UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

(Mark One)

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

                                       or

[X]      Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                       or

[ ]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934
              For the transition period from _________ to _________

                                       or

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

                         Commission file number: 0-51005

                           AMERA RESOURCES CORPORATION
             (Exact name of Registrant as specified in its charter)

                           AMERA RESOURCES CORPORATION
                 (Translation of Registrant's name into English)

                            BRITISH COLUMBIA, CANADA
                 (Jurisdiction of incorporation or organization)

   SUITE 709 - 837 WEST HASTINGS STREET, VANCOUVER, BRITISH COLUMBIA, V6C 3N6
                    (Address of principal executive offices)

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

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                           COMMON STOCK, NO PAR VALUE
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.
                                 NOT APPLICABLE
                                (Title of Class)

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital or common stock as of December 31, 2005.

          16,599,092 COMMON SHARES OUTSTANDING AS OF DECEMBER 31, 2005

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

Yes [ ]  No [X]

If this report is an annual or transition report,  indicate by check mark if the
registrant  is not required to file  reports  pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
Yes [ ]  No [X]


                                     - 7 -
<PAGE>

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

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

Yes [X]  No [ ]

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

Large accelerated filer [ ]   Accelerated filer [ ]    Non-accelerated filer [X]

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

Item 17 [X]   Item 18 [ ]

GENERAL INFORMATION:

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




                                     - 2 -
<PAGE>



GENERAL INFORMATION:  UNLESS OTHERWISE  INDICATED,  ALL REFERENCES HEREIN ARE TO
CANADIAN DOLLARS.

                                    GLOSSARY

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

ALTERATION                   Any  physical  or  chemical  change  in a  rock  or
                             mineral  subsequent  to its  formation.  Milder and
                             more localized than metamorphism.

BRECCIA:                     A rock containing  generally  angular  fragments of
                             itself or some other rock.

CATEO:                       In Argentina,  a cateo is an exploration concession
                             granted for a period of up to 1,100 days.  In areas
                             where  field work  seasons  are  limited,  only the
                             available   field  season  will  be  considered  in
                             determining  the  1,100  days.  A cateo  gives  the
                             holder the  exclusive  right to  explore  the area,
                             subject to certain pre-existing rights of owners of
                             mines  within  the  area  and  abutting  owners  of
                             cateos.  Through  the process of  exploration,  the
                             owner   of   the    cateo   may   make   and   file
                             "manifestations"   of  discovery  (see  below)  and
                             petition the mining  authority  for the granting of
                             mines  (see  below).  A cateo  may be up to  10,000
                             hectares  in size.  A single  legal  person may not
                             hold more than 20 cateos  or  200,000  hectares  of
                             cateos  in any one  province.  When  the  cateo  is
                             officially  granted,  a one time  payment  of about
                             US$0.35 ( Pesos $0.80 ) per hectare is required.

CLASTIC:                     Rock components  consisting of fragments derived by
                             mechanical erosion of pre-existing rocks.

EPITHERMAL:                  A   mineral   deposit   consisting   of  veins  and
                             replacement   bodies,   usually  in   volcanic   or
                             sedimentary rocks,  containing precious metals, or,
                             more rarely, base metals.  Epithermal deposits form
                             in   hydrothermal   systems   related  to  volcanic
                             activity  and while  active  can  discharge  to the
                             surface as hot springs or fumaroles.

G/T:                         grams per tonne

HIGH SULPHIDATION:           Veins,  vuggy  breccias and  sulphide  replacements
                             ranging  from  pods  to  massive  lenses  occur  in
                             volcanic  sequences   associated  with  high  level
                             hydrothermal   systems   marked  by   acid-leached,
                             advanced argillic, siliceous alteration.

HYDROTHERMAL ALTERATION:     Those chemical and mineral  changes  resulting from
                             the   interaction  of  hot  water   solutions  with
                             pre-existing solid mineral phases.

INTRUSIVE ROCK:              A body of rock,  that while fluid,  penetrated into
                             or  between  other  rocks,  but  solidified  before
                             reaching the surface.

KM:                          Kilometre

LWA                          length weighted average

M:                           Metre

MAFIC:                       Dark  colored,  generally  iron or magnesium  rich,
                             rock or mineral.

MANIFESTATIONS:              In Argentina,  manifestations or  "manifestaciones"
                             of discovery  are official  notices  filed with the
                             mining authority  indicating that the person filing
                             (who  must be the  owner  of the  cateo  in an area
                             covered  by a  cateo)  has  made a  discovery.  The
                             filing and  acceptance  by the mining  authority of
                             such  a  notice,  constitutes  the  first  step  in
                             converting  a discovery  to a mine (see  below).  A
                             manifestation  of  discovery  may cover one or more
                             claims in the case of either a vein or disseminated
                             deposit.  The  size of the  manifestations  and the
                             annual  payments  required of the owner is the same
                             as those for a mine.

MINE:                        In  Argentina,  a mine or "mina" is a real property
                             interest. It is a right of exploration granted on a
                             permanent basis after the completion of an official
                             survey  for as  long  as the  right  is  diligently


                                     - 3 -
<PAGE>


                             utilized  and  semi-annual  payments  of  40  Pesos
                             (approximately US$17.50) per claim are made. A mine
                             may   consist   of  one  or   several   claims   or
                             "pertenencias".  In the case of vein deposits, each
                             claim  is a  maximum  of 200 by 300  metres  or six
                             hectares; for disseminated deposits,  each claim is
                             up to one square kilometre or 100 hectares.

PATHFINDER ELEMENT:          An element which  typically  occurs with the metals
                             of  interest  in  a  particular   type  of  mineral
                             deposit. For example: arsenic,  antimony,  mercury,
                             and silver are commonly  associated with epithermal
                             deposits.

PORPHYRY:                    An igneous rock  containing  mineral  crystals that
                             are visibly  larger than other crystals of the same
                             or different composition.

POTASSIC ALTERATION:         Development    of   secondary    potassium-dominant
                             minerals   such  as   K-Feldspar   or   biotite  by
                             hydrothermal activity.

PPM:                         parts per million

PROPYLITIC ALTERATION:       Hydrothermal  alteration  consisting of the mineral
                             assemblage  epidote-chlorite-albite-calcite usually
                             found in the  outer  zones of  epithermal  gold and
                             copper porphyry deposits.

QUALIFIED PERSON             As  defined   in  under   Canadian  law   (National
                             Instrument  43-101   Standards  of  Disclosure  for
                             Mineral Projects)  ("NI 43-101") an individual  who
                             (a) is an engineer  or  geoscientist  with at least
                             five years of experience  in  mineral  exploration,
                             mine  development or operation  or mineral  project
                             assessment, or any  combination  of these;  (b) has
                             experience relevant  to the  subject  matter of the
                             mineral project and the technical report; and (c)is
                             a  member  in  good  standing  of  a   professional
                             association.

SEDIMENTARY ROCKS:           Descriptive  term for a rock  formed  of  sediment,
                             namely  solid  material  both  mineral and organic,
                             deposited from suspension in a liquid.

SILICA ALTERATION:           Hydrothermal  alteration consisting of the flooding
                             or impregnating  of  pre-existing  rock with silica
                             (SiO2).

SKARN:                       A style  of  alteration  characterized  by iron and
                             magnesium bearing aluminosilicate materials such as
                             garnet and diopside.

STOCKWORK:                   A mineral deposit or  accumulation  consisting of a
                             three-dimensional  network  of planar to  irregular
                             veinlets spaced closely together

STREAM SEDIMENT SAMPLE:      A  sample  of  fine   sediment   derived  from  the
                             mechanical action of the stream.

SULFIDE:                     A  compound  of  sulfur  combined  with one or more
                             metallic or semi-metallic elements.

SUPERGENE:                   A mineral  deposit or  enrichment  formed  near the
                             surface by descending solutions.

TACAZA VOLCANICS:            Tertiary-aged   (65  to  1.8  million   years  ago)
                             volcanic rocks.

TALUS:                       Rock fragments lying at the base of a cliff or on a
                             steep slope from which they were derived.

VEINLET:                     A small vein.

VEINS:                       An  occurrence  of minerals,  having been  intruded
                             into another rock, forming tabular shaped bodies.

AG:                          Silver

AS:                          Arsenic

AU:                          Gold



                                     - 4 -
<PAGE>


BA:                          Barium

CO:                          Cobalt

CU:                          Copper

MO:                          Molybdenum

PB:                          Lead

SB:                          Antimony

ZN:                          Zinc


                                    MINERALS

ARGENTITE:                   A silver sulphide mineral - Ag2S

AZURITE:                     A  deep  blue  to  violet  blue  copper   carbonate
                             hydroxide  mineral  commonly found in the oxidation
                             zones of porphyry copper deposits - Cu3(CO3)2(OH)2.

BIOTITE:                     An iron and magnesium bearing mica mineral.

CARBONATE:                   A mineral containing the radical CO3.

CALCITE:                     Calcium Carbonate (CaCO3)

CHALCOPYRITE:                A  sulfide  mineral  containing  copper  and iron -
                             CuFeS2.

CHLORITE:                    Family of sheet silicates of iron,  magnesium,  and
                             aluminum,  characteristic of low-grade metamorphism
                             or  hydrothermal  alteration.   Green  color,  with
                             cleavage  like  mica  except  that  chlorite  small
                             scales are not elastic.

FELDSPAR:                    An   aluminosilicate   with  variable   amounts  of
                             potassium, sodium and calcium.

HORNBLENDE:                  A complex  hydrated  aluminosilicate  of magnesium,
                             iron and sodium.

MAGNETITE:                   A magnetic iron oxide mineral.

MALACHITE                    A bright green copper carbonate  hydroxide  mineral
                             often found in the oxidized zone of porphyry copper
                             deposits - Cu2(CO3)(OH)2.

PYROXENE:                    An aluminosilicate of magnesium and iron.




                                     - 5 -
<PAGE>


                                   ROCK TYPES


ANDESITE:                    A volcanic rock with the principal  minerals  being
                             plagioclase.

CONGLOMERATE:                A  clastic   sedimentary  rock  containing  rounded
                             fragments of gravel or pebble size.

DACITE:                      A  volcanic  or  shallow  intrusive  rock  with the
                             principal  minerals being  plagioclase,  quartz and
                             one or more mafic constituents.

DIORITE:                     An intrusive  rock  composed  essentially  of sodic
                             plagioclase, hornblende, biotite, or pyroxene.

LIMESTONE:                   A sedimentary  rock  consisting  chiefly of calcium
                             carbonate.

SANDSTONE:                   A clastic  sedimentary  rock  composed  largely  of
                             sand-sized grains, principally quartz.

SHALE:                       A  clastic   sedimentary  rock  derived  from  very
                             fine-grained sediment (mud).

TUFF:                        A  consolidated  rock formed of compacted  volcanic
                             fragments and fine ash,  generally smaller than 4mm
                             in  diameter.  If  particles  are  melted  slightly
                             together  from  their  own  heat,  it is a  "welded
                             tuff."


FORWARD LOOKING STATEMENTS

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





                                     - 6 -
<PAGE>



                                     PART I

ITEM 1.  DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.
--------------------------------------------------------------------------------

Not applicable.


ITEM 3.  KEY INFORMATION.
--------------------------------------------------------------------------------

SELECTED FINANCIAL DATA

The  selected  financial  data of the Company for the years ended  December  31,
2005,  2004 and 2003,  was derived from the financial  statements of the Company
which have been audited by Ernst & Young LLP, independent Chartered Accountants,
as indicated in their report which is included  elsewhere in this annual report.
The selected  financial data set forth for the years ended December 31, 2002 and
2001 are derived from the Company's audited financial  statements,  not included
herein.

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

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

Reference is made to Note 8 of the Company's  audited  financial  statements for
the years ended December 31, 2005 of the Company's financial  statements,  which
are included  herein,  for a  discussion  of the  material  differences  between
Canadian  generally  accepted  accounting  principles  ("GAAP") and US GAAP, and
their effect on the Company's financial statements.

To date,  the Company has not generated any cashflow from its activities to fund
ongoing activities and cash commitments. The Company has financed its operations
principally  through the sale of its equity  securities.  The  Company  does not
believe it has  sufficient  financial  resources  to conduct  all of the planned
exploration of its mineral  property  interests and to fund its ongoing overhead
expenses  during the 12 months from January 1, 2006 to December 31, 2006. In the
future, the Company may need to raise additional capital through the sale of its
equity securities to fund further exploration activities. See "Item 5. Operating
and  Financial  Review and  Prospects - Liquidity  and Capital  Resources."  The
Company may not be able to raise the  necessary  funds,  if any,  and may not be
able to raise such funds at terms which are  acceptable  to the Company.  In the
event the  Company is unable to raise  adequate  finances  to fund the  proposed
activities,  it will need to reassess its  alternatives  and may have to abandon
one or more of its property interests as a result.



                                     - 7 -
<PAGE>

CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
<TABLE>
<CAPTION>

                           ----------------------------------------------------------------------
                                                           (CDN $)
                           ----------------------------------------------------------------------
                                 2005          2004            2003          2002           2001
                           ----------     ----------     ----------     ----------     ----------
<S>                       <C>            <C>            <C>            <C>            <C>

Revenue                             -              -              -              -              -

General Corporate
Expenditures                 (988,664)      (845,181)      (408,352)       (26,614)          (116)

General Exploration
Expenditures                 (199,264)       (18,318)             -              -              -

Foreign Exchange Loss         (36,624)       (25,104)          (896)             -              -

Interest and
Miscellaneous Income           15,001         14,271          3,492            356              -

Write-off of mineral
properties                   (225,000)             -              -              -              -

Net Loss for the year      (1,434,551)      (874,332)      (405,756)       (26,258)          (116)

Loss per Share
  Basic and Diluted             (0.09)         (0.07)         (0.08)         (1.25)          (116)

Weighted Average Number
  of Shares Outstanding    15,916,822     13,192,736      4,848,716         20,974              1

Working Capital               516,270      1,686,120      1,021,272        174,042           (115)

Capital Assets                      -          2,796              -              -              -

Mineral Properties          3,184,844      2,014,978        684,259              -              -

Long-Term Debt                      -              -              -              -              -

Total Assets                3,843,389      3,754,341      1,820,883        207,469              1

Net Assets -
  Shareholder's Equity      3,546,233      3,604,137      1,705,531        184,042           (115)

</TABLE>



                                     - 8 -
<PAGE>


ADJUSTED TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Under U.S.  GAAP the  following  financial  information  would be adjusted  from
Canadian GAAP  (references are made to Note 8 of the  accompanying  consolidated
audited financial statements):

<TABLE>
<CAPTION>

                           ----------------------------------------------------------------------
                                                           (CDN $)
                           ----------------------------------------------------------------------
                                 2005          2004            2003          2002           2001
                           ----------     ----------     ----------     ----------     ----------
<S>                       <C>            <C>            <C>            <C>            <C>

CONSOLIDATED STATEMENT OF
  OPERATIONS

Loss for the year under
  Canadian GAAP            (1,434,551)      (874,332)      (405,756)       (26,258)          (116)

Mineral property and
  deferred exploration
  costs for the year,
  net of reversal of
  future income tax        (1,339,742)    (1,230,962)      (684,259)             -              -

Mineral property and
  deferred exploration
  costs written off during
  the year which would
  have been expensed in
  the year incurred           225,000              -              -              -              -
                           ----------     ----------     ----------     ----------     ----------
Loss for the year
  under US GAAP            (2,549,293)    (2,105,294)    (1,090,015)       (26,258)          (116)
                           ==========     ==========     ==========     ==========     ==========

Basic and diluted loss
  per share under US GAAP       (0.16)         (0.16)         (0.22)         (1.25)          (116)
                           ==========     ==========     ==========     ==========     ==========


SHAREHOLDERS' EQUITY

Balance per Canadian GAAP   3,546,233      3,604,137      1,705,531        184,042              1

Mineral property and
  deferred exploration
  costs expensed net of
  reversal of future
  income tax               (3,029,963)    (1,915,221)      (684,259)             -              -
                           ----------     ----------     ----------     ----------     ----------
Balance per US GAAP           516,270      1,688,916      1,021,272        184,042              1
                           ==========     ==========     ==========     ==========     ==========
</TABLE>




                                     - 9 -
<PAGE>

<TABLE>
<CAPTION>

                           ----------------------------------------------------------------------
                                                          (CDN $)
                           ----------------------------------------------------------------------
                                 2005          2004            2003          2002           2001
                           ----------     ----------     ----------     ----------     ----------
<S>                       <C>            <C>            <C>            <C>            <C>

CONSOLIDATED STATEMENTS
  OF CASH FLOWS

OPERATING ACTIVITIES

Cash used per
  Canadian GAAP            (1,131,111)      (845,988)       (80,610)        (4,031)             -
Mineral properties
  and deferred costs       (1,196,242)    (1,230,962)      (414,259)             -              -
                           ----------     ----------     ----------     ----------     ----------
Cash used per US GAAP      (2,327,353)    (2,076,950)      (494,869)        (4,031)             -
                           ==========     ==========     ==========     ==========     ==========

INVESTING ACTIVITIES

Cash used per
  Canadian GAAP            (1,196,242)    (1,233,242)      (414,259)             -              -
Mineral properties
  and deferred costs         1,196,242     1,230,962        414,259              -              -
                           ----------     ----------     ----------     ----------     ----------
Cash provided (used)
  per US GAAP                       -         (2,796)             -              -              -
                           ==========     ==========     ==========     ==========     ==========

FINANCING ACTIVITIES

Cash provided per
  Canadian and US GAAP      1,170,448      2,641,134      1,415,245        201,499              1
                           ==========     ==========     ==========     ==========     ==========
</TABLE>

See Note 8 of the Company's consolidated financial statements.


