures have been reclassified to
        conform with current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|3. | Adoption of new accounting standards:
|-- | -------------------------------------
|   |                                      
|   | (a)                                  
|   |                                      
|   |                                      
|   |                                      
|   | (b)                                  
|   |                                      
|   |                                      
|   |                                      
|   |                                      

10

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|3. | Adoption of new accounting standards (continued):
|-- | -------------------------------------------------
|   |                                                  
|   | (b)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|4. | Recent accounting pronouncements:                
|   |                                                  
|   | (a)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   | (b)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   | (c)                                              
|   |                                                  
|   |                                                  

11

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|4. | Recent accounting pronouncements (continued):
|-- | ---------------------------------------------

| |     | interim and annual periods beginning on or after October
        1, 2007. The Company is evaluating the impact of the adoption of this
        Section on the disclosure in the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (d) | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Section 3031, Inventories, establishes standards
        for the measurement and disclosure of inventory. It provides guidance
        on the determination of costs and its subsequent recognition as an expense,
        including any write-down to net realizable value. The Section 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 is evaluating the impact of
        the adoption of this Section on the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (e) | 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 2011
        is the changeover date for publicly-listed companies to use IFRS, replacing
        Canada's own GAAP. The transition date 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.

|5. | Amounts receivable:
|-- | -------------------

| |                                |   | 2007      |   |   | 2006      |  
| | ------------------------------ | - | --------- | - | - | --------- | -
| |                                |   |           |   |   |           |  
| | Value added tax recoverable    | $ | 3,037,482 |   | $ | 3,002,521 |  
| | Trade accounts receivable      |   | 2,515,477 |   |   | 866,826   |  
| | Other                          |   | 436,284   |   |   | 401,237   |  
| |                                |   | 5,989,243 |   |   | 4,270,584 |  
| | Allowance for doubtful amounts |   | (110,000  | ) |   | (150,000  | )
| |                                |   |           |   |   |           |  
| |                                | $ | 5,879,243 |   | $ | 4,120,584 |  

|   | The Company, through its Mexican subsidiaries, pays
        value added tax on the purchase and sale of goods and services at a rate
        of 15%. The net amount paid or payable is recoverable, but such recovery
        is subject to review and assessment by local tax authorities.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                            
|6. | Inventories:                                                                                                                                                                                                                                                                               

| |                        |   | 2007    |  |   | 2006    | 
| | ---------------------- | - | ------- |  | - | ------- | 
| |                        |   |         |  |   |         | 
| | Finished product       | $ | 311,357 |  | $ | 368,462 | 
| | Ore stockpile          |   | 29,319  |  |   | -       | 
| | Materials and supplies |   | 407,797 |  |   | 236,665 | 
| |                        |   |         |  |   |         | 
| |                        | $ | 748,473 |  | $ | 605,127 | 

12

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|7. | Acquisitions:
|-- | -------------
|   |              
|   | (a)          
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              

The net present value of the Companys
  post acquisition payment requirements pursuant to the Topia Purchase Agreement
  and assumed debt was determined by discounting the face value of the US$1,761,493
  (CAD$2,158,534) at the Companys estimated current borrowing cost to the
  date of acquisition, to equal $1,430,937. As at December 31, 2007, no remaining
  obligations remained.

The acquisition was accounted for as
  an asset acquisition. The following table summarizes the fair value of consideration
  given and the estimate fair value of assets acquired as at the acquisition date:

| | Assets acquired:                           |   |           | 
| | ------------------------------------------ | - | --------- | 
| | Plant                                      | $ | 1,730,573 | 
| | Mineral properties                         |   | 269,516   | 
| | Offices and mobile equipment               |   | 319,253   | 
| |                                            |   |           | 
| |                                            | $ | 2,319,342 | 
| |                                            |   |           | 
| | Consideration given:                       |   |           | 
| | Cash and direct costs of
      acquisition | $ | 888,405   | 
| | Debt                                       |   | 1,430,937 | 
| |                                            |   |           | 
| |                                            | $ | 2,319,342 | 

13

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|7. | Acquisitions (continued):
|-- | -------------------------

| |     | The Company incurred mineral exploration expenditures
        on mineral property included in the Topia Mine Project both prior and
        subsequent to the acquisition transaction (note 9).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (b) | Guanajuato Mine:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | On October 25, 2005, the Company purchased a 100% ownership
        interest in a group of producing silver- gold mines in Guanajuato, Mexico
        which includes 2 main properties, a plant, workshops and administration
        facilities, mining infrastructure, equipment, and certain surface rights
        (real estate). The total purchase price of US$7,250,000 (paid) consisted
        of staged cash payments to the end of 2006. The cash paid and direct acquisition
        costs incurred at the acquisition date totaled $4,428,416. The remaining
        staged payments were discounted at the Companys estimated current
        borrowing rate to the date of acquisition, to equal $3,918,747. As at
        December 31, 2006, no remaining obligations remained.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The acquisition was accounted for as an asset purchase.
        The following table summarizes the fair value of consideration given and
        the estimated fair value of assets acquired at the acquisition date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | Assets acquired:                           |   |           | 
| | ------------------------------------------ | - | --------- | 
| | Plant                                      | $ | 2,049,063 | 
| | Mineral properties                         |   | 3,750,000 | 
| | Offices and mobile equipment               |   | 811,722   | 
| | Land                                       |   | 1,736,378 | 
| |                                            |   |           | 
| |                                            | $ | 8,347,163 | 
| |                                            |   |           | 
| | Consideration given:                       |   |           | 
| | Cash and direct costs of
      acquisition | $ | 4,428,416 | 
| | Debt                                       |   | 3,918,747 | 
| |                                            |   |           | 
| |                                            | $ | 8,347,163 | 

| |     | The Company incurred mineral exploration expenditures
        on mineral properties included in the Guanajuato Mine Project both prior
        and subsequent to the acquisition transaction (note 9).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | A legal proceeding was launched in 2006 by five dissident
        members of the Sociedad Cooperativa Minero Metalurgica Sante Fe (the "Cooperativa")
        against the administration of the Cooperativa. Minera Mexicana el Rosario,
        S.A. de C.V. ("MMR") and one of MMRs officers were named in the
        lawsuit. The lawsuit alleged that the sale of the Guanajuato mine assets
        should be nullified on the basis that the proceedings leading to the approval
        of the sale did not meet specific requirements as set out in the bylaws
        of the Cooperativa. The lawsuit was abandoned late in the second quarter
        of 2007 and was officially confirmed by the Court, after which the lawsuit
        cannot be re-initiated by the five dissidents.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (c) | Arcoiris Concession:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | On March 8, 2006, the Company purchased a 100% interest
        in the Arcoiris concession. The total purchase price of US$300,000 consists
        of staged cash payments of US$20,000 (paid) upon signing of the purchase
        agreement, US$80,000 (paid) upon registration of the agreement and US$100,000
        each on the first (paid) and second anniversary date. The Arcoiris concession
        is a strategic claim that is contiguous                                                                                                                                                                                                                                                                                                                                           

14

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|7. | Acquisitions (continued):
|-- | -------------------------

| |     | with the existing Topia Mine Property. The 100 hectare
        concession contains portions of the strike extension and down-dip projection
        of the Dos Amigos Vein that the Company has already started developing
        on its Topia Mine Property.                                                                                                                                                                                                                             
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | Fundiciones Property:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | On May 15, 2006, the Company purchased a 100% interest
        in the Fundiciones property. The agreement required cash payments of Pesos2,250,000
        (CAD$222,300) (paid) upon signing of the purchase agreement and an additional
        payment of Pesos5,447,029 (CAD$538,166) (paid). The additional 3.88 hectares
        of real estate is adjacent to the existing plant at Guanajuato and the
        purchase will facilitate any future expansion of the plant facilities.