EXCHANGE RATE HISTORY

The noon rate of  exchange  on June 19,  2006,  reported  by the  United  States
Federal  Reserve Bank of New York for the  conversion  of Canadian  dollars into
United States dollars was CDN$1.1231 (US$0.8903 = CDN S1.00).

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

         ----------------------------------------------------------
         PERIOD                                          AVERAGE
         ----------------------------------------------------------
         January 1, 2005 - December 31, 2005              0.8254
         January 1, 2004 - December 31, 2004              0.7682
         January 1, 2003 - December 31, 2003              0.7206
         January 1, 2002 - December 31, 2002              0.6368
         January 1, 2001 - December 31, 2001              0.6456




                                     - 10 -
<PAGE>



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

         --------------------------------------------------------
         MONTH                                 HIGH         LOW
         --------------------------------------------------------
         December 2005                        0.8690       0.8521
         January 2006                         0.8744       0.8528
         February 2006                        0.8788       0.8638
         March 2006                           0.8834       0.8531
         April 2006                           0.8926       0.8534
         May 2006                             0.9100       0.8903


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

RISK FACTORS

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

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

As of June 19, 2006, the Company had working capital of $1,400,000.  The Company
does not  believe it has  sufficient  working  capital to  conduct  all  planned
exploration work of on it mineral  property  interests during the 12 months from
January 1, 2006 through  December 31, 2006. See "Item 5. Operating and Financial
Review and Prospects - Liquidity and Capital  Resources." The Company may not be
able to raise the  necessary  funds,  if any,  and may not be able to raise such
funds on terms which are acceptable to the Company.  In the event the Company is
unable to raise adequate finances to fund its proposed  activities,  the Company
may have to delay or indefinitely  postpone further  exploration of its property
interests with the possible loss of its interests. Any further additional equity
financing undertaken by the Company may cause dilution to its shareholders.

EXPLORATION STAGE COMPANY:  All of the Company's  property  interests are in the
exploration stage and do not contain any "reserves",  as that term is defined in
Industry Guide 7 adopted by the Securities and Exchange  Commission (the "SEC").
The term  "reserves"  is defined in Industry  Guide 7 as "that part of a mineral
deposit  which could be  economically  and legally  extracted or produced at the
time of the reserve determination." Industry Guide 7 is available from the SEC's
website at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7.

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

ADDITIONAL  FINANCING:  In recent years,  the securities  markets in Canada have
experienced a high level of price and volume volatility, and the market price of
securities of many companies, particularly junior mineral exploration companies,


                                     - 11 -
<PAGE>


have  experienced  wide  fluctuations in price which have not  necessarily  been
related to the operating  performance,  underlying  asset values or prospects of
such  companies.  Substantially  all  of  the  Company's  financings  have  been
conducted  through the sale of its common stock.  Continued  price  fluctuations
will have a  significant  impact on the  Company's  ability to  complete  equity
financings.

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

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

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

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

The  provincial  government of Chubut  Province,  Argentina has enacted  certain
anti-mining  laws  banning  the use of cyanide and  open-pit  mining in metallic
extraction  in the  Province  of  Chubut.  The  provincial  legislation  is more
restrictive than current federal Argentinean mining laws. However,  there can be
no assurance that the provincial legislation will be revised or repealed.

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

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



                                     - 12 -
<PAGE>


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

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

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

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

PRICE  FLUCTUATIONS AND SHARE PRICE  VOLATILITY:  In recent years the securities
markets in Canada have  experienced a high level of price and volume  volatility
and the  market  price of  securities  of many  companies,  particularly  junior
mineral  exploration   companies,   like  the  Company,  have  experienced  wide
fluctuations   which  have  not  necessarily   been  related  to  the  operating
performance,  underlying  asset  values  or  prospects  of  such  companies.  In
particular,  the per  share  price of the  Company's  common  shares  on the TSX
Venture Exchange (the "TSX-V") fluctuated from a high of $0.94 to a low of $0.35
during the 12-month period ending  December 31, 2005.  There can be no assurance
that continual fluctuations in price will not occur.

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

OPERATING  HAZARDS AND RISKS:  All of the Company's  mineral claim interests are
located  outside of Canada.  If the Company  were to become  involved in a legal
action in Canada relating to its mineral claim interests, the Company may not be
able to enforce any judgment it obtains in such an action against assets located
outside of Canada.

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

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

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


                                     - 13 -
<PAGE>


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

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

CONFLICTS OF INTEREST:  Several of the Company's  directors are also  directors,
officers or shareholders of other companies.  Some of the directors and officers
are  engaged  and will  continue  to be engaged  in the  search  for  additional
business opportunities on behalf of other corporations, and situations may arise
where  these  directors  and  officers  will be in direct  competition  with the
Company.  Such  associations may give rise to conflicts of interest from time to
time.  Such a  conflict  poses  the  risk  that the  Company  may  enter  into a
transaction  on terms which could place the Company in a worse  position than if
no conflict  existed.  Conflicts,  if any, will be dealt with in accordance with
the relevant provisions of the BUSINESS CORPORATIONS ACT (British Columbia) (the
"BCBCA").  The  directors of the Company are required by law to act honestly and
in good faith with a view to the best  interest  of the  Company and to disclose
any interest  which they many have in any project or opportunity of the Company.
However,  each director has a similar  obligation  to other  companies for which
such director  serves as an officer or director.  In order to avoid the possible
conflict  of  interest  which may arise  between  the  directors'  duties to the
Company and their duties to the other companies on whose boards they serve,  the
directors and officers of the Company have agreed to the following:

         1.       participation  in  other  business  ventures  offered  to  the
                  directors will be allocated  between the various companies and
                  on the basis of prudent  business  judgment  and the  relative
                  financial abilities and needs of the companies to participate;
         2.       no commissions or other  extraordinary  consideration  will be
                  paid to such directors and officers; and
         3.       business   opportunities   formulated   by  or  through  other
                  companies  in which the  directors  and  officers are involved
                  will  not be  offered  to the  Company  except  on the same or
                  better terms than the basis on which they are offered to third
                  party participants.

See "Item 7. Major  Shareholders and Related Party  Transactions - Related Party
Transactions - Conflicts of Interest".  As of the date of this annual report all
material  conflicts of interests  which have arisen since January 1, 2001,  have
been described in "Item 7. Major Shareholders and Related Party Transactions."

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

The Company  maintains a Foreign  Commercial  General  Liability  policy in U.S.
dollars  which  provides  US$5,000,000  coverage  for bodily  injury or property
damage per occurrence and coverage up to  US$5,000,000  per offence for personal
injury or advertising  injury (libel,  slander,  etc.). The policy has a general
aggregate limit for all claims during each consecutive policy period, except for
those  resulting  from  product  hazards or  completed  operations  hazards,  of


                                     - 14 -
<PAGE>


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

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

    -    $5,000,000 bodily injury liability for each person.
    -    $5,000,000 bodily injury liability for each occurrence.
    -    $5,000,000 property damage liability for each occurrence.
    -    $10,000 medical expense coverage, per person.
    -    $10,000 medical expense coverage, per accident.

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

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

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

Argentina has recently  experienced  some  economic and  political  instability.
Management  believes the new democratic elected government is making progress in
the   domestic   economy  and  it  is   improving   the  image  of  the  country
internationally.  Additionally,  management  believes  the  economic  crisis  of
December  2001 has been  overcome,  and  although  the country  defaulted on its
loans,  it has worked out with the  International  Monetary Fund a bail-out loan
agreement.

The Company  maintains  the  majority  of its funds in Canada and only  forwards
sufficient funds to meet current obligations and overhead in Argentina and Peru.
The Company does not believe that any current currency restrictions which may be
imposed will have any immediate impact on the Company's exploration activities.



                                     - 15 -
<PAGE>


IMPACT OF  GOVERNMENT  REGULATIONS  ON THE  COMPANY'S  BUSINESS:  The  Company's
activities are subject to various  governmental  regulations in Argentina,  Peru
and the U.S.A.

ARGENTINA

MINING INDUSTRY

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

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

REGULATORY ENVIRONMENT

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

Importers and exporters  must be registered  with  Argentinean  Customs  office.
Except  for a limited  list of items  requiring  the  previous  approval  of the
authorities there are no import restrictions. Import of pharmaceuticals,  drugs,
foodstuffs,  defense  material and some other items  require the approval of the
applicable government  authority.  Import duties are being progressively reduced
in accordance with the free enterprise and free-trade  policy being  implemented
by the government in order to achieve greater international competitiveness.  To
illustrate,  duties currently range between zero and 20 percent. Restrictions on
exports are not generally imposed,  although there are export taxes currently in
place including mineral products.

POLITICAL ENVIRONMENT AND ECONOMY

In recent years Argentina has experienced a number of changes to its government.
The current president,  Nestor Kirchner, came to power in May 2003. The economic
performance  of the  country  has been  troubled  and  uncertain  since the late
1990's.  Management believes there are currently some positive  indications that
the economic situation is improving.
The provincial  government of Chubut  Province,  Argentina,  has enacted certain
anti-mining  laws banning the use of cyanide in metallic  mineral  extraction in
the  Province  of Chubut and  open-pit  mining is subject to, yet to be defined,
zoning  process.  The provincial  legislation is more  restrictive  than current
federal Argentinean mining laws. Certain authorities believe that the provincial
legislation may be unconstitutional. However, there can be no assurance that the
provincial legislation will be repealed.

PERU

MINING INDUSTRY

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


                                     - 16 -
<PAGE>


MINERAL CONCESSIONS IN PERU

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

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

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

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

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

NEVADA, UNITED STATES

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

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


                                     - 17 -
<PAGE>


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

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

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

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

PENNY STOCK  REGULATION:  The SEC has adopted rules that regulate  broker-dealer
practices in connection with  transactions in "penny stocks".  Generally,  penny
stocks are  equity  securities  with a price of less than  US$5.00  (other  than
securities  registered on certain national securities exchanges or quoted on the
NASDAQ system).  Since the Company's shares are traded for less than US$5.00 per
share,  the shares are subject to the SEC's penny stock rules until such time as
(1) the Company's net tangible assets exceed  US$5,000,000  during the Company's
first three years of continuous  operations or US$2,000,000  after the Company's
first three years of continuous  operations;  or (2) the Company has had average
revenue of at least  US$6,000,000 for three years. The penny stock rules require
a  broker-dealer,  prior to a transaction in a penny stock not otherwise  exempt
from the rules, to deliver a standardized risk disclosure document prescribed by
the SEC that provides information about penny stocks and the nature and level of
risks in the  penny  stock  market.  The  broker-dealer  must  obtain a  written
acknowledgement   from  the  purchaser  that  the  purchaser  has  received  the
disclosure  document.  The  broker-dealer  also must provide the  customer  with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and  its  salesperson  in the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account. In addition,  the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the  broker-dealer  must
make a  special  written  determination  that  the  penny  stock  is a  suitable
investment for the purchaser and receive the  purchaser's  written  agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules.  Such rules and regulations may make it difficult for holders
to sell the  common  stock of the  Company,  and they may be  forced  to hold it
indefinitely.

ENFORCEMENT  OF LEGAL  PROCESS:  It may be difficult to bring and enforce  suits
against  the  Company.  The  Company is a  corporation  incorporated  in British
Columbia.  None of the Company's  directors are residents of the United  States,
and all or a  substantial  portion of their  assets are  located  outside of the
United  States.  As a  result,  it may be  difficult  for  U.S.  holders  of the
Company's common shares to effect service of process on these persons within the
United States or to enforce  judgments  obtained in the U.S.  based on the civil


                                     - 18 -
<PAGE>


liability  provisions of the U.S. federal securities laws against the Company or
its officers and directors.  In addition,  a shareholder  should not assume that
the courts of Canada (i) would  enforce  judgments  of U.S.  courts  obtained in
actions against the Company, its officers or directors predicated upon the civil
liability  provisions of the U.S.  federal  securities laws or other laws of the
United States, or (ii) would enforce,  in original actions,  liabilities against
the  Company,  its  officers  or  directors  predicated  upon the  U.S.  federal
securities laws or other laws of the United States.

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

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

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

         c)       the judgment  was obtained by fraud or in any manner  contrary
                  to natural justice or rendered in contravention of fundamental
                  principles of procedure;

         d)       a dispute between the same parties,  based on the same subject
                  matter  has given rise to a  judgment  rendered  in a Canadian
                  court or has been decided in a third  country and the judgment
                  meets the necessary  conditions for  recognition in a Canadian
                  court;

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

         f)       the judgment enforces  obligations  arising from foreign penal
                  laws or laws that deal with taxation or the taking of property
                  by a foreign government; or

         g)       there has not been  compliance  with  applicable  Canadian law
                  dealing with the limitation of actions.

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

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

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



                                     - 19 -
<PAGE>


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

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

UNITED  STATES  MARKET:  As of the  date  of this  annual  report,  there  is no
established  market in the United States for the Company's  common  shares.  The
Company's common shares have been quoted in the pink sheets (the "Pink Sheets"),
published by Pink Sheets LLC,  under the symbol  "AJRSF" since January 14, 2004;
however,  trading in the  Company's  shares is sporadic and limited.  Management
anticipates  that the Company will seek to have its common  shares quoted on the
Over-The-Counter  Bulletin  Board  operated by the Nasdaq  Stock  Market,  Inc.;
however,  there are no assurances as to if, or when, the Company's common shares
will be quoted on the Over-The-Counter  Bulletin Board. In addition, even if the
Company's shares are quoted on the Over-The-Counter  Bulletin Board, trading may
continue to be sporadic and limited. Consequently, the Company's shareholders in
the United  States may not be able to use their shares for  collateral  or loans
and  may not be able  to  liquidate  at a  suitable  price  in the  event  of an
emergency.  In addition,  the Company's  shareholders  may not be able to resell
their shares in the United States and may have to hold them indefinitely.

U.S.  TAX  LIABILITY:  The  Company  may  be  deemed  to be a  "Passive  Foreign
Investment Company" ("PFIC").  See "Item 10. Additional Information - Taxation."
If the Company is deemed to be a PFIC, a United  States  holder of the Company's
common  shares  would be required to pay an interest  charge  together  with tax
calculated at maximum tax rates on certain  "excess  distributions"  (defined to
include  certain  dividends  from a PFIC  and any gain on the sale of stock of a
PFIC)  unless such  holder made an election  either to (1) include in his or her
taxable income his or her pro rata share of the PFIC's ordinary earnings and net
capital gains under the Qualified  Electing Fund rules or (2) mark to market his
or her Company  common  shares at the end of each  taxable  year as set forth in
Section 1296 of the Internal  Revenue Code of 1986,  as amended.  The  elections
require  certain  conditions be met such as filing on or before the due date, as
extended,  for filing the shareholder's  income tax return for the first taxable
year to which the election will apply.


ITEM 4.  INFORMATION ON THE COMPANY.
--------------------------------------------------------------------------------

HISTORY AND DEVELOPMENT OF THE COMPANY

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



                                     - 20 -
<PAGE>



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

To this end, the Company  entered into a Letter of Intent,  dated March 6, 2003,
as amended by Amending  Letter  Agreement dated September 30, 2003, with IMA and
Inversiones  Mineras  Argentinas  S.A.  ("IMASA"),  an  indirect,   wholly-owned
subsidiary of IMA,  whereunder the Company was granted an irrevocable  option to
acquire a 51% undivided interest in the group of mineral rights known as Mogote,
located in the Province of San Juan, Argentina (the "Mogote Project"). See "Item
4.  Information  on the  Company -  Property,  Plant and  Equipment  - Principal
Properties - Mogote Project" and "Item 7. Major  Shareholders  and Related Party
Transactions - Related Party  Transactions." To exercise the option, the Company
must issue an  aggregate  1,650,000  common  shares (of which  450,000 have been
issued) and incur an aggregate  US$1,250,000 in exploration  expenditures on the
Mogote Project by July 1, 2007, less the amount paid to IMA as reimbursement for
all past payments made and  expenditures  incurred by IMA on the Mogote Project,
being $197,854. As well, the Company has agreed to make all payments required to
maintain the Mogote  Project in good standing  including all payments due to the
underlying owners and vendors thereof,  which total  US$269,100.  As of December
31, 2005 the full amount of the  obligation  had been paid.  By reason of recent
Argentinean  legislation,  payment obligations denominated in a foreign currency
must now be paid in  Argentinean  currency,  calculated in  accordance  with set
conversion rates fixed by the government from time to time, which has the effect
of reducing the US dollar  amounts that the Company will  ultimately  pay to the
owners.  The Company shall be the operator of the Mogote Project  throughout the
term of the subject option.