|8. | Mineral properties, plant and equipment:                                                             
|-- | -----------------------------------------------------------------------------------------------------
|   |                                                                                                      
|   | The major components of the Company's mineral properties,
        plant and equipment are as follows:

| |                                                    |   | December
      31, |   |   | December
      31, |  
| | -------------------------------------------------- | - | ------------------ | - | - | ------------------ | -
| |                                                    |   | 2007               |   |   | 2006               |  
| |                                                    |   |                    |   |   |                    |  
| | Topia Mine (note 7(a)):                            |   |                    |   |   |                    |  
| | Mineral properties                                 | $ | 2,167,106          |   | $ | 1,577,851          |  
| | Plant and
      equipment                          |   | 5,660,608          |   |   | 5,002,155          |  
| | Buildings and mobile equipment                     |   | 393,346            |   |   | 383,086            |  
| | Asset retirement obligations
      (note 11)       |   | 546,254            |   |   | 52,734             |  
| |                                                    |   | 8,767,314          |   |   | 7,015,826          |  
| | Accumulated depreciation
      and depletion       |   | (2,177,831         | ) |   | (615,898           | )
| |                                                    |   | 6,589,483          |   |   | 6,399,928          |  
| |                                                    |   |                    |   |   |                    |  
| | Guanajuato Mines (note 7(b)):                      |   |                    |   |   |                    |  
| | Mineral properties                                 |   | 3,978,063          |   |   | 3,750,000          |  
| | Plant and equipment                                |   | 4,828,025          |   |   | 4,248,128          |  
| | Buildings
      and mobile equipment               |   | 1,752,370          |   |   | 1,075,714          |  
| | Land                                               |   | 2,844,889          |   |   | 2,480,539          |  
| | Asset retirement obligations
      (note 11)       |   | 532,213            |   |   | 39,551             |  
| |                                                    |   | 13,935,560         |   |   | 11,593,932         |  
| | Accumulated depreciation
      and depletion       |   | (2,753,990         | ) |   | (799,333           | )
| |                                                    |   | 11,181,570         |   |   | 10,794,599         |  
| |                                                    |   |                    |   |   |                    |  
| | Santo Nino                                         |   | 68,542             |   |   | 68,542             |  
| |                                                    |   |                    |   |   |                    |  
| | Leasehold improvements and other equipment, net of |   |                    |   |   |                    |  
| | accumulated
      depreciation of $123,957 (2006 - |   |                    |   |   |                    |  
| | $36,879)                                           |   | 248,218            |   |   | 113,817            |  
| |                                                    |   |                    |   |   |                    |  
| |                                                    | $ | 18,087,813         |   | $ | 17,376,886         |  

15

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|9. | Mineral property exploration expenditures:                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------
|   |                                                                                                                 
|   | The continuity of expenditures on mineral properties
        for the year ended December 31, 2007 is as follows:

San
      
      
      Santo
      
      
      San
      
      
      Topia
      
      
      TopiaAntonio
      
      
      Nino
      
      
      Taco
      
      
      Main Block
      
      
      II to IV
      
      
      Guanajuato
      
      
      Virimoa
      
      
      Mapimi(a)
      
      
      (a)
      
      
      (b)
      
      
      note
        7
      (a)
      
      note
        7
      (a)
      
      note
        7
      (b)
      
      (c)
      
      
      (d)
      
      
      2007Option
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $payments:
      
      Cash
      
      $
      49,119
      
      $
      102,721
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      216,623
      
      
      368,463Shares
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      246,000
      
      
      246,000Analysis
      
      
      
      
      19,588
      
      
      -
      
      
      -
      
      
      51,098
      
      
      -
      
      
      293,759
      
      
      -
      
      
      160,448
      
      
      524,893Drilling
      
      
      
      
      161,212
      
      
      -
      
      
      -
      
      
      766,273
      
      
      -
      
      
      816,417
      
      
      -
      
      
      928,912
      
      
      2,672,814Field costs
      
      
      
      
      315,688
      
      
      -
      
      
      -
      
      
      111,448
      
      
      -
      
      
      3,007
      
      
      -
      
      
      171,758
      
      
      601,901Geology
      
      
      
      
      31,582
      
      
      -
      
      
      -
      
      
      323,649
      
      
      -
      
      
      750,145
      
      
      -
      
      
      459,351
      
      
      1,564,727Projectadministration
      
      
      
      
      30,132
      
      
      -
      
      
      -
      
      
      16,490
      
      
      -
      
      
      52,024
      
      
      -
      
      
      133,577
      
      
      232,223Mineexplorationcosts
      
      
      
      
      -
      
      
      -
      
      
      -
      
      
      1,223,200
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,223,200607,321
      
      
      102,721
      
      
      -
      
      
      2,492,158
      
      
      -
      
      
      1,915,352
      
      
      -
      
      
      2,316,669
      
      
      7,434,221CostRecoveries
      
      
      
      
      (631,117
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      
      
      
      -
      
      
      -
      
      
      (631,117
      )(23,796
      )
      
      102,721
      
      
      -
      
      
      2,492,158
      
      
      -
      
      
      1,915,352
      
      
      -
      
      
      2,316,669
      
      
      6,803,104Cumulativeexpenses,beginning ofyear
      
      
      
      
      233,870
      
      
      386,933
      
      
      425,465
      
      
      3,325,140
      
      
      168,144
      
      
      2,342,567
      
      
      369,788
      
      
      766,817
      
      
      8,018,724Cumulativeexpenses,end of year
      
      
      
      $
      210,074
      
      $
      489,654
      
      $
      425,465
      
      $
      5,817,298
      
      $
      168,144
      
      $
      4,257,919
      
      $
      369,788
      
      $
      3,083,486
      
      $
      14,821,828


16

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|9. | Mineral property exploration expenditures (continued):                                                          
|-- | ----------------------------------------------------------------------------------------------------------------
|   |                                                                                                                 
|   | The continuity of expenditures on mineral properties
        for the year ended December 31, 2006 is as follows:

San
      Santo
      San
      Topia
      TopiaAntonio
      Nino
      Taco
      Main Block
      II to IV
      Guanajuato
      Virimoa
      Mapimi(a)
      (a)
      (b)
      note
        7(a)
      note
        7(a)
      note 7(b)
      (c)
      (d)
      2006Optionpayments
      $ -
      $ 11,495
      $ -
      $ -
      $ -
      $ -
      $192,337
      $625,639
      $ 829,471Analysis
      1,288
      -
      -
      64,493
      -
      286,744
      -
      -
      352,525Drilling
      -
      -
      -
      206,977
      -
      620,092
      -
      24,951
      852,020Field costs
      768
      -
      -
      228,253
      -
      43,061
      -
      -
      272,082Geology
      16,782
      11,307
      -
      352,364
      44,188
      848,183
      -
      107,207
      1,380,031Projectadministration
      16,006
      -
      -
      127,244
      -
      129,684
      -
      9,020
      281,95434,844
      22,802
      -
      979,331
      44,188
      1,927,764
      192,337
      766,817
      3,968,083Cumulativeexpenses,beginning ofperiod
      199,026
      364,131
      425,465
      2,345,809
      123,956
      414,803
      177,451
      -
      4,050,641Cumulativeexpenses, endof
        period
      $233,870
      $386,933
      $425,465
      $3,325,140
      $168,144
      $2,342,567
      $369,788
      $766,817
      $8,018,724


The continuity of expenditures on mineral
  properties for the year ended December 31, 2005 is as follows:

San
      Santo
      San
      Topia
      TopiaAntonio
      Nino
      Taco
      Main Block
      II to IV
      Guanajuato
      Virimoa(a)
      (a)
      (b)
      note
        7(a)
      note
        7(a)
      note
        7(b)
      (c)
      2005Option payments
      $ 4,099
      $ 24,492
      $ 93,516
      $ -
      $ -
      $ -
      $ -
      $ 122,107Analysis
      18,553
      9,414
      2,814
      78,142
      14,909
      7,571
      14,952
      146,355Drilling
      13,986
      160,900
      85,176
      423,324
      -
      353,057
      80,209
      1,116,652Field costs
      906
      1,851
      1,058
      31,928
      556
      776
      850
      37,925Geology
      86,907
      62,971
      62,298
      288,302
      75,529
      47,059
      77,834
      700,900Land taxes
      11,277
      1,640
      1,886
      44,171
      6,813
      -
      -
      65,787Projectadministration
      29,998
      1,237
      2,267
      106,942
      282
      6,340
      3,606
      150,672165,726
      262,505
      249,015
      972,809
      98,089
      414,803
      177,451
      2,340,398Cumulativeexpenses, beginningof
        period
      33,300
      101,626
      176,450
      1,373,000
      25,867
      -
      -
      1,710,243Cumulativeexpenses, end ofperiod
      $ 199,026
      $ 364,131
      $ 425,465
      $2,345,809
      $ 123,956
      $ 414,803
      $ 177,451
      $4,050,641


17

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|9. | Mineral property exploration expenditures
        (continued):
|-- | --------------------------------------------------------------
|   |                                                               
|   | (a)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | (b)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | (c)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | (d)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

18

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|9. | Mineral property exploration expenditures (continued):
|-- | ------------------------------------------------------

| | (iii) | US$200,000 (paid) and issuance of 200,000 common shares
        (issued) by the first anniversary of the date of signing the option agreement;
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                               
| | (iv)  | US$500,000 and issuance of 100,000 common shares by
        the second anniversary of the date of signing the option agreement;               
| |       |                                                                                                                                               
| | (v)   | US$700,000 by the third anniversary of the date of signing
        the option agreement; and                                                  
| |       |                                                                                                                                               
| | (vi)  | US$1,500,000 by the fourth anniversary of the date of
        signing the option agreement.                                                   

If the option is exercised, the vendors
  will retain a 3% Net Smelter Return, each 0.5% (to a maximum of 2%) of which
  can be purchased for US$500,000.

|10. | Long-term debt:                   
|--- | ----------------------------------
|    |                                   
|    | (a)        Long-term
        debt:

| |                                                                          |   | December
      31, |   |   | December
      31, |  
| | ------------------------------------------------------------------------ | - | ------------------ | - | - | ------------------ | -
| |                                                                          |   | 2007               |   |   | 2006               |  
| |                                                                          |   |                    |   |   |                    |  
| | Topia mine acquisition (note 7(a)) (Cienega
      debt), discounted at |   |                    |   |   |                    |  
| | an effective interest rate of 26.8% per annum,
      repayable in the    |   |                    |   |   |                    |  
| | form of a 10% Net Smelter Royalty
      or US$25,000 per                 |   |                    |   |   |                    |  
| | shipment, whichever is higher and is secured by
      a general          |   |                    |   |   |                    |  
| | security agreement over the assets
      of the Topia operations.        |   |                    |   |   |                    |  
| | The debt was fully repaid as at December 31, 2007.                       | $ | -                  |   | $ | 569,886            |  
| |                                                                          |   |                    |   |   |                    |  
| | Topia mine acquisition (note 7(a)) (Caneles debt),
      without       |   |                    |   |   |                    |  
| | interest and discounted at an
      effective interest rate of 26.8%     |   |                    |   |   |                    |  
| | per annum. Terms of the agreement required retirement
      of the       |   |                    |   |   |                    |  
| | Caneles debt upon full payment
      of the Cienega debt. The debt       |   |                    |   |   |                    |  
| | was fully repaid as at December 31, 2007.                                |   | -                  |   |   | 753,855            |  
| |                                                                          |   |                    |   |   |                    |  
| | Arcoiris concession acquisition, carrying value of US$100,000            |   |                    |   |   |                    |  
| | (note 7(c)), without interest
      and discounted at an effective       |   |                    |   |   |                    |  
| | interest rate of 26.8% per annum, payable in four
      staged           |   |                    |   |   |                    |  
| | payments over three years                                                |   | 99,130             |   |   | 233,060            |  
| |                                                                          |   |                    |   |   |                    |  
| |                                                                          |   | 99,130             |   |   | 1,556,801          |  
| | Less: unamortized
      discount                                         |   | (10,505            | ) |   | (269,860           | )
| |                                                                          |   | 88,625             |   |   | 1,286,941          |  
| | Current portion                                                          |   | (88,625            | ) |   | (1,182,814         | )
| |                                                                          |   |                    |   |   |                    |  
| |                                                                          | $ | -                  |   | $ | 104,127            |  

Interest accreted on long-term debt
  totaled $259,355 in 2007 (2006  $378,363).

19

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|10. | Long-term debt (continued):
|--- | ---------------------------

| | (b) | Convertible loan notes:
| | --- | -----------------------

| |                                                                       |   | December
      31, |  |   | December
      31, | 
| | --------------------------------------------------------------------- | - | ------------------ |  | - | ------------------ | 
| |                                                                       |   | 2007               |  |   | 2006               | 
| |                                                                       |   |                    |  |   |                    | 
| | $2,020,000 note due March 9, 2010, interest rate of 8% per            |   |                    |  |   |                    | 
| | annum payable quarterly. Discounted
      at an effective interest    |   |                    |  |   |                    | 
| | rate of 26.8%.                                                        | $ | 1,398,507          |  | $ | 1,163,799          | 
| |                                                                       |   |                    |  |   |                    | 
| | $4,050,000 million notes due July 14, 2011, interest rate of
      8% |   |                    |  |   |                    | 
| | per annum payable quarterly. Discounted
      at an effective         |   |                    |  |   |                    | 
| | interest
      rate of 25.1%.                                         |   | 2,630,104          |  |   | -                  | 
| |                                                                       |   |                    |  |   |                    | 
| |                                                                       |   |                    |  |   |                    | 
| |                                                                       | $ | 4,028,611          |  | $ | 1,163,799          | 

| | (i)  | On March 8, 2006, the Company completed a financing
        agreement for cash proceeds of $2,020,000. The financing consisted of
        8% per annum unsecured convertible note maturing March 9, 2010 and is
        convertible into common shares of the Company at a price of $1.32 per
        share at the holders option at any time. The conversion feature
        of the note has a fair value of $1,006,000 using a Black-Scholes valuation
        model upon issue of the note. Interest accreted on the note payable during
        2007 was $234,708 (2006 - $149,799).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (ii) | On July 13, 2007, the Company completed financing agreements
        for cash proceeds of $4,050,000. The financing consisted of two 8% per
        annum unsecured convertible notes maturing July 14, 2011 and is convertible
        into common shares of the Company at a price of $2.25 per share at the
        holders option at any time. The conversion feature of the note has
        a fair value of $1,563,000 using a Black- Scholes valuation model upon
        issue of the note. Interest accreted on the notes payable during 2007
        was $143,104.            

The fair value of the conversion feature
  of the notes has been recorded as an equity component of the note financing,
  reducing the amount assigned to the debt component. The debt component is accreted
  to its fair value over the term to maturity as a non-cash interest expense charge.