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

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

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

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

In March 2003,  when the Letter of Intent and Property  Purchase  Agreement were
executed, the Company was not publicly listed. The agreements were negotiated by
the Company's  directors (then Messrs.  Cacos, Minni and Coltura) who considered


                                     - 21 -
<PAGE>


among other factors the agreements,  transactions of a similar nature  currently
being entered in the mining industry, the Company's business plan, the Company's
future IPO and its  planned  listing on the TSX  Venture.  At the time,  Messrs.
Minni and Coltura were disinterested  members of the board of directors.  At the
time of the April 8, 2004 amendment to the Letter of Intent,  Messrs.  Cacos and
Grosso  abstained from voting and the  transaction was approved by the remaining
disinterested  members of the board of  directors,  who at the time were Messrs.
Minni, Coltura and Bottomer.

On August 24, 2004, the Company signed a Letter of Intent with Arcturus Ventures
Inc.  whereby the Company  acquired an option to obtain up to an 80% interest in
the Esperanza property, located in Peru. See "Item 4. Information on the Company
- Property, Plant and Equipment - Other Properties - Esperanza Project."

In those situations where the Company issued shares of its common stock pursuant
to the agreements  discussed above, the shares were valued at the closing market
price  on the day of  issue.  This  amount  is the  value  that is  recorded  as
acquisition  cost  of the  applicable  property  as  described  in Note 3 to the
Company's December 31, 2005,  financial  statements.  The number of shares which
were  issued  for the  acquisition  of  mineral  properties  and their  value is
described in Note 4 of the Company's December 31, 2005, financial statements.

To  date,  the  Company  has  raised  $7,413,500  in cash  through  the  sale of
securities.  The Company intends to raise additional funding through the sale of
its  securities to carry out additional  exploration on its mineral  properties.
See "Item 5.  Operating  and  Financial  Review and  Prospects -  Liquidity  and
Capital  Resources."  There are no  assurances  that the Company will be able to
sell additional securities to fund its exploration or overhead requirements,  or
that the Company will receive a suitable price for any securities sold.

ACQUISITION AND DISPOSITION OF MINERAL PROPERTY INTERESTS DURING THE THREE PRIOR
FISCAL YEARS

The Company has made  additions  to mineral  properties  and  deferred  costs of
$1,394,866, $1,330,719 and, $684,259 and capital assets of $Nil, $2,797 and $Nil
for the fiscal years ended December 31, 2005, 2004 and 2003, respectively.

In fiscal 2005 the Company wrote off the $225,000  carrying  value in the Chubut
properties.  During  fiscal 2003 and 2004 the Company did not abandon,  dispose,
assign or joint-venture any of its arrangements to earn interests in its mineral
properties. To June 19, 2006, the Company has not abandoned,  disposed, assigned
or  joint-ventured  any of its  arrangements  to earn  interests  in its mineral
properties.

BUSINESS OBJECTIVES

The principal  business  carried on and intended to be carried on by the Company
is the acquisition and exploration of natural resource  properties.  The Company
intends on expending its existing cash resources to carry out exploration on its
mineral  properties,  to pay for  administrative  costs  during the fiscal  year
ending  December 31, 2006,  and for working  capital.  The Company may decide to
acquire  other  property  interests  in addition to mineral  property  interests
currently held by the Company.

No capital  expenditures were made by the Company during the 2003, 2004 and 2005
fiscal years other than expenditures  relating to the Company's mineral property
interests.  See "Item 4.  Information  on the  Company  -  Business  Overview  -
Exploration Expenditures."

BUSINESS OVERVIEW

The Company is an exploration stage company exploring primarily for precious and
base metals.  To date,  the Company has not earned any production  revenue,  nor
found any proved  reserves  on any of its  properties.  Since  March  2003,  the
Company has proceeded to enter into a number of agreements to acquire  interests
in  resource  properties  located  in  Argentina,  Peru and  Nevada,  U.S.A.  In
addition,  the Company has  acquired  interests in  properties  located in Chile
adjacent to the  Company's  Mogote  properties.  These Chilean  properties  were
staked to add to the  Mogote  property  in  Argentina.  The Mogote  property  is
located near the border of the two countries.  The Chilean  properties are being
held by the Company's wholly owned Chilean subsidiary.  See "Item 4. Information


                                     - 22 -
<PAGE>


on the Company - Property,  Plant and Equipment - Principal  Properties - Mogote
Project."  See  "Item 4.  Information  on the  Company  -  Property,  Plant  and
Equipment".

EXPLORATION EXPENDITURES

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

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

During fiscal 2003 the Company incurred  $507,042  (including  $270,000 which is
attributed  to  600,000  shares  issued by the  Company)  for  mineral  property
acquisition  costs and $177,217 for  exploration  costs on its mineral  property
interests.

EXPLORATION BUDGET

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

SALES AND REVENUE DISTRIBUTION

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

ORGANIZATIONAL STRUCTURE

As of the  date of this  annual  report,  the  Company  has  three  wholly-owned
subsidiaries,  Recursos de los Andes  S.A.C.,  a Peruvian  company  which became
active in December 2004, Amera Resources (US) Inc., a Nevada, USA company, which
was  incorporated  on  February  2, 2005 and  Amera-Chile  Sociedad  Contractual
Minera, a Chilean company which was formed in May 2005.

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

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

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

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

PRINCIPAL OFFICES

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

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


                                     - 23 -
<PAGE>


PROPERTY, PLANT AND EQUIPMENT

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


                               ORGANIZATION CHART

      |-------------------------------------------------------------------|
      |                    AMERA RESOURCES CORPROATION                    |
      |                   (Vancouver, British Columbia)                   |
      | (Registered in B.C. and a foreign entity registered in Argentina) |
      |----|------------------------------|---------------------------|---|
           |                              |                           |
           |                              |                           |
           |                              |                           |
          100%                           100%                        100%
           |                              |                           |
           |                              |                           |
           |                              |                           |
|----------|-----------|         |--------|--------|        |---------|--------|
|                      |         |                 |        |                  |
| Amera-Chile Sociedad |         | Amera Resources |        | Recursos de los  |
|  Contractual Minera  |         |   (U.S.) Inc.   |        | Andes S.A.C.Peru |
|  (Chile)May 2005     |         |  February 2005  |        |  September 2004  |
|----------------------|         |-----------------|        |------------------|


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

On a  periodic  basis,  management  reviews  the  carrying  values  of  deferred
acquisition and exploration  expenditures with a view to assessing whether there
has been any impairment in value.  Management takes into  consideration  various
information  including,  but not limited to, results of  exploration  activities
conducted to date,  estimated  future metal prices,  and reports and opinions of
outside geologists,  mine engineers and consultants.  In the event that reserves
are determined to be insufficient to recover the carrying value of any property,
the carrying  value will be written down or written off, as  appropriate.  As of
June 19, 2006, the Company has not established  that its option interests or its
mineral claims have any known or proven reserves.

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



                                     - 24 -
<PAGE>


PRINCIPAL PROPERTIES

MOGOTE PROJECT

LOCATION AND ACCESS

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

MINERAL TITLES INCLUDED IN MOGOTE PROPERTY

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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
  CLAIM NAME &     CLAIM                        HECT-                  EXPIRY      WORK/PAYMENT
   COUNTRY         NUMBER       CLAIM TYPE      ACRES     OWNER         DATE         REQUIRED
----------------------------------------------------------------------------------------------------------
<S>            <C>              <C>           <C>      <C>              <C>    <C>
MOGOTES          338579-R-92      CATEO         2259     IMA USA          N/A    $2000 pesos
(Argentina)                                                                      payment after
                                                                                 concession granted
----------------------------------------------------------------------------------------------------------
ADELA # 1        425-098-A-2000   DISCOVERY     2000     N. Arturo        N/A    No payment for 3 years;
(Argentina)                                                                      afterward $800 peso per
                                                                                 year per 100 hectares
----------------------------------------------------------------------------------------------------------
MOGOTES NORTE    520-0275-R097    DISCOVERY     1650     R. Viviani       N/A    No payment for 3 years;
(Argentina)                                                                      afterward $800 peso per
                                                                                 year per 100 hectares
----------------------------------------------------------------------------------------------------------
MOGOTES SUR      520-0274-R-97    DISCOVERY     2100     R. Viviani       N/A    No payment for 3 years;
(Argentina)                                                                      afterward $800 peso per
                                                                                 year per 100 hectares
----------------------------------------------------------------------------------------------------------
MOGOTE 1         156.277-S-76     MINA            48     IMA USA          N/A    $480 peso per year
(Argentina)                                                                       canon
----------------------------------------------------------------------------------------------------------
MOGOTE 9         156.285-S-76     MINA            48     N. Arturo        N/A    $480 peso per year
(Argentina)                                                                       canon
----------------------------------------------------------------------------------------------------------
MOGOTE 14        156.290-S-76     MINA            48     IMA USA          N/A    $480 peso per year
(Argentina)                                                                       canon
----------------------------------------------------------------------------------------------------------
MOGOTE 4         156.280-S-76     MINA            48     IMA USA          N/A    $480 peso per year
(Argentina)                                                                      canon
----------------------------------------------------------------------------------------------------------
MOGOTE 5         156.280-S-76     MINA            48     IMA USA          N/A    $480 peso per year canon
(Argentina)
----------------------------------------------------------------------------------------------------------
Tronquito 1              -        Concesion de   200     Amera Chile      N/A    US$220 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
Tronquito 2              -        Concesion de   200     Amera Chile      N/A    US$220 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
Tronquito 3              -        Concesion de   300     Amera Chile      N/A    US$330 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
Tronquito 4              -        Concesion de   100     Amera Chile      N/A    US$110 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
Tronquito 5              -        Concesion de   200     Amera Chile      N/A    US$220 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
Tronquito 6              -        Concesion de   300     Amera Chile      N/A    US$330 per year canon
(Chile)                           Exploracion
----------------------------------------------------------------------------------------------------------
</TABLE>


                                     - 25 -
<PAGE>


AGREEMENTS

Under an option agreement dated June 7, 2000 among IMA, IMASA and Nestor Arturo,
as amended August 3, 2000, and September 1, 2000, IMA had the right to acquire a
100% interest in the property by making cash payments totaling US$280,000. IMA's
and IMASA's  rights and interests  under this  agreement were assigned to Golden
Arrow and IMAUSA,  respectively,  effective July 7, 2004.  The final  underlying
option payment was paid on June 6, 2005. The vendors also will have the right to
receive a royalty of 0.5% NSR, up to a maximum of US$500,000.

The  Company,  IMA and IMASA  signed a letter of  Intent  on March 6,  2003,  as
amended  September  30,  2003,  pursuant  to which  the  Company  could  earn an
undivided 51% interest in the Mogote Property.  See "Item 7. Major  Shareholders
and Related Party Transactions - Related Party  Transactions." IMA's and IMASA's
rights and  interests  under this  agreement  were  assigned to Golden Arrow and
IMAUSA,  effective  July 7, 2004.  To earn a 51% interest in the  property,  the
Company must issue  1,650,000  common shares to IMA (now Golden Arrow) and incur
US$1,250,000  of  expenditures,  including work programs and  underlying  option
payments,  all over five  years.  The Company has issued  450,000  shares,  at a
recorded cost of $203,000 and is proceeding with work expenditures.

The Company  agreed to reimburse  IMA (now Golden  Arrow) for past payments made
and  expenditures  which had been  incurred  by IMA on the Mogote  Property.  On
September 30, 2003, the Company,  IMA and IMASA entered into an amendment to the
March 6, 2003 agreement.  The amendment  provided that the amount of the expense
reimbursement  as of  September  30, 2003 was  $192,952  and  provided  that the
Company would be the operator of the Mogote  property.  As at December 31, 2003,
the  Company  had  reimbursed  IMA  and  IMASA  $192,952  and  $4,902   remained
outstanding  and was  included  in amounts  payable.  As of June 30,  2004,  the
remaining  $4,902 had been paid.  As at December 31, 2003 the Company had issued
100,000 of its common  shares to IMA at a recorded  amount of  $45,000.  In July
2004 the Company issued  100,000 shares to IMA/Golden  Arrow with a deemed value
of $40,000. In June and July of 2005 the Company issued 250,000 shares to Golden
Arrow with a deemed value of $118,000.

On April 8, 2004,  the Company,  IMA and IMASA entered into a further  agreement
whereby  the  Company  can earn an  additional  24%  interest,  for a total  75%
interest,  after  earning  the initial 51%  interest,  by issuing an  additional
300,000  common shares  (which have been issued,  at a deemed price of $279,000)
and expending an aggregate of US$3 million on  exploration  expenditures  over a
three year period.  IMA's and IMASA's rights and interests  under this agreement
were assigned to Golden Arrow and IMAUSA, respectively,  effective July 7, 2004.
See  "Item 4.  Information  on the  Company  - History  and  Development  of the
Company."

The Company has committed to spend the initial US$1,000,000 by May 30, 2005. The
Company received approval from the TSX Venture for this transaction on April 22,
2004. Joseph Grosso,  Nikolaos Cacos and David Terry,  officers and/or directors
of the Company,  are also officers and/or directors of IMA and Golden Arrow. See
"Item 7. Major  Shareholders  and Related  Party  Transactions  - Related  Party
Transactions."

As of December 31, 2005 the Company had expended  $891,062 in acquisition  costs
and  $1,242,942 in  exploration  expenses on the Mogote  Property.  See "Item 4.
Information on the Company - Plan of Operation."

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

REGIONAL AND LOCAL GEOLOGY

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


                                     - 26 -
<PAGE>


EXPLORATION HISTORY

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

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

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

MARCH 2004 DRILLING - FILO ESTE

In March 2004,  the Company  carried out a 1,475  metre,  5 hole  diamond  drill
program and conducted further  geological mapping and talus fine sampling on the
northern part of the Mogote property.  The drilling tested a portion of the Filo
Este porphyry  target to a depth of up to 495 metres over a strike length of 860
metres  and a  width  of  approximately  250  metres.  Hole  MOG-04-1  had to be
abandoned at 71.6 metres and hole  MOG-04-1A  was drilled from the same location
to target  depth.  Highlights  of the drill  results are  provided in table form
below.

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


                                     - 27 -
<PAGE>


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

 JANUARY-FEBRUARY 2005 DRILLING - FILO ESTE AND FILO CENTRAL

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

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

The significant intercepts include:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                          Total                                          ppm       ppm          %
 Drillhole     Zone       Depth      From         To       Interval     Gold      Silver     Copper
                         (metres)  (metres)    (metres)    (metres)     (LWA)     (LWA)       (LWA)
----------------------------------------------------------------------------------------------------
<S>          <C>         <C>        <C>        <C>          <C>       <C>         <C>        <C>

 MOG-6         Este        250         0         250          250        0.22                  0.083
 including                           176         246           70        0.36       3.0        0.158
----------------------------------------------------------------------------------------------------
 MOG-7         Este        287         0         287          287        0.25       3.0        0.107
----------------------------------------------------------------------------------------------------
 MOG-8         Este        300         4         142          138        0.47       2.0        0.093
----------------------------------------------------------------------------------------------------
 MOG-12        Este        300       214         276           62        0.30       1.1        0.140
----------------------------------------------------------------------------------------------------
</TABLE>

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

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

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



                                     - 28 -
<PAGE>


OTHER PROPERTIES

ESPERANZA PROJECT

On August 24, 2004 the Company signed a Letter of Intent with Arcturus  Ventures
Inc. to purchase up to an 80%  interest  in the  Esperanza  property.  The 4,000
hectare  Esperanza  property  is  located  in the  province  of La  Union in the
department of Northern Arequipa and is approximately 600 kilometres southeast of
Lima.  See Map B. Access to the property  from the city of Arequipa is via paved
road to Chuquibamba  followed by a well-maintained  loose gravel surface road to
Cotahuasi and finally Puica. From Puica the property is approximately 4 hours on
horseback.  The nearest electrical grid is to Puica, a distance of approximately
3  kilometres  from the  property  boundary.  An  alternative  way to access the
property is via a new power line road located approximately 15 kilometres to the
east of the property.  From  Orcopampa the power line road can be accessed and a
four-wheel drive trail can be navigated to within 800 metres of the southeastern
corner of the property.

An initial 55%  interest  in the  Esperanza  project may be earned by  incurring
$750,000 in work  expenditures  over three years,  issuing 250,000 common shares
(75,000  shares  issued with a deemed  value of  $37,750)  and making a one-time
payment of $40,000 to Arcturus (paid). By taking the property up to the bankable
feasibility  stage  within  three years of earning the initial 55%  interest and
issuing a  further  260,000  shares,  the  Company  may earn an  additional  25%
interest.  The TSX Venture approvedthe Letter of Intent on September 1, 2004. In
order to maintain the 4,000 hectare  property in good standing a cannon  payment
of US$12,000 per annum must be paid to the Peruvian Government.