20

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|11. | Asset retirement obligations:                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                  
|    | The Companys asset retirement obligations relate
        to site restoration, clean-up and ongoing treatment and monitoring of
        the Topia and Guanajuato mines. A reconciliation of the provision for
        asset retirement obligations is as follows:

| |                                |   | 2007      |  |   | 2006   | 
| | ------------------------------ | - | --------- |  | - | ------ | 
| |                                |   |           |  |   |        | 
| | Balance, beginning of year     | $ | 92,285    |  | $ | -      | 
| |                                |   |           |  |   |        | 
| | Changes in cash flow estimates |   | 986,182   |  |   | 92,285 | 
| | Accretion expense              |   | 22,704    |  |   | -      | 
| |                                |   |           |  |   |        | 
| | Balance, end of year           | $ | 1,101,171 |  | $ | 92,285 | 

The provision for asset retirement obligations
  is based on the following assumptions:

| | • | The total undiscounted estimated
        cash flows required to settle the Companys estimated obligations
        is US$2,289,000 (2006 - US$175,000).                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                          
| | • | The expected timing of payments
        is estimated as follows: US$1,698,000 in 2011, US$290,000 in 2012, and
        US$301,000 in 2013. This timing matches our remaining life estimate of
        the mines, which is estimated at 3 years in the absence of a reliable
        estimate of reserves.
| |   |                                                                                                                                                                                                                                                                                                          
| | • | A credit-adjusted risk-free
        rate of 25.1% (2006  26.8%) has been used to discount cash flows.                                                                                                                                                                                                   

21

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock:
|--- | --------------

| | (a) | Authorized:                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | Unlimited number of common shares without par value                                                                                                                                           
| |     | Unlimited number of Class A preferred shares without
        par value, issuable in series 
        Unlimited number of Class B preferred shares without par value, issuable
        in series
| |     |                                                                                                                                                                                               
| | (b) | Issued:                                                                                                                                                                                       

| |                                                                         |  | Number of     |  |   | Stated     |  
| | ----------------------------------------------------------------------- |  | ------------- |  | - | ---------- | -
| |                                                                         |  | common shares |  |   | value      |  
| |                                                                         |  |               |  |   |            |  
| | Balance carried forward, December 31, 2004                              |  | 15,818,677    |  | $ | 7,068,595  |  
| |                                                                         |  |               |  |   |            |  
| | Private placement at $0.45 per unit, net of
      costs (i)             |  | 4,358,944     |  |   | 1,882,301  |  
| | Private placement at $0.45 per unit, net of costs (ii)                  |  | 12,363,000    |  |   | 5,008,713  |  
| | Private placement at $0.62 per unit, net of
      costs (iii)           |  | 12,250,310    |  |   | 6,983,028  |  
| | Exercise of "B" warrants at $0.45 per share                             |  | 1,140,000     |  |   | 513,000    |  
| | Exercise of "C" warrants at $0.45 per share                             |  | 1,142,500     |  |   | 514,125    |  
| | Exercise of "D" warrants at $0.45 per share                             |  | 96,000        |  |   | 59,520     |  
| | Exercise of options                                                     |  | 80,000        |  |   | 36,000     |  
| | Issue of options and warrants for financing services                    |  | -             |  |   | (606,083   | )
| | Issue of shares for property                                            |  | 100,000       |  |   | 50,000     |  
| | Reclass from contributed
      surplus on exercise of options           |  | -             |  |   | 27,241     |  
| |                                                                         |  |               |  |   |            |  
| | Balance, December 31, 2005                                              |  | 47,349,431    |  |   | 21,536,440 |  
| |                                                                         |  |               |  |   |            |  
| | Exercise of "F" warrants at $0.62 per share                             |  | 2,179,472     |  |   | 1,351,273  |  
| | Exercise of "G" warrants at $0.62 per share                             |  | 4,034,000     |  |   | 2,501,080  |  
| | Exercise of H warrants at $0.62 per share                             |  | 2,147,500     |  |   | 1,331,450  |  
| | Exercise of I warrants at $0.90
      per share                       |  | 197,000       |  |   | 177,300    |  
| | Exercise of J warrants at $0.90 per share                             |  | 3,062,500     |  |   | 2,756,250  |  
| | Exercise of K warrants at $2.65
      per share                       |  | 127,999       |  |   | 339,197    |  
| | Exercise of agent warrants                                              |  | 1,149,886     |  |   | 817,530    |  
| | Exercise of options                                                     |  | 1,799,560     |  |   | 869,257    |  
| | Private placement at $2.00 per unit, net of costs (iv)                  |  | 7,500,000     |  |   | 13,866,639 |  
| | Issue of warrants for financing services                                |  |               |  |   | (251,500   | )
| | Issue of shares pursuant to mineral property option agreements          |  |               |  |   |            |  
| | -
      Virimoa and Mapimi                                              |  | 250,000       |  |   | 613,000    |  
| | Reclass from contributed
      surplus on exercise of options           |  | -             |  |   | 485,229    |  
| |                                                                         |  |               |  |   |            |  
| |                                                                         |  |               |  |   |            |  
| | Balance, December 31, 2006                                              |  | 69,797,348    |  |   | 46,393,145 |  
| |                                                                         |  |               |  |   |            |  
| | Exercise of I warrants at $0.90
      per share                       |  | 3,906,200     |  |   | 3,515,580  |  
| | Exercise of agents warrants                                             |  | 200,920       |  |   | 180,828    |  
| | Exercise of J warrants at $0.90
      per share                       |  | 5,034,300     |  |   | 4,530,870  |  
| | Exercise of agent warrants                                              |  | 553,084       |  |   | 497,776    |  
| | Exercise of options                                                     |  | 1,017,500     |  |   | 678,000    |  
| | Issue of shares pursuant to mineral property agreement                  |  | 200,000       |  |   | 246,000    |  
| | Reclassification from contributed surplus on
      exercise of options  |  | -             |  |   | 819,356    |  
| | Reclassification to
      common shares on cashless exercise of options |  | 35,000        |  |   | 126,892    |  
| |                                                                         |  |               |  |   |            |  
| | Balance, December
      31, 2007                                        |  | 80,744,352    |  | $ | 56,988,447 |  

No preferred shares have been issued.

22

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------
|    |                           
|    | (b)                       
|    |                           
|    |                           
|    |                           
|    |                           
|    |                           
|    |                           

23

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------

| | (iv) | On June 1, 2006, the Company issued 7,500,000 units
        by private placement at a price of $2.00 per unit (Unit) for gross proceeds
        of $15,000,000 and paid cash issuance costs of $1,133,361. Each Unit comprises
        one common share and one-half of one transferable share purchase warrant.
        Each whole warrant entitles the holder, upon exercise, to acquire one
        common share of the Company at a price of $2.65 until June 1, 2008. After
        the expiration of the hold period the Company has the right to accelerate
        the expiry date of the warrants if the closing price of the Company's
        common shares on the TSX Exchange exceeds $3.35 for a period of 20 consecutive
        trading days. The Company also issued 479,375 broker warrants entitling
        the holder to acquire one common share of the Company at $2.00 for a period
        of twenty-four months. The fair value of broker warrants of $251,500 is
        recorded as a cost of financing and is included in contributed surplus.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      | Included in issued capital stock as at December 31,
        2007 are nil common shares (2006  nil; 2005 - 1,012,500) held in
        escrow. During the year ended December 31, 2007, nil (2006  1,012,500;
        2005 - 675,000) shares were released pursuant to time-based provisions
        of the escrow agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| | (c) | Contributed surplus:
| | --- | --------------------

| |                                                                   |   | Stated value |  
| | ----------------------------------------------------------------- | - | ------------ | -
| |                                                                   |   |              |  
| | Balance, December 31, 2004                                        | $ | 702,679      |  
| |                                                                   |   |              |  
| | Issue of options and warrants for financing
      activities      |   | 606,083      |  
| | Reclassification to common shares on exercise of options          |   | (27,241      | )
| | Stock-based compensation                                          |   | 357,298      |  
| |                                                                   |   |              |  
| | Balance, December 31, 2005                                        |   | 1,638,819    |  
| |                                                                   |   |              |  
| | Issue of warrants for financing activities                        |   | 251,500      |  
| | Reclassification to common shares on exercise of options          |   | (485,229     | )
| | Stock-based compensation                                          |   | 4,672,774    |  
| |                                                                   |   |              |  
| | Balance, December 31, 2006                                        |   | 6,077,864    |  
| |                                                                   |   |              |  
| | Reclassification to common shares on exercise
      of options    |   | (819,356     | )
| | Reclassification to common shares on cashless exercise of options |   | (126,892     | )
| | Stock-based compensation                                          |   | 1,129,500    |  
| |                                                                   |   |              |  
| | Balance December 31, 2007                                         | $ | 6,261,116    |  