The  Esperanza   property  is  at  an  early  exploration  stage.  It  covers  a
three-kilometre  long epithermal system which encompasses four known zones where
numerous  old  workings  occur.  Other  than a limited  surface  program of rock
sampling and soils sampling  conducted by Arcturus,  no known modern exploration
has  previously  been used in the area.  Management  believes  the  property has
significant   potential  for  bulk-tonnage   style  gold   mineralization.   The
prospective   Tacaza   volcanics  unit,   which   underlies  the  property,   is
characterized  by widespread  epithermal  alteration  and elevated gold content.
Gold-bearing quartz veins and related epithermal  alteration extend upwards into
overlying rock units.  Exploration at Esperanza can be conducted  year-round and
road access is to within 800 meters of the property boundary.

In November 2004 the Company commenced a Phase I surface  exploration program on
the property.  The work was carried out over the course of four weeks with a two
week break in the  middle.  The work  comprised  detailed  surface  prospecting,
sampling and mapping.  On February 10, 2005,  the Company  issued a news release
discussing the results of the phase I surface program.  The work resulted in the
discovery of two significant  new gold anomalies,  Zona Ventana and Zona Afuera.
In  addition,   detailed   sampling   conducted   along  the  previously   known
3-kilometre-long  epithermal  gold trend  confirmed and expanded upon these gold
targets.  At Zona Ventana  anomalous  gold occurs over at least 1,000 length and
spans a vertical interval of 150 metres; the width remains open. Zona Afuera was
discovered  two  kilometres  to the  southeast  and  immediately  outside of the
property  boundary.  The  Esperanza  property was been  expanded to include this
target  and is now  4,000 ha in size.  A total of 138 rock  samples  and 44 soil
samples were collected during the Phase I surface program

ZONA VENTANA

Zona Ventana (The Window Zone) is  characterized  by  clay-altered  and variably
silica-altered  volcanic tuff exposed in a  north-northeasterly  trending stream
valley in the  southeast  sector of the  Esperanza  property.  This  altered and
mineralized unit is overlain by flat-lying  unaltered tuff. The zone is at least
1000 meters long and is defined by numerous samples  strongly  anomalous in gold
and  epithermal   pathfinder  elements   silver-arsenic-antimony-mercury.   Gold
anomalies span a vertical  interval of 150 metres;  the width of the mineralized
zone is currently not defined.  Various styles of silica alteration are evident.
Structural control on the altered and mineralized zones at Ventana is manifested
as both north-northwest  oriented structures with and  northeast-trending  veins
parallel to the Wayra-Huanca trend.

83 composite rock chip samples  (average  sample length 5 meters) were collected
from Zona Ventana.


                                     - 29 -
<PAGE>


ZONA AFUERA

Zona  Afuera  is  located  two  kilometers   south-southwest  of  Zona  Ventana.
Mineralization at Zona Afuera is hosted by hydrothermal  breccias  characterized
by volcanic  fragments in a siliceous  matrix.  These breccia  bodies outcrop as
isolated knobs in an alpine plain. Gold assays were anomalous in 3 out of 6 rock
samples collected. These included chip samples of 0.65 ppm gold across 8 metres,
0.403 ppm gold across 6 metres and 0.358 ppm gold across 6 metres.

Collectively  Zona  Ventana and Zona  Afuera  exhibit  the  geological  setting,
alteration  characteristics  and geochemical  signature of the upper level of an
epithermal gold system.  The large area over which alteration and mineralization
occurs in the  Ventana-Afuera  area  significantly  enhances the  potential  for
discovery of a bulk-tonnage  epithermal gold deposit.  The next phase of work on
the property will include further  detailed mapping and sampling of Zona Ventana
and Zona  Afuera  and ground  geophysics  to  outline  silica-altered  zones and
structures for drill-testing.

On  February  28, 2005 the Company  announced  that it had staked an  additional
12,000  hectares of ground  tying on to the western  side of the  Poracota  Gold
Project and extending westwards to the Esperanza Property.

In June 2005 the Company commenced a surface exploration program the first phase
of  which  comprised  a  total  of 23 line  kilometres  of  pole-dipole  Induced
Polarization  (IP)/resistivity  and  ground  magnetics  surveying  over the Zona
Ventana and Zona Afuera targets carried out by Quantec Geoscience (Peru) S.A.C..
Grid lines were oriented east-west and spaced 100m apart. At Zona Ventana twelve
1km lines crossing the anomaly were surveyed, as well as a north-south tie-line.
At Zona Afuera three 1.5 km lines, a single 1km line,  with 100m spacing,  and a
north-south tie-line were surveyed.

Three large-scale geophysical features were defined by the IP/resistivity survey
at Zona Ventana: 1) a north to  northeast-trending,  resistivity low, Anomaly 1,
which  underlies  the western  half of the survey grid and  correlates  with the
horizontal trace of the main  altered/mineralized  zone at Ventana.  Resistivity
values  within this zone range from 4.6 to 16 ohm-m.  The  uppermost  portion of
this anomaly exhibits higher resistivity;  2) a sub-horizontal resistivity high,
Anomaly 2, which occurs at shallow  depths over the eastern half of the grid and
likely relates to the presence of largely unaltered ash flow tuffs.  Resistivity
values  within  this zone range from 46 to 200 ohm-m;  and 3) a  sub-horizontal,
unexplained   chargeability  anomaly,  Anomaly  3  which  underlies  Anomaly  2.
Chargeability values within this zone range from 8.5 to 21.0 mV/V.

Detailed mapping,  coupled with IP/resistivity data suggest mineralized zones at
Zona Afuera are localized on the western margin of a rhyolite flow-dome complex.
The data shows a flat-lying zone of high-resistivity connected to a sub-vertical
high-resistivity  domain located  immediately  east of the eastern  surface gold
anomaly.  This pattern is characteristic of siliceous flow-dome  complexes;  the
sub-vertical  domain of  high-resistivity  representing the  feeder-structure or
dome.  The  area of the dome is  covered  by  glacial  and  post-glacial  sands,
however, boulders of rhyolite and pumice are widespread at surface in the area.

Between  August and  November of 2005 several  campaigns of surface  exploration
have focused on conducting further sampling,  hand trenching and mapping of Zona
Ventana and Zona  Afuera,  collecting  silt  samples  from all  drainages on the
property and prospecting and sampling the large newly-staked 12,000 hectare area
between the Esperanza  property and the Poracota  Gold  Project.  The Company is
currently considering its options for the continuing evaluation of the Esperanza
property  now that  all of the  data  from  the  2005  field  programs  has been
compiled.

The eastern portion of the Esperanza  property is accessible by four-wheel drive
vehicle and exploration can be conducted  year-round.  A new high-tension  power
line  passes  close  to the  expanded  eastern  property  boundary.  Work on the
Esperanza  project  has been  carried  out under the  supervision  of  Qualified
Persons John A. Brophy,  P.Geo. and Piotr Lutynski,  M.Sc.,  P.Eng. and has been
reviewed by Dr. David A. Terry, P.Geo., Amera's Vice-President Exploration.  All
assays and  analyses  reported  were  completed  by ALS  Chemex  Laboratories,an
internationally  recognized  assay  service  provider,  in Lima,  Peru and North
Vancouver, Canada ("ALS Chemex").

The Company is unable to determine the costs of a feasibility  study, or even if
such a study is warranted,  until  substantially  more information is available.
There are no  assurances  that the Company will be able to bring the property to
the bankable feasibility stage.


                                     - 30 -
<PAGE>


As of June 19,  2006,  the  Company  had  spent  approximately  $566,000  on the
Esperanza  property.  See  "Item  4.  Information  on  the  Company  -  Plan  of
Operation."

CRUZ DE MAYO PROPERTY, DEPARTMENT OF CUZCO, PERU

The Company announced in July 2005 that it had optioned the  road-accessible 800
hectare Cruz de Mayo property  located in the southern portion of the Department
of Cuzco in Peru.  The Company also acquired by direct staking 2,200 hectares of
adjacent land for a total of 3,000 hectares. Two high priority target zones have
been identified on Cruz de Mayo: Fatima and a porphyry copper-gold zone.

To earn the  interest in the property the Company must pay US $150,000 in option
payments to the Vendor over the period of four years (US $15,000 paid) and incur
US $1,500,000 expenditures over the four years as follows:

                  EXPLORATION
                  EXPENDITURES          DATE
                      US $

                       50,000           May 11, 2006
                      200,000           May 11, 2007
                      500,000           May 11, 2008
                      750,000           May 11, 2009
                  ----------
                   1,500,000
                  ==========

The Company did not meet the  expenditure  requirement  of  US$50,000 by May 11,
2006 due to not being able to gain access to the property. The Company is in the
process of  re-negotiating  the terms of the agreement and gaining access to the
property.

FATIMA GOLD TARGET

Fatima is a bulk tonnage  target with  potential for  bonanza-grade  veins as it
comprises  multiple  higher-grade  gold  bearing  shears and veins  enveloped by
lower-grade  material.  The zone  occurs  in a  northwesterly-oriented  trend of
alteration  and veining which is at least 1.2 kilometres in length and up to 600
metres wide. Within this target area, historical mining activity is evident in a
series of trenches  and dams that were used in a placer  operation  to wash gold
from the  bedrock.  The  structures  are  strongly  oxidized  at surface and all
sulphide  minerals have been leached.  Results  reported in the table below were
collected within an area measuring 550m by 450m.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
ZONE           SAMPLE          SAMPLE      TRENCH [T]     AU      AG       PB       CU
                TYPE            [m]         PANEL [P]   [ppm]   [ppm]      [%]      [%]
----------------------------------------------------------------------------------------
<S>           <C>         <C>             <C>         <C>      <C>      <C>       <C>

Fatima Zone     Chip            1.0m         FZ-T1     14.35     43.9    1,980     0.05
----------------------------------------------------------------------------------------
Fatima Zone     Chip            0.5m         FZ-T2      8.36     12.1      156     0.06
----------------------------------------------------------------------------------------
Fatima Zone     Chip            8.5m         FZ-T3      2.90     11.7      870     0.08
              including         0.2m                   24.80    143.0      838     0.52
              including         3.6m                    4.69     17.3      473     0.14
----------------------------------------------------------------------------------------
Fatima Zone     Chip            8.0m         FZ-T4      0.91     25.6    5,400     0.07
----------------------------------------------------------------------------------------
Fatima Zone     Chip            6.0m         FZ-T5      0.42     20.0    2,573     0.02
----------------------------------------------------------------------------------------
Fatima Zone     Chip           10.0m         FZ-T6      0.35      1.4      297     0.04
----------------------------------------------------------------------------------------
Fatima Zone     Chip           14.0m         FZ-T7      0.29      2.8    1,256     0.03
----------------------------------------------------------------------------------------
Fatima Zone     Chip            9.0m         FZ-T8      0.17      9.5    4,150     0.15
----------------------------------------------------------------------------------------
Fatima Zone     Chip            7.0m         FZ-T9      0.14      1.3    1,120     0.02
----------------------------------------------------------------------------------------
Fatima Zone     Panel       10.0 x 20.0m     FZ-P1      1.86     14.0      215     0.05
----------------------------------------------------------------------------------------
Fatima Zone     Panel       10.0 x 20.0m     FZ-P2      0.43      8.0      148     0.09
----------------------------------------------------------------------------------------
</TABLE>


                                     - 31 -
<PAGE>


Central Zone Porphyry Copper-Gold Target

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

--------------------------------------------------------------------------------
ZONE          SAMPLE TYPE       SAMPLE           TRENCH [T]       AU         CU
                                  [M]             PANEL [P]     [PPM]        [%]
--------------------------------------------------------------------------------

Central Zone       Chip          23.0m              CZ-T1        0.07       0.28
Central Zone      Panel        5.0 x 5.0m           CZ-P1        2.87       0.02
Central Zone      Panel        5.0 x 5.0m           CZ-P2        0.01       1.81
Central Zone      Panel       10.0 x 10.0m          CZ-P3        0.32       0.12
Central Zone      Panel        1.0 x 3.0m           CZ-P4        0.51       0.10
--------------------------------------------------------------------------------

Subsequent to satisfactory  completion of a community relations program in early
2006,  soil  auger  geochemical  surveys  are  planned to cover the areas of the
Fatima and Central zones to identify  extensions and buried  anomalous areas for
trenching and  subsequent  drill testing.  Simultaneously  a program of detailed
geological and structural  mapping and further rock sampling will be carried out
over the mineralized zones to delineate  controls to  mineralization.  As well a
systematic  evaluation  of the  unexplored  southwest  and northern  part of the
property will be carried out.

Work on the Cruz de Mayo  property has been  carried out under the  direction of
Piotr  Lutynski,  M.Sc.,  P.Eng.  and has been  reviewed by Dr.  David A. Terry,
P.Geo.,  Vice President  Exploration for Amera, a Qualified  Person.  All assays
from the Cruz de Mayo property were carried out by ALS Chemex.

ACERO COPPER-GOLD PROJECT, DEPARTMENT OF CUZCO, PERU

In October  2005 the  Company  announced  that it  acquired by staking the Acero
porphyry  copper-gold  property in southern  Department of Cuzco, Peru. The 1700
hectare 100%  Amera-owned  property lies within the Santo Tomas Porphyry  Copper
Belt and is  located  just 8km west of the  Company's  Cruz de Mayo  gold-copper
project  near the town of  Velille.  Both  properties  are located in a prolific
mining district known for both epithermal gold and porphyry copper deposits.

The Constancia  copper-molybdenum  project currently being explored by Norsemont
Mining Inc. is located 20km to the east; the  high-profile  Liam epithermal gold
project of Newmont Peru Limited/Southwestern  Resources Corp. is located 50km to
the southwest; while BHP Billiton's Tintaya copper-gold-silver  porphyry-related
skarn deposit is located 60km to the southeast.

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

--------------------------------------------------------------------------------
                                  TRENCH [T]
  SAMPLE TYPE     SAMPLE LENGTH    PANEL [P]      CU      AU       AG      MO
                       [m]         GRAB [G]       [%]    [ppm]    [ppm]   [ppm]
--------------------------------------------------------------------------------

     Chip              4.0           T1         0.55     0.01      0.2       4
     Chip             10.0           T2         0.55     0.04      0.3       6
     Chip             10.0           T3         0.47     0.02      0.5       5
     Chip             12.0           T4         0.42     0.13      1.0       5
     Chip             10.0           T5         0.36     0.03      0.3       8




                                     - 32 -
<PAGE>


--------------------------------------------------------------------------------
                                  TRENCH [T]
  SAMPLE TYPE     SAMPLE LENGTH    PANEL [P]      CU      AU       AG      MO
                       [m]         GRAB [G]       [%]    [ppm]    [ppm]   [ppm]
--------------------------------------------------------------------------------

     Chip             10.0           T6         0.31     0.03      0.2       5
     Chip              3.0           T7         0.31     0.11      2.0       4
     Chip             10.0           T8         0.28     0.17      0.7       3
     Chip             10.0           T9         0.24     0.03      0.4       9
     Chip             11.0           T10        0.22     0.04      0.5       4
     Chip             10.0           T11        0.16     0.10      0.4       1
     Chip             11.0           T12        0.14     0.12      0.9       1
     Chip             12.0           T13        0.13     0.75    316.0      36
     Chip             30.0           T14        0.11     0.06      1.0      46
     Panel         5.0 x 5.0         P1         0.48     0.06      0.9     109
     Panel         3.0 x 5.0         P2         0.12     0.05      0.7       2
--------------------------------------------------------------------------------

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

Several phases of intrusive have been mapped on the property  including  dacite,
micro-diorite  and granodiorite;  the majority of mineralization  and alteration
identified  to date is hosted  by  dacitic  intrusive.  Quartz  stockwork,  with
individual  veinlets up to 3cm wide, is  widespread in the southwest  portion of
the mineralized area. Copper  mineralization  identified on surface on the Acero
property  appears to be open to the  southeast  of current  mapping and sampling
coverage. Subsequent to satisfactory completion of a community relations program
in early 2006 Amera is planning a comprehensive  surface  exploration program to
identify  drill  targets on the core area and to evaluate  the  remainder of the
property.

Work on the Acero  property  has been  carried out under the  direction of Piotr
Lutynski,  M.Sc.,  P.Eng.  and has been reviewed by Dr. David A. Terry,  P.Geo.,
Vice President  Exploration for Amera, a Qualified Person. All assays from Acero
were carried out by ALS Chemex.

FUYANI COPPER-GOLD PROPERTY, DEPARMENT OF CUSCO, PERU

Acquisition of the Fuyani copper-gold property by staking was announced on April
24, 2006. The property is located 40km north of Santo Tomas in the Department of
Cusco. It is easily  accessed along the gravel road connecting  Santo Tomas with
Cusco, 70km north of the property. Fuyani is located in the Santo Tomas Porphyry
Copper  belt.  The  property  lies 40km NW of the  Constancia  copper-molybdenum
project  currently being explored by Norsemont Mining Inc; the high-profile Liam
epithermal gold project of Newmont Peru Limited/Southwestern  Resources Corp. is
located 80km to the  southwest;  and BHP Billiton's  Tintaya  copper-gold-silver
porphyry-related  skarn deposit is located 100km to the  southeast.  Only 4 rock
samples have been collected from the property to date.