24

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------
|    |                           
|    | (d)                       
|    |                           
|    |                           
|    |                           
|    |                           

25

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------

The continuity of common stock options
  for 2007 is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      December 31,
      
      
      
      
      
      Cancelled/
      
      
      Cashless
      
      
      
      
      
      December 31,price
      
      Expiry date
      
      
      2006
      
      
      Granted
      
      
      expired
      
      
      Exercise
      
      
      Exercised
      
      
      20070.45
      
      February 8, 2009
      
      
      490,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      490,0000.52
      
      April 5, 2009
      
      
      30,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      30,0000.45
      
      May 25, 2009
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (40,000
      )
      
      60,0000.45
      
      February 27, 2010
      
      
      200,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (50,000
      )
      
      150,0000.45
      
      July 11, 2010
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (100,000
      )
      
      -0.45
      
      August 30, 2010
      
      
      75,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (75,000
      )
      
      -0.45
      
      July 26, 2010
      
      
      580,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (180,000
      )
      
      400,0000.60
      
      September 29, 2007
      
      
      125,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (125,000
      )
      
      -0.90
      
      January 5, 2011
      
      
      1,551,700
      
      
      -
      
      
      -
      
      
      -
      
      
      (350,000
      )
      
      1,201,7000.90
      
      December 31, 2007
      
      
      237,500
      
      
      -
      
      
      -
      
      
      (140,000
      )
      
      (97,500
      )
      
      -0.90
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      December 06, 2011
      
      
      2,295,000
      
      
      -
      
      
      (190,000
      )
      
      -
      
      
      -
      
      
      2,105,0002.65
      
      March 11, 2012
      
      
      -
      
      
      165,000
      
      
      (50,000
      )
      
      -
      
      
      -
      
      
      115,0002.00
      
      June 05, 2012
      
      
      -
      
      
      525,000
      
      
      (150,000
      )
      
      -
      
      
      -
      
      
      375,0002.00
      
      September 10, 2012
      
      
      -
      
      
      550,000
      
      
      -
      
      
      -
      
      
      -
      
      
      550,0006,584,200
      
      
      1,240,000
      
      
      (390,000
      )
      
      (140,000
      )
      
      (1,017,500
      )
      
      6,276,700Weighted average
        exercise price
      
      
      $1.50
      
      
      $2.09
      
      
      $2.40
      
      
      $0.90
      
      
      $0.67
      
      
      $1.71


As at December 31, 2007, all share options
  are fully vested. The weighted average remaining contractual life of the options
  is 3.0 years.

The continuity of common stock options
  for 2006 is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      December 31,
      
      
      
      
      
      Cancelled/
      
      
      
      
      
      December 31,price
      
      Expiry date
      
      
      2005
      
      
      Granted
      
      
      expired
      
      
      Exercised
      
      
      20060.45
      
      February 8, 2009
      
      
      710,000
      
      
      -
      
      
      -
      
      
      (220,000
      )
      
      490,0000.52
      
      April 5, 2009
      
      
      60,000
      
      
      -
      
      
      -
      
      
      (30,000
      )
      
      30,0000.45
      
      May 25, 2009
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      100,0000.45
      
      February 27, 2010
      
      
      250,000
      
      
      -
      
      
      -
      
      
      (50,000
      )
      
      200,0000.45
      
      May 2, 2006
      
      
      100,000
      
      
      -
      
      
      -
      
      
      (100,000
      )
      
      -0.45
      
      July 11, 2010
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      100,0000.45
      
      August 30, 2010
      
      
      125,000
      
      
      -
      
      
      (50,000
      )
      
      -
      
      
      75,0000.45
      
      July 26, 2010
      
      
      700,000
      
      
      -
      
      
      -
      
      
      (120,000
      )
      
      580,0000.60
      
      September 13, 2006
      
      
      747,260
      
      
      -
      
      
      -
      
      
      (747,260
      )
      
      -0.60
      
      September 29, 2007
      
      
      125,000
      
      
      -
      
      
      -
      
      
      -
      
      
      125,0000.45
      
      October 4, 2006
      
      
      416,500
      
      
      -
      
      
      -
      
      
      (416,500
      )
      
      -0.90
      
      January 5, 2011
      
      
      -
      
      
      1,605,000
      
      
      (50,000
      )
      
      (3,300
      )
      
      1,551,7000.90
      
      December 31, 2007
      
      
      -
      
      
      350,000
      
      
      -
      
      
      (112,500
      )
      
      237,5000.90
      
      January 14, 2008
      
      
      -
      
      
      400,000
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      January 14, 2008
      
      
      -
      
      
      400,000
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      December 6, 2011
      
      
      -
      
      
      2,295,000
      
      
      -
      
      
      -
      
      
      2,295,0003,433,760
      
      
      5,050,000
      
      
      (100,000
      )
      
      (1,799,560
      )
      
      6,584,200Weighted average exercise price
      0.46
      
      
      1.83
      
      
      0.68
      
      
      0.48
      
      
      1.50


26

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------

The continuity of common stock options
  for 2005 is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      December 31,
      
      
      
      
      
      Cancelled/
      
      
      
      
      
      December 31,price
      
      Expiry date
      
      
      2004
      
      
      Granted
      
      
      expired
      
      
      Exercised
      
      
      20050.45
      
      February 8, 2009
      
      
      790,000
      
      
      -
      
      
      -
      
      
      (80,000
      )
      
      710,0000.52
      
      April 5, 2009
      
      
      60,000
      
      
      -
      
      
      -
      
      
      -
      
      
      60,0000.52
      
      April 30, 2009
      
      
      400,000
      
      
      -
      
      
      (400,000
      )
      
      -
      
      
      -0.45
      
      May 25, 2009
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      100,0000.45
      
      February 27, 2010
      
      
      -
      
      
      250,000
      
      
      -
      
      
      -
      
      
      250,0000.45
      
      May 2, 2006
      
      
      -
      
      
      100,000
      
      
      -
      
      
      -
      
      
      100,0000.45
      
      July 11, 2010
      
      
      -
      
      
      100,000
      
      
      -
      
      
      -
      
      
      100,0000.45
      
      August 30, 2010
      
      
      -
      
      
      125,000
      
      
      -
      
      
      -
      
      
      125,0000.45
      
      July 26, 2010
      
      
      -
      
      
      700,000
      
      
      -
      
      
      -
      
      
      700,0000.60
      
      September 13, 2006
      
      
      -
      
      
      747,260
      
      
      -
      
      
      -
      
      
      747,2600.60
      
      September 29, 2007
      
      
      -
      
      
      125,000
      
      
      -
      
      
      -
      
      
      125,0000.45
      
      October 4, 2006
      
      
      -
      
      
      416,500
      
      
      -
      
      
      -
      
      
      416,5001,350,000
      
      
      2,563,760
      
      
      (400,000
      )
      