                                     - 33 -
<PAGE>



COCHA COPPER-SILVER PROJECT, DEPARTMENT OF JUNIN, PERU

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

A total of 18 rock  samples have been  collected  from the property to date with
assays  ranging from 4 ppm to 2.89%  copper and <0.2 to 99.2 ppm silver.  At the
Discovery Outcrop area a series of contiguous chip samples averaged 0.80% Cu and
10 ppm silver over 80m.  Included within the 80-metre  interval  mentioned above
were two  non-adjacent  10-metre  intervals  assaying  2.69% copper and 24.4 ppm
silver and 1.38%  copper and 26.2 ppm silver  (see Table 1).  Mineralization  is
hosted  by  steeply-dipping  malachite-stained  sandstone  and  mudstone  of the
Permian Mitu Formation.

--------------------------------------------------------------------------------
  SAMPLE
  NUMBER      LOCATION                TYPE     INTERVAL         CU         AG
                                                 (m)            (%)      (g/t)
--------------------------------------------------------------------------------
  246006      Discovery Outcrop       chip       10.0           1.38      26.2
  246005      Discovery Outcrop       chip       10.0           0.54       7.6
  246008      Discovery Outcrop       chip       10.0           0.22       1.3
  246003      Discovery Outcrop       chip       10.0           0.05       0.3
  246002      Discovery Outcrop       chip       10.0           0.46       3.6
  246001      Discovery Outcrop       chip       10.0           0.06       0.4
  246200      Discovery Outcrop       chip       10.0           2.69      24.4
  246241      2.4km SSW of D.O.(*)    chip        0.7           2.89      99.2
  246242      1.6km SSW of D.O.(*)    chip        0.3           1.65       1.5

(*)D.O. equals Discovery Outcrop
--------------------------------------------------------------------------------

Chip samples collected at the Merce Showing, located 700m northwest and on trend
from the Discovery  Outcrop,  assayed 0.46% copper and 9.4 g/t silver over 9.5m.
This 9.5m interval is comprised of three  consecutive  chip samples,  including:
0.18% copper and 4.2 g/t silver over 4.0m,  1.7% copper and 25.1 g/t silver over
1.0m and 0.43% copper and 10.6 g/t silver over 4.5m.

The area surrounding the discovery outcrop is predominantly  overburden covered.
Therefore a series of soil sample lines were  established to test for extensions
to the mineralized  zone under cover. A total of 275 soil samples were collected
at 12.5 to 25m intervals along lines spaced  approximately  100m apart. A 2.25km
long  and up to 700m  wide  northwest-oriented  copper-silver  soil  anomaly  is
centred on the discovery  outcrop.  Soil values range from 3 to 3,230 ppm copper
(0.32%  copper) and from <0.2 ppm to 4.7 ppm  silver;  the anomaly is open along
strike in both directions and to the north (see map on Amera website).

The Cocha property hosts  sedimentary  copper-silver  mineralization  similar in
style to the giant Lubin Deposit (52 Mt Cu, 2,275 M oz Ag) in the Kupferschiefer
district  of Poland  and the White Pine  Deposit  (8.3Mt Cu, 800 M oz Ag) in the
Upper  Peninsula  of  Michigan.  The  Cocha  property  is  located  in a belt of
Permian-aged  clastic sedimentary rocks known to host stratabound  copper-silver
mineralization.  The property is  road-accessible  and averages  4400m above sea
level.

Due to the high quality  copper-silver  target that has been  identified  by the
preliminary exploration work on the Cocha property,  permitting has commenced to
extend  road  access  to the main  showing  area and to  conduct  a  preliminary
trenching and drilling program as soon as possible. Meanwhile, further expansion
of the soil grid,  detailed rock sampling and geological mapping will be carried
out to identify additional targets on the property.

Analyses  for the  samples  for Cocha were  performed  by ALS  Chemex.  Work was
carried out under the direction of Piotr Lutynski,  M.Sc.,  P.Eng.,  a Qualified
Person and reviewed by Dr. David A. Terry,  P.Geo.,  Vice President  Exploration
for Amera, also a Qualified Person.


                                     - 34 -
<PAGE>


MITU COPPER-SILVER PROPERTY, DEPARTMENT OF JUNIN, PERU

On May 8, 2006 the Company  announced that it had been granted the 5,800 hectare
Mitu concession covering a high grade copper-silver  target in the Department of
Junin,  Peru.  Amera  holds a 100%  interest in the Mitu  property,  acquired by
direct staking.  The property is located  approximately 155km northeast of Lima,
80km southeast of the historic mining camp of Cerro de Pasco and 110km northwest
of the Company's Cocha  copper-silver  project.  Mitu is easily accessible via a
paved  road-connecting  Lima with Oroya and Cerro de Pasco.  From the paved road
there  are  several  4x4  roads  leading  to  different  areas of the  property.
Elevations on the property range from 3700m to 4400m above sea level.

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

A total of 10 stream  sediment  samples were collected in the Mitu Project area.
Results  ranged from 8 to 246 ppm copper and 0.1 to 0.4 ppm silver.  The highest
copper  value  came  from  one  sample  collected  in the  central  part  of the
concession  reflecting  mineralization  associated  with the contact between the
Mitu and Pucara formations.

The  Company is  currently  carrying  out a  comprehensive  surface  exploration
program  comprising  prospecting,  geological  mapping and soil grid sampling to
evaluate the Mitu property and delineate targets for more advanced exploration.

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

NEVADA, USA, PROPERTIES

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

The Roy  property is located 56  kilometres  northwest  of Tonopah and the Hills
property is located 65 kilometres  northwest of Tonopah. The properties are both
located adjacent to the Pole Line road.  Access to the property is by truck from
Tonopah.  There is no power  available on the  properties.  The nearest power is
available  within less than 50 kilometres from the properties.  The Roy property
is a  gold-silver  epithermal  system while the Hills  property is a silver-gold
epithermal system. Both the Roy and Hills claim blocks are underlain by volcanic
rocks that have  undergone  epithermal  alteration and  mineralization  prior to
being covered by younger volcanic sediments and gravels. Work to date on the Roy
and Hills properties includes surface mapping, geological sampling, and a ground
magnetics survey carried out by Quantec  Geophysic along 200 meter-spaced  lines
with 10 meter-spaced sample points.

As of the date of this annual report, the Roy and Hills claim blocks are without
known reserves.

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


                                     - 35 -
<PAGE>


CHUBUT PROPERTIES

The Company  entered into a Property  Purchase  Agreement,  dated March 6, 2003,
with IMA and IMASA  whereunder  the Company  acquired a 100% interest in certain
mineral  exploration  properties  located in the Province of Chubut,  Argentina,
consisting of three (3) cateos known as Lago Pico, Loma Alta and Nueva Ruta. See
"Item 7. Major  Shareholders  and Related  Party  Transactions  - Related  Party
Transactions."  In  consideration  therefor,  the Company  issued 500,000 of its
common  shares to IMA.  These shares had a deemed value of $22,000 or $0.044 per
share (when the Property Purchase  Agreement was negotiated),  which at the time
was IMA's  recorded  cost for these  properties.  These shares were approved for
issuance,  as additional  shares to be issued, in conjunction with the Company's
initial public offering.  When the shares were issued in November 2003 they were
recorded at a deemed value of $225,000  ($0.45 per share - which was the initial
public  offering  issue  price).  IMA and IMASA (now  Golden  Arrow and  IMAUSA)
retained a 3% net smelter  returns royalty in respect of such properties and the
Company  agreed to pay a cash bonus of  US$250,000  to IMA (now Golden Arrow) at
such time as a decision to place any of the properties in commercial  production
is made,  of which  there are no  assurances.  See "Item 4.  Information  on the
Company - History and  Development of the Company." IMA's and IMASA's rights and
interests in the  agreement  were  transferred  and assigned to Golden Arrow and
IMAUSA, on July 7, 2004.

As of June 19,  2006,  the  Company  has spent  $225,000  in  acquisition  costs
(represented  by the  deemed  value of the  common  shares  issued)  and had not
incurred  any  exploration  expenses  on the  Chubut  properties.  See  "Item 4.
Information on the Company - Plan of  Operation."  During 2005 the Company wrote
off $225,000 Chubut properties  representing the fair value of the shares issued
upon  acquisition  of the  properties.  The  Company  decided to write off these
properties as there is no active  exploration  on the properties and the Company
has postponed any exploration  indefinitely.  The Company  continues to hold the
legal title to these properties.

At the time the Company acquired the Chubut Properties,  the Company intended to
explore the properties for mineralization; however, the provincial government of
Chubut Province,  Argentina has enacted certain anti-mining laws banning the use
of cyanide and open-pit mining in metallic extraction in the Province of Chubut.
As a result, the Company has decided not to proceed with any exploration work on
these  properties  until  changes in mining  laws in Chubut  Province  have been
clarified. The Company does not know if, or when, such clarification will occur;
therefore,  the  Company has not  budgeted  any funds for  exploration  of these
properties for the fiscal 2006 period.

PLAN OF OPERATION

As  of  June  19,  2006,  the  Company  had  working  capital  of  approximately
$1,400,000.

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

In January 2005 the Company  commenced a Phase II drilling program on the Mogote
Property.  See  "Item 4.  Information  on the  Company  -  Property,  Plant  and
Equipment - Principal Properties - Mogote Project." The Company has not budgeted
for any  exploration  programs on the Mogote  Project during the balance of 2006
and is actively seeking joint venture partners to advance the project.

Preliminary  surface  exploration  comprising  prospecting,  geological mapping,
rock,  soil and silt sampling was carried out in late 2005 and early 2006 on the
Cocha  copper-silver  property,  granted to the Company in March 2006,  in Junin
Department  200km to the east of Lima.  Early results from the work on the Cocha
property   indicate  a   significant   zone  of   near-surface   sediment-hosted
copper-silver  mineralization  is present  and a Phase I drill  program has been
planned and  permitted.  Currently  the Company  plans to initiate a 2000m drill
program in mid-2006 to test the Discovery Outcrop area.

During  the  period  June to  October,  2005 the  company  carried  out  surface
exploration  comprising  prospecting,  geological mapping,  rock sampling,  soil
sampling and stream sediment  sampling and ground  geophysics over the Esperanza
gold property.  The company is currently  deciding on the  appropriate  scope of
program to carry out in 2006 and has budgeted $250,000 to carry out the work.


                                     - 36 -
<PAGE>


Exploration  carried out during 2005 has identified two zones of  mineralization
on the Cruz de Mayo gold-copper property in Cuzco Department,  Peru. The company
plans to carry out a detailed soil and rock sampling program,  ground geophysics
and, dependant on results, a preliminary drill test of the property.  A total of
$300,000 has been budgeted for this work.

A total of $160,000 has been  budgeted to advance other  properties  the Company
currently  has in its portfolio  through  surface  exploration  programs for the
remainder of 2006.

Reconnaissance  and evaluation  activities  aimed at  identifying  properties to
acquire by direct staking or through  agreements  with third parties are planned
to continue through the first half of 2006 in Peru. In addition the Company will
be continually evaluating submittals and other exploration opportunities as they
arise.  It is the aim of the Company to acquire  additional  properties over the
next year,  primarily in Peru or Chile.  The Company has  budgeted  $350,000 for
these activities during fiscal 2006.  Management may have to make adjustments to
the budget  throughout  the year,  dependant  upon  exploration  results  and/or
acquisition opportunities.

The table below sets forth the Company's  exploration budget for the fiscal 2006
period.

--------------------------------------------------------------------------------
                        LOCATION     JANUARY-MAY     JUNE-DECEMBER       TOTAL
--------------------------------------------------------------------------------
Cocha         Cu-Ag       Peru         $15,000          $335,000       $350,000
Esperanza      Au         Peru          $5,000          $245,000       $250,000
Cruz de Mayo  Au-Cu       Peru         $20,000          $280,000       $300,000
Other Peru Properties     Peru         $30,000          $130,000       $160,000
Peru Generative and
     Acquisitions                     $100,000          $150,000       $250,000
Other Evaluations                      $50,000           $50,000       $100,000
--------------------------------------------------------------------------------
TOTAL                                 $220,000        $1,190,000     $1,410,000
================================================================================

The Company does not believe it has  sufficient  financial  resources to conduct
all of the planned exploration of its mineral property interests and to fund its
ongoing overhead  expenses during the 12 months from January 1, 2006 to December
31,  2006.  In the  future,  the Company  may need to raise  additional  capital
through  the  sale  of  its  equity  securities  to  fund  further   exploration
activities.  See  "Item 5.  Operating  and  Financial  Review  and  Prospects  -
Liquidity  and  Capital  Resources."  The  Company  may not be able to raise the
necessary  funds, if any, and may not be able to raise such funds at terms which
are  acceptable  to the  Company.  In the event the  Company  is unable to raise
adequate finances to fund the proposed activities,  it will need to reassess its
alternatives and may have to abandon one or more of its property  interests as a
result.


                                     - 37 -
<PAGE>



                                      MAP A

                    [MAP OF THE SAN JUAN PROVINCE, ARGENTINA
                   SHOWING THE LOCATION OF THE MOGOTE PROJECT

          [Also showing the towns of Calingasta , Rodeo, Villa Union,
                       and San Agustin del Valle Fertil]]

     AVAILABLE FOR VIEWING AT THE COMPANY'S WEBSITE: www.ameraresources.com



                                     - 38 -
<PAGE>


                                      MAP B

                      [MAP OF THE AREQUIPA DEPARTMENT, PERU
                 SHOWING THE LOCATION OF THE ESPERANZA PROPERTY]

  [Also showing the cities/towns of Arequipa, Chivay, Chuquibamba Vitor, etc.]

     AVAILABLE FOR VIEWING AT THE COMPANY'S WEBSITE: www.ameraresources.com


                                     - 39 -
<PAGE>



                                      MAP C

                 [LOCATION MAP OF THE ROY AND HILLS PROPERTIES,
                        NYE COUNTY, NEVADA, USA SHOWING
                  THE LOCATION OF THE ROY AND HILS PROPERTIES]

          [Also showing Mineral County, Esmeralda Count and Nye County
       as well as the cities/towns of Gabbs, Round Mountain and Tonopah]

AVAILABLE FOR VIEWING AT THE COMPANY'S WEBSITE: www.ameraresources.com


                                     - 40 -
<PAGE>


ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
--------------------------------------------------------------------------------

The  following  discussion  of the results of  operation  of the Company for the
fiscal  years  ended  December  31,  2005,  2004  and  2003  should  be  read in
conjunction with the accompanying  audited  financial  statements of the Company
and related notes included therein.

The Company's  financial  statements  are prepared in  accordance  with Canadian
GAAP,  the  application  of which,  in the case of the Company,  conforms in all
material  respects  for  the  period  presented  with  US  GAAP  except  for the
differences noted in Note 8 of the Company's  audited  financial  statements for
the years ended December 31, 2005, 2004 and 2003 which are included herein.  The
noon rate of exchange on June 19, 2006,  reported by the United  States  Federal
Reserve Bank of New York,  for the  conversion  of Canadian  dollars into United
States dollars was CDN$1.1232  (US$0.8903 = CDN$1.00).  The effects of inflation
and  price  changes  have not had a  material  impact on the  Company  since its
incorporation. The Company does not engage in hedging activities.

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

OVERVIEW

The Company was  incorporated on April 11, 2000 and remained  without a business
asset until March 2003,  when the Company  negotiated a number of  agreements to
option  and  acquire  interests  in  various  mineral   concessions  located  in
Argentina.  In December 2003, the Company  completed its initial public offering
and commenced trading on the TSX Venture under the symbol "AMS".

The  Company  is an  exploration  stage  company  engaged  in  the  business  of
acquiring, exploring and evaluating natural resource properties, and potentially
joint  venturing these  properties  depending on the evaluation of the property.
The Company has been focusing on conducting an exploration program on the Mogote
Property in Argentina and on Esperanza  Property in Peru. The Company's material
mineral property interests are located in Argentina, Peru and in US. The Company
is currently  reviewing other mineral property  interest  opportunities in South
and North  America and has budgeted  approximately  $250,000 for fiscal 2006 for
generative exploration program. During December 2004, the Company staked the Roy
and Hills  claim  blocks in Nevada.  See "Item 4.  Information  on the Company -
Property,  Plant and Equipment - Other  Properties - Nevada,  USA,  Properties."
During 2005 and the  beginning  of 2006 the company  staked or optioned  Cruz de
Mayo, Fuyani, Mitu, Acero and Cocha properties in Peru. See "Item 4. Information
on the Company - Property, Plant and Equipment - Other Properties."

RESULTS OF OPERATIONS

FISCAL YEAR ENDED  DECEMBER 31, 2005 COMPARED TO FISCAL YEAR ENDED  DECEMBER 31,
2004

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

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

     -   Corporate  development and investor relations of $182,702,  compared to
         $151,739  during  2004,  is  comprised  of costs  related  to  investor
         relations, investor conferences and general corporate information.
     -   General exploration costs of $199,264 were incurred during 2005 (2004 -
         $18,318) as the Company expanded its generative  exploration activities
         in Peru and in the US.
     -   Management  fees of $73,500  were paid to the  President of the Company
         pursuant to an employment agreement compared to $72,400 during 2004.

     -   Office and sundry expenses were $92,724 during 2005 compared to $51,173
         during 2004 as a result of the increase in activity in 2005.



                                     - 41 -
<PAGE>


     -   Rent of $73,573  increased by $44,062 from $29,511 rent paid in 2004 to
         IMA. The rent expense in 2005  represents  allocation  of fees from the
         Grosso Group.
     -   Salaries of $294,170  represent  allocation  of fees paid to the Grosso
         Group  during  2005 and  salaries  paid to  employees  in Peru  office,
         compared to $154,074  during 2004.  Total fees of $377,410 was incurred
         by the Company from the Grosso Group during 2005  compared to $108,390,
         which was paid to IMA for rent,  salaries and  administrative  services
         during 2004.
     -   Stock-based  compensation  of  $52,500 is the  estimated  fair value of
         stock options granted to employees,  directors and  consultants  during
         2005 compared to $131,805 the estimated fair value of the stock options
         granted during 2004. Stock-based  compensation is accounted for at fair
         value as determined  by the  Black-Scholes  option  pricing model using
         amounts that are believed to approximate  the volatility of the trading
         price  of  the  Company's  stock,  the  expected  lives  of  awards  of
         stock-based compensation, the fair value of the Company's stock and the
         risk-free interest rate.
     -   Write off of mineral  properties  consists of the $225,000 write off of
         Chubut properties,  as there is no active exploration on the properties
         and the Company  has  postponed  any  exploration  indefinitely.  These
         properties  located in Western Chubut Province of Argentina are subject
         to an ongoing government moratorium on exploration activities.

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

FISCAL YEAR ENDED  DECEMBER 31, 2004 COMPARED TO FISCAL YEAR ENDED  DECEMBER 31,
2003

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

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

     -   Corporate  development and investor relations  ($151,739) comprise of a
         monthly fee of $7,500 paid to Raven  Capital for market  awareness  and
         investor  relations for January to April.  The  arrangement  with Raven
         Capital was terminated in April.  Ridgecrest  Capital S.A. was retained
         to provide consulting  services for the Company with European investors
         and was paid fees of $18,305.  The arrangement with Ridgecrest  Capital
         was terminated  effective  December 31, 2004.  Attendance at investment
         conferences was a cost of $30,100. The remaining corporate  development
         and  investor  relations  costs in fiscal 2004 was  comprised  of costs
         related to general  corporate  information and fees paid to consultants
         to assist the Company with its finanicngs.
     -   Management  fees ($72,400)  represents fees charged by the President of
         the Company pursuant to an employment agreement.
     -   Professional fees ($48,200) include  accounting and consulting fees for
         market research.
     -   Legal  fees  ($63,058)  have  increased  due to  costs  related  to the
         preparation  and  filing  of  the  Company's  Form  20-F   registration
         statement and increased corporate legal costs for its activities.
     -   Salaries  ($154,074)  consists mainly of fees that were paid to IMA for
         the provision of personnel under a cost sharing  arrangement and salary
         plus $25,000 relocation allowance paid to the Company's Vice President,
         Exploration.  A  total  of  $108,390  was  paid  to IMA  for  rent  and
         administrative services.
     -   Office and Sundry  ($51,173) is comprised  mainly of printing  costs of
         $20,803, telephone expense of $8,837 and other office expenses.
     -   Travel ($47,018)  principally  related to attendance at conferences and
         presentations.
     -   Advertising ($60,745) included costs to prepare materials for potential
         and existing shareholders.
     -   Stock-based  compensation  ($131,805)  is the  estimated  fair value of
         stock options granted to employees, directors and consultants.


                                     - 42 -
<PAGE>


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

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

FISCAL YEAR ENDED  DECEMBER 31, 2003 COMPARED TO FISCAL YEAR ENDED  DECEMBER 31,
2002

During 2003, the Company  reported a loss of $405,756,  an increase of $379,498,
compared to a loss of $26,258 in 2002.  General and  administrative  expenses of
$408,352 was reported in 2003, a  significant  increase of $381,738 from $26,614
in 2002.  The Company was  inactive  from its  inception on April 11, 2000 until
late in 2002, when it commenced raising equity financing.  Activities  continued
in earnest in 2003 as the Company  conducted a number of financings,  negotiated
mineral property  acquisition  agreements and successfully  completed an initial
public offering and listing on the TSX Venture.  Accordingly,  significant costs
were  incurred  in 2003.  The  Company  incurred  accounting,  audit,  legal and
professional fees with respect to the review of property  acquisitions,  general
corporate  matters  and  increased  activities.  Advertising,  office and travel
expenses were incurred on the  implementation  of a market awareness program and
investor  relations.  The Company also incurred  management  fees of $25,000 for
services rendered by the President of the Company. In addition,  during 2003 the
Company  recorded a non-cash  charge of $252,000  attributed  to the granting of
stock options to employees,  directors and consultants.  The compensation charge
is an estimate of the fair value of the stock options based on the Black Scholes
model using assumptions and estimates.

During 2003, the Company acquired interests in the Mogote and Chubut Properties.
As at December 31, 2003, the Company had recorded  $197,854 for reimbursement to
IMA for past costs  incurred,  issued  100,000  common shares at a fair value of
$45,000,  and  incurred  $39,188 in  additional  property  costs and $164,768 in
exploration  expenditures  during  the  Phase  I  drill  program  on the  Mogote
Property.  No  exploration  activities  had been conducted in 2003 on the Chubut
Properties,  with the Company  issuing  500,000 common shares at a fair value of
$225,000 for their acquisition.

During 2003,  the Company  completed a number of special  warrant  financings to
raise gross  proceeds of $363,900.  This was followed by the  Company's  initial
public offering to raise $675,000. A further $5,000 was received on the exercise
of warrants.  During 2002,  the Company  received  $79,999 from its seed capital
financing.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  cash  position at December 31, 2005 was  $522,327,  a decrease of
$1,156,905  from  December 31, 2004.  Total assets  increased to  $3,843,389  at
December 31, 2005 from  $3,754,341 at December 31, 2004. This increase is mainly
due to the  increase  in  carrying  value of  exploration  properties  offset by
$225,000 write off of Chubut properties and decrease in cash balance.

As the Company is an exploration stage company, revenues are limited to interest
earned on cash held with the Company's financial  institutions.  The Company has
financed its operations  through the sale of its equity  securities.  During the
year ended  December  31,  2005,  the Company  completed a private  placement of
1,650,000  units at $0.55 per unit,  for gross  proceeds of $907,500.  Each unit
consisted  of one  common  share and one half  non-transferable  share  purchase
warrant.  Each whole warrant  entitles the holder to purchase a common share for
$0.60 per share on or before  March 18,  2006.  The Company  also issued  66,750
Agent's  Warrants at $0.60 and 14,962 Agent's Units at $0.55 per Unit and 27,000
Units at $0.55  per Unit as a  Corporate  Finance  Fee.  There  were  also  cash
commissions and administration fees paid of $61,751.

The Company also received a further  $326,649 from the exercises of warrants and
$8,250 from the exercise of stock options during 2005.



                                     - 43 -
<PAGE>


On January 30,  2006 the Company  completed  a private  placement  financing  of
1,412,000  units at $0.60 per unit,  for gross  proceeds of $847,200.  Each unit
comprised one common share and one non-transferable share purchase warrant. Each
warrant  entitles the holder to purchase one additional  common share at a price
of $0.65 per share on or before January 30, 2008.

Subsequent  to  December  31, 2005 the  Company  has  requested  and was granted
permission  by TSX Venture to amend the  exercise  price for  2,750,000 of $1.20
warrants  with the March 24th and March  31st,  2006 expiry  dates.  The amended
price was $0.60 per warrant. There was no extension to the term of the warrants.

Subsequent to December 31, 2005 the Company issued  1,194,500  common shares for
$716,700 on the exercise of warrants.

The Company  considers  that it has  adequate  resources to maintain its ongoing
operations and current  property  commitments  for the ensuing year but does not
have sufficient working capital to fund all of its planned exploration work. The
Company  will  continue to rely on  successfully  completing  additional  equity
financing to further exploration of its existing and new properties in Americas.
There can be no assurance  that the Company will be  successful in obtaining the
required  financing.  The failure to obtain such  financing  could result in the
loss of the Company's interest in one or more of its mineral claims.

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

RESEARCH AND DEVELOPMENT

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

TREND INFORMATION

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

OFF-BALANCE SHEET ARRANGEMENTS

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

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

                                       -----------------------------------------
                                                  PAYMENTS DUE BY PERIOD(2)
                                       -----------------------------------------
                                       LESS THAN     1-3        3-5    MORE THAN
                             TOTAL      1 YEAR      YEARS      YEARS    5 YEARS
--------------------------------------------------------------------------------

CONTRACTUAL OBLIGATIONS(1)  $402,000    $402,000      -          -         -
--------------------------------------------------------------------------------
TOTAL                       $402,000    $402,000      -          -         -
================================================================================

(1)  The payments shown are monthly fees to Grosso Group for the  administrative
     and management  services.  See "Item 6 - Directors,  Senior  Management and
     Employees - Management Contracts".
(2)  As of December 31, 2005.




                                     - 44 -
<PAGE>



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
--------------------------------------------------------------------------------

DIRECTORS AND SENIOR MANAGEMENT

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

------------------------------------------------------------------------------------------------------
                                             PRINCIPAL OCCUPATION AND IF
                                             NOT AT PRESENT AN ELECTED                PERIOD OF
NAME, POSITION AND                           DIRECTOR, OCCUPATION DURING              SERVICES AS A
COUNTRY OF RESIDENCE                         THE PAST FIVE YEARS(1)                   DIRECTOR/OFFICER
------------------------------------------------------------------------------------------------------
<S>                                         <C>                                      <C>

NIKOLAOS CACOS                               President, CEO and Director of           April 2000
President, Chief Executive Officer           the Company.  VP, North
and Director                                 America Corporate Development
(resident of Vancouver, BC, Canada)          of IMA Exploration Inc. since
Age 39                                       June 2005.  Director and
                                             Corporate Secretary of Golden
                                             Arrow Resources Corporation
                                             since 2004.
------------------------------------------------------------------------------------------------------

JOSEPH GROSSO                                Director, President and CEO of           February 2004
Chairman and Director                        IMA Exploration Inc. since
(resident of Burnaby, BC, Canada)            February 1990.
Age 68
------------------------------------------------------------------------------------------------------

JERRY A. MINNI                               Partner of Minni, Clark &                November 2002
Director                                     Company, Certified General
(resident of Vancouver, BC, Canada)          Accountants since 1988;
Age 44                                       Director and CEO Raytec
                                             Development since 1992.
------------------------------------------------------------------------------------------------------

ROBERT COLTURA                               Businessman/Consultant, has              August 2002
Director                                     been President of Matalia
(resident of Langley, BC, Canada)            Investments Ltd. since Oct.
Age40                                        1993,
------------------------------------------------------------------------------------------------------

LINDSAY BOTTOMER                             VP Corporate Development,                February 2004
Director                                     Entree Gold Inc., Nov. 2005 -
(resident of North Vancouver, BC, Canada)    Present.  President Souther
Age 57                                       Rio Resources, June 2001-Nov.
                                             2005.
------------------------------------------------------------------------------------------------------

ARTHUR LANG                                  Chief Financial Officer.                 March 2005
Secretary, CFO                               Director and officer of IMA
(resident of Vancouver, BC, Canada)          Exploration Inc. since April
Age 62                                       2004 and a Director and
                                             Officer of Golden Arrow
                                             Resources Corporation since
                                             June 2004. Consultant
                                             providing financial management
                                             services to various clients
                                             from 1999 to April 2004
                                             through Arthur G Lang Inc., a
                                             private British Columbia company.
------------------------------------------------------------------------------------------------------
</TABLE>


                                     - 45 -
<PAGE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------
                                             PRINCIPAL OCCUPATION AND IF
                                             NOT AT PRESENT AN ELECTED                PERIOD OF
NAME, POSITION AND                           DIRECTOR, OCCUPATION DURING              SERVICES AS A
COUNTRY OF RESIDENCE                         THE PAST FIVE YEARS(1)                   DIRECTOR/OFFICER
------------------------------------------------------------------------------------------------------
<S>                                         <C>                                      <C>

DAVID TERRY                                  Director and VP, Exploration             March 2004
Vice President, Exploration                  of IMA May 2004 to present.
(resident of Maple Ridge, BC, Canada)        Director and VP, Exploration
Age 40                                       for Golden Arrow from July 2004
                                             to current. Regional geologist
                                             with the British Columbia Ministry
                                             of Energy and Mines in Cranbrook,
                                             British Columbia from May 2001
                                             to March 2004.
------------------------------------------------------------------------------------------------------
</TABLE>

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

CONFLICTS OF INTEREST

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

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

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

See "Item 3.  Key Information - Risk Factors."

The following  table  identifies,  as of June 19, 2006, the name of each officer
and  director of the Company and any company (i) which  employs  such officer or
director, (ii) for which such officer or director currently serves as an officer
or director, or (iii) which is affiliated with such officer or director:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR    NAME OF COMPANY                 DESCRIPTION OF BUSINESS     POSITION              TERM OF SERVICE
-------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                             <C>                         <C>                   <C>

Nikolaos Cacos      IMA Exploration Inc.            Mineral Exploration         Vice President        June 2005 to present

                    Golden Arrow Resources Corp.    Mineral Exploration         Director              July 2004 to present
                                                                                Corporate Secretary   July 2004 to present
-------------------------------------------------------------------------------------------------------------------------------

</TABLE>


                                     - 46 -
<PAGE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR    NAME OF COMPANY                 DESCRIPTION OF BUSINESS     POSITION              TERM OF SERVICE
-------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                             <C>                         <C>                   <C>

Joseph Grosso       IMA Exploration Inc.            Mineral Exploration         Director              February 1990 to present
                                                                                President & CEO       February 1990 to present

                    Golden Arrow Resources Corp.    Mineral Exploration         Director, Chairman    May 2004 to present
                                                                                President & CEO       May 2004 to present

                    Gold Point Energy Corp.         Mineral Exploration         Chairman, Director    April 2006 to present
-------------------------------------------------------------------------------------------------------------------------------

Jerry Minni         Raytec Development Corp.        Food Equipment              Director              February 1992 to present
                                                        Manufacturer            President             February 1992 to present

                    Global Sortweb.com Inc.         Software Development        Director              July 1998 to present
                                                                                CFO                   July 1998 to present

                    Avantec Technologies Inc.       Chemical Equipment          Director              June 1999 to present
-------------------------------------------------------------------------------------------------------------------------------

Lindsay Bottomer    Silver Quest Resources Ltd.     Mineral Exploration         Director              July 2001 to present

                    Entree Gold Inc.                Mineral Exploration         Director              June 2002 to present

                    Strategem Capital Corp.         Venture Capital             Director              June 2003 to present

                    Yale Resources Ltd.             Mineral Exploration         Director              December 2005 to present

                    Centrasia Mining Corp.          Mineral Exploration         Director              September 2005 to present
-------------------------------------------------------------------------------------------------------------------------------

David Terry         Golden Arrow Resources Corp.    Mineral Exploration         Director              July 2004 to present
                                                                                V.P. Exlporation      July 2004 to present

                    IMA Exploration Inc.            Mineral Exploration         Director              May 2004 to present
                                                                                V.P. Exploration      June 2004 to present

                    Astral Mining Corporation       Mineral Exploration         Director              March 2005 to present
-------------------------------------------------------------------------------------------------------------------------------

Robert Coltura      Matalia Investments Ltd.        Hospitality and Tourism     President             October 1993 to present
                                                        Consulting
-------------------------------------------------------------------------------------------------------------------------------
Arthur Lang         IMA Exploration Inc.            Mineral Exploration         Director              April 2004 to present
                                                                                Vice-President & CFO  April 2004 to present

                    Golden Arrow Resources Corp.    Mineral Exploration         Director              June 2004 to present
                                                                                Vice-President & CFO  July 2004 to present

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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


                                     - 47 -
<PAGE>


COMPENSATION

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

Effective  January 2, 2004,  the  Company  entered  into an  agreement  with the
President of the Company for his services.  Under the contract the President was
paid $6,125 per month. During the three months ended March 31, 2006, the Company
paid $21,375 (2005 - $18,375) to the President. The contract also provides that,
in the event  the  services  are  terminated  without  cause or upon a change in
control of the Company,  a termination  payment would include eighteen months of
compensation  plus a bonus amount  agreed to by the parties.  On May 1, 2006 the
monthly fee increased to $7,292.

The Company does not have any retirement plans or benefits.

EXECUTIVE COMPENSATION

The  following  information  provides  details of the  compensation  paid by the
Company to its directors and officers  during the fiscal year ended December 31,
2005,  which has been released by the Company in accordance with the regulations
(the "Regulations") made under the Securities Act (British Columbia).

SUMMARY COMPENSATION TABLE

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

During the Company's last completed  financial year ended December 31, 2005, the
Company had two Named  Executive  Officers,  Mr.  Nikolaos  Cacos and Mr. Arthur
Lang.