      (80,000
      )
      
      3,433,760Weighted average exercise price
      
      $
      0.47
      
      $
      0.50
      
      $
      0.52
      
      $
      0.45
      
      $
      0.46


The Company applies the fair value based
  method of accounting for employee stock options granted after January 1, 2003.
  During the year ended December 31, 2007, the Company recorded compensation expense
  for the fair value of stock options of $1,129,500 (2006 - $4,672,774, 2005 -
  $357,298) for stock options that were granted during the year. The weighted
  average fair value of options granted during 2007 was $2.09 (2006 - $1.83, 2005
  - $0.46) . The fair value per option was determined using the following weighted
  average assumptions:

| |                         | 2007      | 2006      | 2005     
| | ----------------------- | --------- | --------- | ---------
| |                         |           |           |          
| | Risk-free interest rate | 4.4%      | 3.8%      | 3.2%     
| | Dividend paid           | 0.0%      | 0.0%      | 0.0%     
| | Expected life           | 5.0 years | 4.2 years | 3.4 years
| | Volatility              | 64.0%     | 65.2%     | 78.0%    

27

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------
|    |                           
|    | (e)                       
|    |                           
|    |                           

Balance
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      
      December 31,
      
      
      
      
      
      
      
      
      
      
      
      December 31,Series
      
      price
      
      
      Expiry date
      
      
      2006
      
      
      Issued
      
      
      Exercised
      
      
      Expired
      
      
      2007Series "I" Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      3,906,200
      
      
      -
      
      
      (3,906,200
      )
      
      -
      
      
      -Agents' Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      200,920
      
      
      -
      
      
      (200,920
      )
      
      -
      
      
      -Series "J" Warrants
      
      0.90
      
      
      Dec. 20, 2007
      
      
      5,034,300
      
      
      -
      
      
      (5,034,300
      )
      
      -
      
      
      -Agents Warrants
      
      0.90
      
      
      Dec. 20, 2007
      
      
      553,084
      
      
      -
      
      
      (553,084
      )
      
      -
      
      
      -Series K Warrants
      
      2.65
      
      
      June 1, 2008
      
      
      3,621,999
      
      
      -
      
      
      -
      
      
      -
      
      
      3,621,999Broker Warrants
      
      2.00
      
      
      June 1, 2008
      
      
      479,375
      
      
      -
      
      
      -
      
      
      -
      
      
      479,37513,795,878
      
      
      -
      
      
      (9,694,504
      )
      
      -
      
      
      4,101,374


The continuity of warrants for 2006
  is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      
      December 31,
      
      
      
      
      
      
      
      
      
      
      
      December 31,Series
      
      price
      
      
      Expiry date
      
      
      2005
      
      
      Issued
      
      
      Exercised
      
      
      Expired
      
      
      2006Series "F" Warrants
      
      0.62
      
      
      June 28, 2006
      
      
      1,039,861
      
      
      -
      
      
      (1,039,861
      )
      
      -
      
      
      -Agents' Warrants
      
      0.62
      
      
      June 28, 2006
      
      
      127,500
      
      
      -
      
      
      (127,500
      )
      
      -
      
      
      -Series "F" Warrants
      
      0.62
      
      
      July 18, 2006
      
      
      1,139,611
      
      
      -
      
      
      (1,139,611
      )
      
      -
      
      
      -Finders' Warrants
      
      0.62
      
      
      July 18, 2006
      
      
      48,200
      
      
      -
      
      
      (48,200
      )
      
      -
      
      
      -Series "G" Warrants
      
      0.62
      
      
      Sept. 13, 2006
      
      
      4,034,000
      
      
      -
      
      
      (4,034,000
      )
      
      -
      
      
      -Series "H" Warrants
      
      0.62
      
      
      Oct. 4, 2006
      
      
      2,147,500
      
      
      -
      
      
      (2,147,500
      )
      
      -
      
      
      -Series "I" Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      4,103,200
      
      
      -
      
      
      (197,000
      )
      
      -
      
      
      3,906,200Agents' Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      410,320
      
      
      -
      
      
      (209,400
      )
      
      -
      
      
      200,920Series "J" Warrants
      
      0.90
      
      
      Dec. 20, 2007
      
      
      8,096,800
      
      
      -
      
      
      (3,062,500
      )
      
      -
      
      
      5,034,300Agents Warrants
      
      0.90
      
      
      Dec. 20, 2007
      
      
      735,990
      
      
      -
      
      
      (182,906
      )
      
      -
      
      
      553,084Series "K" Warrants
      
      2.65
      
      
      June 1, 2008
      
      
      -
      
      
      3,749,998
      
      
      (127,999
      )
      
      -
      
      
      3,621,999Broker Warrants
      
      2.00
      
      
      June 1, 2008
      
      
      -
      
      
      479,375
      
      
      -
      
      
      -
      
      
      479,375Agent Warrants
      
      0.62
      
      
      Sept. 13, 2006
      
      
      -
      
      
      373,630
      
      
      (373,630
      )
      
      -
      
      
      -Agent Warrants
      
      0.62
      
      
      Oct. 4, 2006
      
      
      -
      
      
      208,250
      
      
      (208,250
      )
      
      -
      
      
      -21,882,982
      
      
      4,811,253
      
      
      (12,898,357
      )
      
      -
      
      
      13,795,878


28

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|12. | Capital stock (continued):
|--- | --------------------------

The continuity of warrants for 2005
  is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      
      December 31,
      
      
      
      
      
      
      
      
      
      
      
      December 31,Series
      
      price
      
      
      Expiry date
      
      
      2004
      
      
      Issued
      
      
      Exercised
      
      
      Expired
      
      
      2005Series "B" Warrants
      
      0.45
      
      
      Mar. 22, 2005
      
      
      1,715,000
      
      
      -
      
      
      (1,140,000
      )
      
      (575,000
      )
      
      -Series "C" Warrants
      
      0.45
      
      
      Jan. 13, 2005
      
      
      2,280,500
      
      
      -
      
      
      (1,142,500
      )
      
      (1,138,000
      )
      
      -Series "D" Warrants
      
      0.62
      
      
      Mar. 28, 2005
      
      
      1,785,714
      
      
      -
      
      
      (96,000
      )
      
      (1,689,714
      )
      
      -Agents' Warrants
      
      0.62
      
      
      Mar. 28, 2005
      
      
      591,543
      
      
      -
      
      
      -
      
      
      (591,543
      )
      
      -Series "E" Warrants
      
      0.62
      
      
      May 27, 2005
      
      
      1,500,000
      
      
      -
      
      
      -
      
      
      (1,500,000
      )
      
      -Agents' Warrants
      
      0.62
      
      
      Apr. 22, 2005
      
      
      450,000
      
      
      -
      
      
      -
      
      
      (450,000
      )
      