The following table  (presented in accordance with the  Regulations)  sets forth
all annual and long term  compensation  for  services in all  capacities  to the
Company for the financial  years ended December 31, 2005,  2004 and 2003 (to the
extent required by the Regulations) in respect of the Named Executive Officer:

<TABLE>
<CAPTION>

                                                                    ---------------------------------------
                                                                             LONG TERM COMPENSATION
                                  ------------------------------    ---------------------------------------
                                      ANNUAL COMPENSATION                     AWARDS                PAYOUTS
                      --------    ------------------------------    ----------------------------    -------    ---------
                        YEAR                             OTHER                       RESTRICTED
------------------      ENDED                            ANNUAL      SECURITIES      SHARES OR                 ALL OTHER
    NAME AND          DECEMBER                           COMPEN-    UNDER OPTIONS/   RESTRICTED      LTIP       COMPEN-
PRINCIPAL POSITION       31       SALARY      BONUS      SATION     SARS GRANTED(1)  SHARE UNITS    PAYOUTS      SATION
------------------    --------    ------------------------------    ----------------------------    -------    ---------
                                    ($)        ($)         ($)           (#)             (#)          ($)          ($)
<S>                   <C>        <C>        <C>         <C>         <C>               <C>         <C>          <C>

Nikolaos Cacos          2005      73,500        Nil        Nil              Nil          Nil          Nil          Nil
President and CEO       2004      72,400        Nil        Nil           50,000          Nil          Nil          Nil
                        2003         Nil     25,000        Nil          125,000          Nil          Nil          Nil

Arthur Lang             2005      13,402(2)     Nil        Nil              Nil          Nil          Nil          Nil
Secreatry & CFO         2004         Nil(3)     Nil        Nil              Nil          Nil          Nil          Nil
                        2003         Nil        Nil        Nil              Nil          Nil          Nil          Nil
------------------    --------    ------------------------------    ----------------------------    -------    ---------
</TABLE>


                                     - 48 -
<PAGE>

NOTE:
(1)  Figures  represent options granted during a particular year; see "Aggregate
     Option" table for the aggregate number of options outstanding at year end.
(2)  During the year 2005,  Mr.  Lang's  total  compensation  from Grosso  Group
     Management  Ltd.  (the "Grosso  Group") was $94,667,  of which  $13,402 was
     allocated to the Company as part of the Grosso Group fees for the year.
(3)  During  the  year  2004,  Mr.  Lang  received  his  compensation  from  IMA
     Exploration Inc.

LONG TERM INCENTIVE PLAN AWARDS

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

OPTION/STOCK  APPRECIATION  RIGHT ("SAR") GRANTS AND REPRICINGS  DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR

During the financial  year ended December 31, 2005 no option grants were made to
the Named Executive Officers of the Company.

AGGREGATED  OPTION EXERCISES DURING THE MOST RECENTLY  COMPLETED  FINANCIAL YEAR
AND FINANCIAL YEAR-END OPTION/SAR VALUES

The following  table sets forth details of all exercises of stock options during
the financial  year ended December 31, 2005 by the Named  Executive  Officer(s),
and the financial year end value of unexercised options on an aggregated basis:
<TABLE>
<CAPTION>

=======================================================================================================
                                                           UNEXERCISED OPTIONS    VALUE OF UNEXERCISED
                                                            AT FINANCIAL YEAR     IN THE MONEY OPTIONS
                        SECURITIES                               END(3)           AT FINANCIAL YEAR END
                        ACQUIRED ON     AGGREGATE VALUE           (#)                   ($)(3)(4)
                        EXERCISE(1)       REALIZED(2)         EXERCISABLE/              EXERCISABLE/
NAME                       (#)               ($)             UNEXERCISABLE             UNEXERCISABLE
--------------          -----------     ---------------    -------------------    ---------------------
<S>                     <C>              <C>                <C>                       <C>

Nikoloas Cacos             Nil               Nil              175,000 / NA                Nil / NA
Arthur Lang                Nil               Nil                  Nil / NA                Nil / NA

=======================================================================================================
</TABLE>

NOTES:
(1)  Number of common  shares of the Company  acquired on the  exercise of stock
     options.
(2)  Calculated  using the closing  price of common shares of the Company on the
     TSX Venture.
(3)  As  freestanding  SARs have not been  granted,  the number of shares relate
     solely to stock options.
(4)  Value of  unexercised  in-the-money  options  calculated  using the closing
     price of common  shares of the Company on the TSX  Venture on December  31,
     2005 of $0.54 per share,  less the  exercise  price of  in-the-money  stock
     options.

TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL

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


                                     - 49 -
<PAGE>

PENSION PLAN

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

DIRECTOR COMPENSATION

CASH COMPENSATION

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

NON-CASH COMPENSATION

No stock  options were granted by the Company  during the  financial  year ended
December 31, 2005 to the directors who are not the Named  Executive  Officers of
the Company:

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

<TABLE>
<CAPTION>

=======================================================================================================
                                                           UNEXERCISED OPTIONS    VALUE OF UNEXERCISED
                                                            AT FINANCIAL YEAR     IN THE MONEY OPTIONS
                        SECURITIES                               END(3)           AT FINANCIAL YEAR END
                        ACQUIRED ON     AGGREGATE VALUE           (#)                   ($)(3)(4)
                        EXERCISE(1)       REALIZED(2)         EXERCISABLE/              EXERCISABLE/
NAME                       (#)               ($)             UNEXERCISABLE             UNEXERCISABLE
--------------------    -----------     ---------------    -------------------    ---------------------
<S>                     <C>              <C>                <C>                       <C>

Directors as a group       Nil               Nil              325,000 / N/A               NA / NA
who are not Named
Executive Officers
=======================================================================================================
</TABLE>

NOTES:
(1)  Number of common  shares of the Company  acquired on the  exercise of stock
     options.
(2)  Calculated  using the closing  price of common shares of the Company on the
     TSX Venture.
(3)  As  freestanding  SARs have not been  granted,  the number of shares relate
     solely to stock options.
(4)  Value of  unexercised  in-the-money  options  calculated  using the closing
     price of common  shares of the Company on the TSX  Venture on December  31,
     2005 of $0.54 per share,  less the  exercise  price of  in-the-money  stock
     options.

EMPLOYMENT AGREEMENTS

Effective January 2, 2004, the Company entered into a management  agreement with
Mr.  Nikolaos Cacos for his services as President of the Company.  For 2004, Mr.
Cacos was paid an aggregate of $72,400.  The  compensation  amounts are adjusted
annually and the aggregate for 2005 was $73,500.  On May 1, 2006 the monthly fee
increased to $7,292.  The agreement  also provides that, in the event Mr. Cacos'
services  are  terminated  without  cause or upon a  change  of  control  of the
Company,  a termination  payment  would  include a bonus plus  eighteen  months'
compensation.

David  Terry's  services to the Company  are  provided as part of the  Company's
agreement  with the Grosso Group.  Mr. Terry has entered into an agreement  with
the Grosso Group. Prior to January 1, 2005, Mr. Terry had a consulting agreement
with the Company.  See "Item 6.  Directors,  Senior  Management  and Employees -
Management  Contracts  - Grosso  Group  Management  Ltd."  and  "Item  7.  Major
Shareholders and Related Party Transactions - Related Party Transactions."

Arthur  Lang's  services to the Company  are  provided as part of the  Company's
agreement with the Grosso Group. Mr. Lang has entered into an agreement with the
Grosso Group.  Prior to January 1, 2005, Mr. Lang's services to the Company were
provided as part of the Company's  agreement  with IMA. See "Item 6.  Directors,
Senior Management and Employees - Management Contracts - Grosso Group Management
Ltd." and "Item 7. Major  Shareholders and Related Party  Transactions - Related
Party Transactions."


                                     - 50 -
<PAGE>

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

MANAGEMENT CONTRACTS

GROSSO GROUP MANAGEMENT LTD.

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

The Grosso  Group is a private  company  which is owned by the  Company,  Golden
Arrow Resources Corporation ("Golden Arrow"), IMA Exploration Inc. ("IMA"), Gold
Point Exploration Corp. ("Gold Point") and Astral Mining Corporation ("Astral"),
each of which own one share. The Grosso Group provides its shareholder companies
with geological, corporate development,  administrative and management services.
The Grosso  Group staff is  available  to the  shareholder  companies  on a cost
recovery  basis  without the  expense of full time  personnel.  The  shareholder
companies  pay  monthly  fees  to the  Grosso  Group.  The fee is  based  upon a
reasonable  prorating  of the  Grosso  Group's  costs  including  its  staff and
overhead costs among each shareholder company with regard to the mutually agreed
average annual level of services  provided to each shareholder  company.  During
fiscal 2005,  the Company  incurred  fees of $377,410 to the Grosso Group plus a
deposit of $95,000.  The fees the Company pays to the Grosso Group are allocated
to various  expense  items that  reflect the nature of the actual  costs:  rent,
salaries,  office and telephone.  These fees are equivalent to costs the Company
would have incurred  directly.  The deposits from the shareholder  were used for
the purchase of equipment and leasehold  improvements and for operating  working
capital.

The Administration Services Agreement may be terminated by a shareholder company
after January 1, 2007,  upon 30 days' written notice to the Grosso Group.  Prior
to January 1, 2007, if a shareholder  company desires to terminate the agreement
it will pay a termination fee equal to six-months basic administration charge.

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

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

The members of the board of directors  of the Grosso Group are  appointed by the
shareholder  companies,  with each  shareholder  company  appointing  one of its
directors to serve as a director of the Grosso Group.  As of June 19, 2006,  the
directors of the Grosso Group are Nikolaos  Cacos,  Joseph Grosso,  Arthur Lang,
Nick DeMare and Manfred Kurschner.  Mr. Grosso is an officer and director of the
Company,  a director  and  officer of IMA and a director  and  officer of Golden
Arrow. Mr. Lang is an officer of the Company,  a director and officer of IMA and
a director and officer of Golden Arrow.  Nikolaos  Cacos is an officer of IMA, a
director  and officer of Golden Arrow and a director and officer of the Company.
Nick DeMare is an officer and director of Gold Point. Mr. DeMare indirectly owns
100% of Chase Management Ltd., a company which provides  consulting  services to
the Company and other Grosso Group  shareholder  companies.  Mr.  Kurschner is a
director of Golden Arrow and an officer and a director of Astral.

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


                                     - 51 -
<PAGE>


BOARD PRACTICES

AUDIT COMMITTEE

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

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

REMUNERATION COMMITTEE

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

SHARE OWNERSHIP

The following table sets forth certain  information  regarding  ownership of the
Company's shares by the Company's officers and directors as of June 19, 2006.

--------------------------------------------------------------------------------
                                        SHARES AND RIGHTS
                                           BENEFICIALLY                PERCENT
TITLE OF CLASS     NAME OF OWNER       OWNED OR CONTROLLED(1)        OF CLASS(1)
--------------------------------------------------------------------------------

Common Stock       Nikolaos Cacos          1,643,532(2)                   8.4%
Common Stock       Joseph Grosso           1,845,491(3)                   9.4%
Common Stock       Robert Coltura            160,832(4)                   0.8%
Common Stock       Jerry Minni               126,549(5)                   0.6%
Common Stock       Lindsay Bottomer           60,000(6)                   0.3%
Common Stock       David A. Terry            160,000(7)                   0.8%
Common Stock       Arthur Lang                10,000(8)                  0.05%
--------------------------------------------------------------------------------
Total                                      4,006,404
================================================================================
NOTES:
(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common  stock  through  the  exercise of  outstanding  options or
     warrants  within 60 days from June 19, 2006,  these  additional  shares are
     deemed to be  outstanding  for the purpose of computing  the  percentage of
     common stock owned by such  persons,  but are not deemed to be  outstanding
     for the purpose of  computing  the  percentage  owned by any other  person.
     Based on 19,205,592 shares of common stock outstanding as of June 19, 2006.
(2)  Includes the following  shares,  options and warrants held by Mr. Cacos and
     Aspasia Cacos (Mr. Cacos' wife):
     a.   1,177,032 shares held by Mr. Cacos;
     b.   67,000 shares held by Mrs. Cacos;
     c.   Options held by Mr. Cacos to acquire 175,000 shares;
     d.   Options held by Mrs. Cacos to acquire 24,500 shares;
     e.   Warrants  held by Mr.  Cacos to acquire  200,000  shares at a price of
          $0.65  per  share,  exercisable  until  February  2, 2008 See "Item 6.
          Directors,  Senior  Management  and Employees - Options,  Warrants and
          Other Rights to Acquire Securities."


                                     - 52 -
<PAGE>


(3)  Includes the  following  shares and options  held by Mr.  Grosso and Evelyn
     Grosso (Mr. Grosso's wife):
     a.   962,180 shares held by Mr. Grosso;
     b.   459,811 shares held by Mrs. Grosso;
     c.   33,500 shares held by Mr. Grosso in an RRSP account
     d.   Options held by Mr. Grosso to acquire 185,000 shares;
     e.   Options held by Mrs. Grosso to acquire 55,000 shares;
     f.   Warrants  held by Mr. Grosso to acquire  100,000  shares at a price of
          $0.65 per share, exercisable until February 2, 2008
     g.   Warrants  held by Mrs.  Grosso to acquire  50,000 shares at a price of
          $0.65  per  share,  exercisable  until  February  2, 2008 See "Item 6.
          Directors,  Senior  Management  and Employees - Options,  Warrants and
          Other Rights to Acquire Securities."
(4)  Includes the following shares, options and warrants held by Mr. Coltura and
     Betty Coltura (Mr. Coltura's wife):
     a.   96,332 shares held by Mr. Coltura
     b.   7,500 shares held by Mrs. Coltura
     c.   Options held by Mr. Coltura to acquire 50,000 shares;
     d.   Warrants  held by Mr.  Coltura to acquire  7,000  shares at a price of
          $0.65 per share  exercisable  until  February  2,  2008.  See "Item 6.
          Directors,  Senior  Management  and Employees - Options,  Warrants and
          Other Rights to Acquire Securities."
(5)  Includes the following shares, options and warrants held by Mr. Minni:
     a.   59,549 shares held by Mr. Minni
     b.   50,000 options; and
     c.   Warrants  held by Mr.  Minni to acquire an  additional  17,000  shares
          shares at a price of $0.65 per share,  exercisable  until  February 2,
          2008  See  "Item 6.  Directors,  Senior  Management  and  Employees  -
          Options, Warrants and Other Rights to Acquire Securities."
(6)  Includes  10,000  shares  held  by Mr.  Bottomer  and  options  held by Mr.
     Bottomer to acquire  40,000 shares and warrants to acquire 10,000 shares at
     a price of $0.65 per share,  exercisable  until February 2, 2008. See "Item
     6. Directors, Senior Management and Employees - Options, Warrants and Other
     Rights to Acquire Securities."
(7)  Includes 40,000 shares held by Mr. Terry, options to acquire 100,000 shares
     and  warrants  to  acquire  20,000  shares at a price of $0.65  per  share,
     exercisable  until  February  2,  2008.  See  "Item  6.  Directors,  Senior
     Management  and  Employees - Options,  Warrants and Other Rights to Acquire
     Securities."
(8)  Includes  5,000  shares held by Mr..  Lang and  warrants  to acquire  5,000
     shares at a price of $0.65 per share,  exercisable  until February 2, 2008.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."

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

OPTIONS, WARRANTS AND OTHER RIGHTS TO ACQUIRE SECURITIES

As of June 19, 2006, the Company had entered into property acquisition or option
agreements pursuant to which up to 1,635,000 common shares of the Company may be
issued. See "Item 4. Information on the Company - Property,  Plant and Equipment
- Principal Properties - Mogote Project" and "Item 4. Information on the Company
- Property, Plant and Equipment - Other Properties - Esperanza Project."

Additionally,  as of June 19,  2006,  the  Company had granted a number of stock
options and issued a number of warrants pursuant to which up to 2,916,500 common
shares of the Company may be issued.  The  following is a brief summary of these
stock options and warrants.


                                     - 53 -
<PAGE>


STOCK OPTIONS

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

ADMINISTRATION OF THE STOCK OPTION PLAN

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

DESCRIPTION OF STOCK OPTION PLAN

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

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

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

(a)      for each  organized  trading  facility  on which the common  shares are
         listed,  Market Value will be the closing  trading  price of the common
         shares  on the day  immediately  preceding  the  grant  date  less  any
         discounts permitted by the applicable regulatory authorities;
(b)      if the  Company's  common  shares are listed on more than one organized
         trading  facility,  the  Market  Value  shall  be the  Market  Value as
         determined in accordance  with  subparagraph  (a) above for the primary
         organized  trading  facility on which the common shares are listed,  as
         determined  by the  Board  (or a  committee  thereof),  subject  to any
         adjustments  as may be  required  to secure  all  necessary  regulatory
         approvals;
(c)      if the  Company's  common  shares are  listed on one or more  organized
         trading  facilities  but have not traded  during the ten  trading  days
         immediately  preceding  the grant date,  then the Market  Value will be
         determined  by the  Board  (or a  committee  thereof),  subject  to any
         adjustments  as may be  required  to secure  all  necessary  regulatory
         approvals; and
(d)      if the  Company's  common  shares are not listed for trading on a stock
         exchange or over the counter  market,  the value which is determined by
         the  Board  (or a  committee  thereof)  to be  the  fair  value  of the
         Company's common shares, taking into consideration all factors that the
         Board (or a committee  thereof) deems appropriate,  including,  without
         limitation,  recent sale and offer  prices of the  Company's  shares in
         private transactions negotiated at arms' length.