      -Series "F" Warrants
      
      0.62
      
      
      June 28, 2006
      
      
      -
      
      
      1,039,861
      
      
      -
      
      
      -
      
      
      1,039,861Agents' Warrants
      
      0.62
      
      
      June 28, 2006
      
      
      -
      
      
      127,500
      
      
      -
      
      
      -
      
      
      127,500Series "F" Warrants
      
      0.62
      
      
      July 18, 2006
      
      
      -
      
      
      1,139,611
      
      
      -
      
      
      -
      
      
      1,139,611Finders' Warrants
      
      0.62
      
      
      July 18, 2006
      
      
      -
      
      
      48,200
      
      
      -
      
      
      -
      
      
      48,200Series "G" Warrants
      
      0.62
      
      
      Sept. 13, 2006
      
      
      -
      
      
      4,034,000
      
      
      -
      
      
      -
      
      
      4,034,000Series "H" Warrants
      
      0.62
      
      
      Oct. 4, 2006
      
      
      -
      
      
      2,147,500
      
      
      -
      
      
      -
      
      
      2,147,500Series "I" Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      -
      
      
      4,103,200
      
      
      -
      
      
      -
      
      
      4,103,200Agents' Warrants
      
      0.90
      
      
      Nov. 30, 2007
      
      
      -
      
      
      410,320
      
      
      -
      
      
      -
      
      
      410,320Series "J" Warrants
      
      0.90
      
      
      Dec. 20, 2007
      
      
      -
      
      
      8,096,800
      
      
      -
      
      
      -
      
      
      8,096,800Agents Warrants
      
      0.90
      
      
      Dec.
        20, 2007
      
      
      -
      
      
      735,990
      
      
      -
      
      
      -
      
      
      735,9908,322,757
      
      
      21,882,982
      
      
      (2,378,500
      )
      
      (5,944,257
      )
      
      21,882,982


|13. | Related party transactions:                                                      
|--- | ---------------------------------------------------------------------------------
|    |                                                                                  
|    | The Company entered into the following transactions
        with related parties:

| |                                                         |   | 2007    |  |   | 2006    |  |   | 2005    | 
| | ------------------------------------------------------- | - | ------- |  | - | ------- |  | - | ------- | 
| |                                                         |   |         |  |   |         |  |   |         | 
| | Consulting fees paid or accrued to companies            |   |         |  |   |         |  |   |         | 
| | controlled by directors of the Company                  | $ | 539,000 |  | $ | 388,250 |  | $ | 295,760 | 
| |                                                         |   |         |  |   |         |  |   |         | 
| | Consulting fees paid or accrued to companies            |   |         |  |   |         |  |   |         | 
| | controlled by officers of the
      Company             |   | 395,943 |  |   | 272,578 |  |   | 186,483 | 
| |                                                         |   |         |  |   |         |  |   |         | 
| | Cost recoveries received or accrued from a              |   |         |  |   |         |  |   |         | 
| | company with a common director of the Company           |   | 631,117 |  |   | -       |  |   | -       | 
| |                                                         |   |         |  |   |         |  |   |         | 
| | Office and administration fees paid or accrued to       |   |         |  |   |         |  |   |         | 
| | a company controlled by a director
      of the Company |   | 39,879  |  |   | 101,060 |  |   | 78,388  | 
| |                                                         |   |         |  |   |         |  |   |         | 

As at December 31, 2007, $74,401 (2006
   nil; 2005 - $14,080) was due to companies controlled by officers and
  directors of the Company and was included in accounts payable. Amounts due from
  a company with a common director were $400,742 (2006  nil, 2005 - nil)
  and were included in amounts receivable.

29

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|14. | Income taxes:              
|--- | ---------------------------
|    |                            
|    | Provision for income taxes:

| |                      |   | 2007      |  |   | 2006    |   |   | 2005     |  
| | -------------------- | - | --------- |  | - | ------- | - | - | -------- | -
| |                      |   |           |  |   |         |   |   |          |  
| | Current income taxes | $ | 149,969   |  | $ | 127,475 |   | $ | -        |  
| | Future income taxes  |   | 2,421,504 |  |   | (17,459 | ) |   | (370,514 | )
| |                      |   |           |  |   |         |   |   |          |  
| |                      | $ | 2,571,473 |  | $ | 110,016 |   | $ | (370,514 | )

Income tax expense differs from the amount
  which would result from applying the statutory Canadian tax rates for the following
  reasons:

| |                                              |   | 2007        |   |   | 2006        |   |   | 2005       |  
| | -------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
| |                                              |   |             |   |   |             |   |   |            |  
| | Net income (loss) before tax                 | $ | (17,129,388 | ) | $ | (14,974,421 | ) | $ | (5,602,199 | )
| | Canadian income tax rate                     |   | 34.12%      |   |   | 34.12%      |   |   | 34.12%     |  
| |                                              |   |             |   |   |             |   |   |            |  
| | Income tax recovery expected                 |   | (5,844,547  | ) |   | (5,109,272  | ) |   | (1,911,470 | )
| | Permanent differences                        |   | (81,800     | ) |   | 1,766,992   |   |   | 121,910    |  
| | Difference in tax rates                      |   | 561,686     |   |   | 809,932     |   |   | 252,662    |  
| | Benefit of tax attributes not recognized and |   |             |   |   |             |   |   |            |  
| | other
      items                            |   | 7,936,134   |   |   | 2,642,364   |   |   | 1,166,384  |  
| |                                              |   |             |   |   |             |   |   |            |  
| |                                              | $ | 2,571,473   |   | $ | 110,016     |   | $ | (370,514   | )

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

| |                                                              |   | 2007       |   |   | 2006       |  
| | ------------------------------------------------------------ | - | ---------- | - | - | ---------- | -
| |                                                              |   |            |   |   |            |  
| | Future income tax assets:                                    |   |            |   |   |            |  
| | Mineral property, plant and
      equipment and related debt | $ | 1,022,274  |   | $ | 1,033,103  |  
| | Office equipment
      financing and other                   |   | 430,454    |   |   | 442,343    |  
| | Capital losses                                               |   | 261,141    |   |   | 300,285    |  
| | Non-capital losses                                           |   | 3,717,141  |   |   | 6,095,103  |  
| | Total future income tax assets                               |   | 5,431,010  |   |   | 7,870,834  |  
| |                                                              |   |            |   |   |            |  
| | Valuation allowance                                          |   | (5,431,010 | ) |   | (7,585,674 | )
| | Future income
      tax assets, net of allowance             |   | -          |   |   | 285,160    |  
| |                                                              |   |            |   |   |            |  
| | Future income tax liabilities:                               |   |            |   |   |            |  
| | Mineral properties                                           |   | (2,421,504 | ) |   | (285,160   | )
| |                                                              |   |            |   |   |            |  
| | Future income tax
      liability                            | $ | (2,421,504 | ) | $ | -          |  

At December 31, 2007, the Company had
  operating losses of $13,170,509 (2006 - $20,988,000; 2005 - $8,795,000) and
  capital losses of $1,934,816 (2006 - $1,934,816; 2005 - $1,989,000). The operating
  losses at December 31, 2007 includes $12,365,275 (2006 - $7,285,000; 2005 -
  $3,881,000) in Canada and $805,233 (2006 - $13,703,000; 2005 - $4,914,000) in
  Mexico. The capital losses are without expiry, and the operating losses expire
  at various dates to 2027.

30

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|14. | Income taxes (continued):                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | A new tax in Mexico,
        referred to as a Flat Tax, was enacted in 2007 and came into
        effect on January 1, 2008. The Flat Tax is an alternative minimum tax.
        Taxpayers are required to pay the higher of the amount due under income
        tax or flat tax. The tax basis of fixed assets is significantly reduced
        and tax losses originating from prior years are not deductible under Flat
        Tax.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|15. | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|16. | Commitments and contingencies:                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          

31

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|16. | Commitments and contingencies (continued):
|--- | ------------------------------------------

| |     | not been provided for since management believes that
        this assessment is without merit and will not have a material adverse
        impact on our financial position, results of operations or cash flows.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                  
| | (b) | The Company is committed to making severance payments
        amounting to approximately $1,645,000 to certain Officers and management
        in the event that there is a change of control of the Company.    
| |     |                                                                                                                                                                                                                  
| | (c) | Commitments outstanding relating to laboratory and drilling
        services amount to $1,146,000 in 2008, $818,000 in 2009, $818,000 in 2010,
        and $818,000 in 2011.                                     
| |     |                                                                                                                                                                                                                  
| | (d) | The Company is committed to operating lease payments
        of $112,000 in 2008 and $66,000 in 2009.                                                                                                            

|17. | Subsequent events:
|--- | ------------------
|    |                   
|    | (a)               
|    |                   
|    |                   
|    |                   
|    |                   
|    |                   
|    | (b)               
|    |                   
|    | (c)               

32

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|18. | Reconciliation between Canadian and United
        States generally accepted accounting principles:                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    | These consolidated financial statements have
        been prepared in accordance with Canadian generally accepted accounting
        principles (Canadian GAAP). A description of US GAAP and practices prescribed
        by the US Securities and Exchange Commission (collectively US GAAP) that
        result in material measurement differences from Canadian GAAP are as follows:
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                          

33

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|18. | Reconciliation between Canadian and United States
        generally accepted accounting principles (continued):
|--- | ---------------------------------------------------------------------------------------------------------------

| |     | There were no significant differences in accounting
        for stock-based compensation between Canadian GAAP and US GAAP during
        the three years ended December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c) | Elimination of deficit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | During the year ended December 31, 1999, the Company
        reduced its paid-up capital by $6,211,205 to eliminate the deficit at
        March 31, 1999. In order to effect these reductions, it was not necessary
        to revalue the assets of the Company. As a consequence, all conditions
        under the US GAAP quasi-reorganization rules were not met and the recapitalization
        of the deficit would not be recorded.                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | Convertible note payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Under Canadian GAAP, the proceeds of the financing allocated
        to the estimated fair value of the conversion feature of the debt is recorded
        as an equity component of the debt (note 10(b)). Under US GAAP, a value
        is assigned to the conversion feature only if the effective conversion
        rate is less than the market price of the common stock at the date of
        issuance. Accordingly, no value would be assigned under US GAAP to the
        conversion feature on the convertible notes issued in 2006 and 2007.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Applying US GAAP, the convertible notes at December
        31, 2007 would be recorded at face value for a total of $6,070,000 and
        no value would be assigned to equity components of the convertible notes.
        In addition, accretion on the calculated debt discounts on the convertible
        notes under Canadian GAAP aggregating $377,812 (2006 - $149,799, 2005
        - nil) for the year ended December 31, 2007 would not have been recorded,
        reducing interest expense by an equivalent amount.                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The amounts in the consolidated balance sheets that
        differ significantly from those reported under Canadian GAAP are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                          |  | December
      31, 2007 |   |  | December
      31, 2006 |  
| | ------------------------ |  | ----------------------- | - |  | ----------------------- | -
| |                          |  | Canadian                |   |  | US                      |  
| |                          |  | GAAP                    |   |  | GAAP                    |  
| |                          |  |                         |   |  |                         |  
| | Convertible note payable |  | 4,028,611               |   |  | 6,070,000               |  
| | Share capital            |  | 56,988,447              |   |  | 63,199,652              |  
| | Contributed surplus      |  | 6,261,116               |   |  | 6,276,116               |  
| | Equity component of      |  |                         |   |  |                         |  
| | convertible note         |  | 2,569,000               |   |  | -                       |  
| | Deficit                  |  | (44,628,039             | ) |  | (50,326,633             | )

| | (e) | Statement of operations presentation:                                                                                                                                                                    
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                          
| |     | The consolidated statement of operations includes a
        write-down of the San Taco mineral property in other expenses. Under US
        GAAP, this amount would be disclosed as an operating expense.

34

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|18. | Reconciliation between Canadian and United
        States generally accepted accounting principles (continued):
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|    | (f)                                                                                                            
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    | (g)                                                                                                            
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                
|    |                                                                                                                

35

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|18. | Reconciliation between Canadian and United States
        generally accepted accounting principles (continued):
|--- | ---------------------------------------------------------------------------------------------------------------

| |  | 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

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.

| | (h) | Reconciliation:                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                      
| |     | The effect of the measurement differences between Canadian
        GAAP and US GAAP on the consolidated balances sheets and statements of
        operations and cash flows is summarized as follows:

| | (i) | Share capital and contributed surplus:
| | --- | --------------------------------------

| |                                                      |   | 2007       |  |   | 2006       | 
| | ---------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                      |   |            |  |   |            | 
| | Share capital and contributed surplus, under         |   |            |  |   |            | 
| | Canadian GAAP                                        | $ | 63,249,563 |  | $ | 52,471,009 | 
| | Adjustment for stock-based compensation for          |   |            |  |   |            | 
| | employees (note 18(b))                               |   | 15,000     |  |   | 15,000     | 
| | Reversal of recapitalization of deficit (note 18(c)) |   | 6,211,205  |  |   | 6,211,205  | 
| |                                                      |   |            |  |   |            | 
| | Share capital and contributed surplus, under         |   |            |  |   |            | 
| | US GAAP                                              | $ | 69,475,768 |  | $ | 58,697,214 | 

| | (ii) | Deficit:
| | ---- | --------

| |                                                         |   | 2007        |   |   | 2006        |  
| | ------------------------------------------------------- | - | ----------- | - | - | ----------- | -
| |                                                         |   |             |   |   |             |  
| | Deficit, under Canadian GAAP                            | $ | (44,628,039 | ) | $ | (24,927,178 | )
| | Adjustment for stock-based compensation for             |   |             |   |   |             |  
| | employees (note 18(b))                                  |   | (15,000     | ) |   | (15,000     | )
| | Reversal of recapitalization of deficit (note 18(c))    |   | (6,211,205  | ) |   | (6,211,205  | )
| | Interest accreted on convertible loan note (note 18(d)) |   | 527,611     |   |   | 149,799     |  
| |                                                         |   |             |   |   |             |  
| | Deficit, under US GAAP                                  | $ | (50,326,633 | ) | $ | (31,003,584 | )

36

---

|GREAT PANTHER RESOURCES LIMITED               
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)               
|                                              
|Years ended December 31, 2007, 2006 and 2005  
|                                              

|18. | Reconciliation between Canadian and United States
        generally accepted accounting principles (continued):
|--- | ---------------------------------------------------------------------------------------------------------------

| | (iii) | Loss and loss per share:
| | ----- | ------------------------

| |                                         |   | 2007        |   |   | 2006        |   |   | 2005       |  
| | --------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
| |                                         |   |             |   |   |             |   |   |            |  
| | Loss for the year, under                |   |             |   |   |             |   |   |            |  
| | Canadian GAAP                           | $ | (19,700,861 | ) | $ | (15,084,437 | ) | $ | (5,231,685 | )
| | Interest accreted on convertible        |   |             |   |   |             |   |   |            |  
| | loan
      note (note 18(d))            |   | 377,812     |   |   | 149,799     |   |   | -          |  
| |                                         |   |             |   |   |             |   |   |            |  
| | Loss for the year,
      under US GAAP  | $ | (19,323,049 | ) | $ | (14,934,638 | ) | $ | (5,231,685 | )
| |                                         |   |             |   |   |             |   |   |            |  
| | Basic and diluted loss per share, under |   |             |   |   |             |   |   |            |  
| | US GAAP                                 | $ | (0.27       | ) | $ | (0.25       | ) | $ | (0.22      | )
| | Weighted average number of common       |   |             |   |   |             |   |   |            |  
| | shares, basic and diluted               |   | 72,227,455  |   |   | 59,720,424  |   |   | 23,986,543 |  

37

---