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

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

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


                                     - 54 -
<PAGE>


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

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

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

As of June 19,  2006,  an  aggregate of  1,504,500  incentive  stock  options to
purchase  shares  of  the  Company's  common  stock  remain  outstanding  to the
following persons:

--------------------------------------------------------------------------------
                            NATURE          NO. OF     EXERCISE    EXPIRY
OPTIONEE                    OF OPTION(1)   OPTIONS   PRICE/SHARE   DATE
                                                          $
--------------------------------------------------------------------------------

Gerry Carlson               Consultant      25,000       0.60      Dec 12, 2008
Nick DeMare                 Consultant      50,000       0.60      Dec 12, 2008
Nikolaos Cacos              Director       125,000       0.60      Dec 12, 2008
Sean Hurd                   Consultant     100,000       0.60      Dec 12, 2008
Steve Phillips              Consultant      75,000       0.60      Dec 12, 2008
Juan Carlos Berretta        Consultant      25,000       0.60      Dec 12, 2008
William Lee                 Consultant      25,000       0.60      Dec 12, 2008
Joseph Grosso               Director       100,000       0.60      Dec 12, 2008
Carlo Timossi               Consultant      50,000       0.60      Dec 12, 2008
Evelyn Grosso               Consultant      55,000       0.60      Dec 12, 2008
Robert Coltura              Director        50,000       0.60      Dec 12, 2008
Jerry Minni                 Director        50,000       0.60      Dec 12, 2008
Louis P. Salley             Consultant      25,000       0.60      Dec 12, 2008
Robert Weicker              Consultant      25,000       0.60      Dec 12, 2008
Carlos D'Amico              Employee       100,000       0.60      Dec 12, 2008
Judy Wong                   Consultant      20,000       0.60      Dec 12, 2008
David Terry                 Officer         60,000       0.90      Apr 2, 2009
Lindsay Bottomer            Director        40,000       0.90      Apr 2, 2009
Gerry Carlson               Consultant      25,000       0.90      Apr 2, 2009
Diane Reeves                Consultant      25,000       0.90      Apr 2, 2009
Tookie Angus                Consultant      45,000       0.90      Apr 2, 2009
Sean Hurd                   Consultant      50,000       0.90      Apr 2, 2009
Nikolaos Cacos              Consultant      50,000       0.90      Apr 2, 2009
Aspasia Cacos               Consultant      24,500       0.90      Apr 2, 2009
Joseph Grosso               Director        85,000       0.90      Apr 2, 2009
Steve Phillips              Consultnat      25,000       0.90      Apr 2, 2009
Nick DeMare                 Consultant      25,000       0.90      Apr 2, 2009
David Terry                 Officer         40,000       0.75      Mar 21, 2010
Lee Shane                   Consultant      10,000       0.75      Mar 21, 2010
Campbell Smyth              Consultant      75,000       0.75      Mar 21, 2010
Claudia Sandoval            Consultant      25,000       0.75      Mar 21, 2010
                                         ---------
TOTAL:                                   1,504,500
                                         =========


                                     - 55 -
<PAGE>


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

As of June 19, 2006,  the directors  and officers of the Company,  as a group (7
persons), held options to purchase 624,500 shares of the Company's common stock,
including options held by their spouses.

WARRANTS

As of June 19, 2006, there were non-transferable  common share purchase warrants
exercisable  for the  purchase  of  1,412,000  common  shares,  which  expire on
February 2, 2008 and may be exercised at $0.65 per share.

As of June 19, 2006,  the directors  and officers of the Company,  as a group (7
persons),  held  warrants to purchase  359,000  shares of the  Company's  common
stock.

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

EMPLOYEES REVIEW

As of the date of this annual report the Company has no employees other than the
Company's officers. The Company's officers serve on a part-time basis and, given
the current level of the Company's  activities,  management does not believe the
Company requires full-time employees. See "Item 6. Directors,  Senior Management
and Employees - Directors and Senior  Management."  During the fiscal year ended
December 31, 2005, the Company directly  employed  Nikolaos Cacos and indirectly
employed   approximately  20  employees  through  the  Administration   Services
Agreement with the Grosso Group, including corporate, accounting, geological and
administrative  services.  The Company has one  part-time  employee in its Lima,
Peru office.  The Company  entered into a management  agreement  with the Grosso
Group,  effective  January 1, 2005,  pursuant to which  employees  of the Grosso
Group provide services to the Company. See "Item 6. Directors, Senior Management
and Employees - Management  Contracts - Grosso Group  Management Ltd." and "Item
7.  Major   Shareholders   and  Related  Party   Transactions  -  Related  Party
Transactions."  During the year ended  December 31,  2004,  the Company had five
part-time  employees,  Nikolaos Cacos, Joseph Grosso,  Jerry Minni, David Terry,
and Arthur Lang. During the fiscal year ended December 31, 2003, the Company had
two part-time employees,  Nikolaos Cacos and Jerry Minni. During the fiscal year
ended  December  31,  2003,  the  Company  also  utilized  the  services  of two
geologists.  During the fiscal  years  ended  December  31,  2002 and 2001,  the
Company had one part-time employee,  Nikolaos Cacos. The Company's needs will be
dependent upon its level of exploration programs and financial condition.


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
--------------------------------------------------------------------------------

PRINCIPAL HOLDERS OF VOTING SECURITIES

The following table sets forth certain  information  regarding  ownership of the
Company's shares by the Company's  officers and directors as a group, as well as
all  persons  who own five  percent  (5%) or more of the  Company's  outstanding
shares, as of June 19, 2006.

--------------------------------------------------------------------------------
                                              SHARES AND RIGHTS
TITLE OF CLASS         NAME AND ADDRESS      BENEFICIALLY OWNED       PERCENT OF
                          OF OWNER            OR CONTROLLED(1)          CLASS(1)
--------------------------------------------------------------------------------

Common Stock           Nikolaos Cacos            1,643,532(2)            8.55%

Common Stock           Joseph Grosso             1,845,491(3)            9.60%

--------------------------------------------------------------------------------

NOTES:
(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common  stock  through  the  exercise of  outstanding  options or
     warrants  within 60 days from May 31,  2006,  these  additional  shares are



                                     - 56 -
<PAGE>

     deemed to be  outstanding  for the purpose of computing  the  percentage of
     common stock owned by such  persons,  but are not deemed to be  outstanding
     for the purpose of  computing  the  percentage  owned by any other  person.
     Based on 19,205,592 shares of common stock outstanding as of June 19, 2006.
(2)  Includes the  following  shares,  options an warrants held by Mr. Cacos and
     Aspasia Cacos (Mr. Cacos' wife):
     a.   1,177,032 shares held by Mr. Cacos;
     b.   67,000 shares held by Mrs. Cacos;
     c.   Options held by Mr. Cacos to acquire 175,000 shares;
     d.   Options held by Mrs. Cacos to acquire 24,500 shares;
     e.   Warrants  held by Mr.  Cacos to acquire  200,000  shares at a price of
          $0.65  per  share,  exercisable  untilFebruary  2,  2008 See  "Item 6.
          Directors,  Senior  Management  and Employees - Options,  Warrants and
          Other Rights to Acquire Securities."
(3)  Includes the  following  shares and options  held by Mr.  Grosso and Evelyn
     Grosso (Mr. Grosso's wife):
     a.   962,180 shares held by Mr. Grosso;
     b.   459,811 shares held by Mrs. Grosso;
     c.   33,500 shares held by Mr. Grosso in an RRSP
     d.   Options held by Mr. Grosso to acquire 185,000 shares;
     e.   Options held by Mrs. Grosso to acquire 55,000 shares;
     f.   Warrants  held by Mr. Grosso to acquire  100,000  shares at a price of
          $0.65 per share exercisable until February 2, 2008
     g.   Warrants  held by Mrs.  Grosso to acquire  50,000 shares at a price of
          $0.65  per  share  exercisable  until  February  2,  2008 See "Item 6.
          Directors,  Senior  Management  and Employees - Options,  Warrants and
          Other Rights to Acquire Securities."

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

CHANGES IN SHAREHOLDINGS

Initially,  the Company had one share issued and outstanding,  which was held by
Joseph Grosso.  Mr. Grosso transferred the single outstanding share to Mr. Cacos
on April  11,  2000.  Subsequently,  Messrs.  Cacos  and  Grosso  have  acquired
additional  shares of the  Company's  common  stock in private  placements,  the
initial public offering and purchases through the TSX Venture.

ESCROW SHARES

Under  the   applicable   policies  and  notices  of  the  Canadian   Securities
Administrators  securities held by Principals (as defined below) are required to
be held in escrow in accordance  with the national  escrow regime  applicable to
initial  public   distributions.   Equity  securities  owned  or  controlled  by
Principals,  including common shares,  special warrants and common shares issued
on the exercise of previously issued special  warrants,  (except for 10% of each
Principal's holdings of common shares) are subject to the escrow requirements.

Principals  include  all persons or  companies  that (on the  completion  of the
Company's  initial public  offering in December 1, 2003 (the  "Offering"),  were
included in one of the following categories:

         (i)      directors and senior  officers of the Company or of a material
                  operating   subsidiary  of  the  Company,  as  listed  in  the
                  Company's prospectus for the Offering;
         (ii)     promoters of the Company  during the two years  preceding  the
                  Offering;
         (iii)    those  who  owned  and/or  controlled  more  than  10%  of the
                  Company's voting  securities  immediately  after completion of
                  the  Offering  if they  also  appointed  or had the  right  to
                  appoint a director  or senior  officer of the  Company or of a
                  material operating subsidiary of the Company;
         (iv)     those  who  owned  and/or  controlled  more  than  20%  of the
                  Company's voting  securities  immediately  after completion of
                  the Offering; and
         (v)      associates and affiliates of any of the above.

The  Principals of the Company were all of the directors and senior  officers of
the Company after the Offering, which were Messrs. Cacos, Minni and Coltura (and
included Mr. Cacos'  wife).  Pursuant to an agreement  (the "Escrow  Agreement")
dated as of April 30, 2003 among the  Company,  Computershare  Trust  Company of
Canada (the "Escrow  Agent") and the  Principals of the Company,  the Principals
agreed to deposit in escrow their common shares (the "Escrowed Securities") with
the Escrow Agent.  The Escrow  Agreement  provides that the Escrowed  Securities
will be released  from escrow in equal blocks at 6 month  intervals  over the 36
months  following  the  issue of the final  receipt  for the  prospectus  in the
Offering (November 3, 2003).


                                     - 57 -
<PAGE>


The Company is an "emerging  issuer" as defined in the  applicable  policies and
notices of the Canadian  Securities  Administrators  and if the Company achieves
"established  issuer"  status during the term of the Escrow  Agreement,  it will
"graduate"  resulting in a catch-up  release and an  accelerated  release of any
securities  remaining  in  escrow  under  the 18 month  schedule  applicable  to
established  issuers as if the  Company had  originally  been  classified  as an
established issuer.

Pursuant to the terms of the Escrow Agreement, the securities held in escrow may
not be  transferred  or  otherwise  dealt  with  during  the term of the  Escrow
Agreement unless the transfers or dealings within the escrow are:

         (i)      transfers to continuing or, upon their  appointment,  incoming
                  directors and senior  officers of the Company or of a material
                  operating subsidiary,  with approval of the Company's board of
                  directors;
         (ii)     transfers to an RRSP or similar trustee plan provided that the
                  only  beneficiaries  are the  transferor  or the  transferor's
                  spouse or children;
         (iii)    transfers upon bankruptcy to the trustee in bankruptcy; and
         (iv)     pledges to a financial  institution  as collateral  for a BONA
                  FIDE loan,  provided  that upon a realization  the  securities
                  remain subject to escrow.  Tenders of Escrowed Securities to a
                  take-over bid are permitted  provided that, if the tenderer is
                  a Principal of the successor  corporation  upon  completion of
                  the  take-over  bid,   securities  received  in  exchange  for
                  tendered Escrowed  Securities are substituted in escrow on the
                  basis of the successor corporation's escrow classification.

The  following  table sets forth  details of the issued and  outstanding  common
shares that are subject to the Escrow  Agreement  which  reflects the release of
June 2, 2006:

         -------------------------------------------------------
                                      NO. OF             % OF
                                     ESCROWED        OUTSTANDING
         NAME                         SHARES           SHARES(2)
         -------------------------------------------------------

         Nikolaos Cacos(1)           129,363             0.67%
         Robert Coltura(1)            18,649             0.09%
         Jerry A. Minni(1)            19,582             0.10%
         Bruno Faccin                 56,391             0.29%
         Susana Sueldo                 6,899             0.04%
         Sean Hurd                    16,725             0.09%
         Alfie Colucci                56,391             0.29%
         Angelo Colucci               56,391             0.29%
         Evelyn Grosso                56,391             0.29%
         Joseph J. Grosso             56,391             0.29%
         Orianna Maiorano             56,391             0.29%
         Vince Maiorano               56,391             0.29%
         Marianna de Simone           56,391             0.29%
         Aspasia Michoulas(1)         10,050             0.05%
         -------------------------------------------------------
         TOTAL                       652,396             3.39%
         =======================================================

    (1)  Includes 52,398 Special  Warrants  convertible into common shares
         upon the Company obtaining  regulatory approval of the prospectus
         for the Offering from the Securities Commissions.
    (2)  Based upon  19,205,592  shares of common stock  outstanding as of
         June 19, 2006.

The remaining shares in escrow will be released on December 2, 2006.

UNITED STATES SHAREHOLDERS

As of June 19, 2006,  there were 2 registered  holders of the  Company's  common
shares  in  the  United  States,   with  combined   holdings  of  4,000  shares,
representing  0.02% of the issued  shares of the Company on June 19,  2006.  The
Company  does not know how many  beneficial  shareholders  it has in the  United
States, but management believes there are less than 300 such shareholders.



                                     - 58 -
<PAGE>


CONTROL BY FOREIGN GOVERNMENT OR OTHER PERSONS

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

CHANGE OF CONTROL

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

RELATED PARTY TRANSACTIONS

Other than as  disclosed  below,  from January 1, 2006 through June 19, 2006 the
Company has not entered into any  transactions  or loans between the Company and
any:  (a)  enterprises   that  directly  or  indirectly   through  one  or  more
intermediaries,  control or are controlled by, or are under common control with,
the Company; (b) associates;  (c) individuals owning, directly or indirectly, an
interest  in the  voting  power  of the  Company  that  gives  them  significant
influence over the Company,  and close members of any such individuals'  family;
(d) key management personnel and close members of such individuals' families; or
(e)  enterprises  in which a substantial  interest in the voting power is owned,
directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.

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

                           EXPLORATION
                           EXPENDITURES          DATE
                               US$

                            1,000,000            May 30, 2005
                            1,000,000            May 30, 2006
                            1,000,000            May 30, 2007
                           ----------
                            3,000,000
                           ==========

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

            ----------------------------------------------------------------
            DATE FOR COMPLETION         EXPENDITURES            CUMULATIVE
                                            US $                    US $
            ----------------------------------------------------------------

            July 1, 2004                   250,000                250,000
            May 30, 2005                 1,000,000              1,250,000
            July 1, 2005                   300,000              1,550,000
            May 30, 2007(1)              1,000,000              2,550,000
            July 1, 2007(1)                300,000              2,850,000
            May 30, 2008(1)              1,000,000              3,850,000
            July 1, 2008(1)                400,000              4,250,000
            ----------------------------------------------------------------
            Total                        4,250,000
            ================================================================

            (1) The dates  subsequent  to December  31, 2005 reflect the May
                2006 amendment to the agreement:  Subsequent to December 31,
                2005  the   Company   appointed  a  special   committee   of
                independent  directors  to  re-negotiate  the  terms  of the
                Mogote   property   option   agreement  with  Golden  Arrow.


                                     - 59 -
<PAGE>

                According  to the  resolutions  adopted  by  both  companies
                Boards, the US$1,000,000  property  expenditures required by
                May 30,  2006  are now  extended  to May  30,  2007  and the
                US$1,000,000 property expenditures required May 30, 2007 are
                now extended to May 30, 2008.  In return for granting of the
                extension,  10% of any  payments,  in terms of cash or stock
                received by the  Company  from a third party who enters into
                an agreement regarding the Mogote property,  will be paid to
                the Golden Arrow.

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

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

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

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

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

4).      Effective  January 2, 2004, the Company  entered into an agreement with
         the President of the Company for his services.  See "Item 6. Directors,
         Senior  Management  and Employees - Employment  Agreements."  Under the
         contract the  President  was paid $6,125 per month.  On May 1, 2006 the
         monthly fee  increased  to $7,292.  During the three months ended March
         31, 2006,  the Company paid $21,375 (2005 - $18,375) to the  President.
         The  contract  also  provides  that,  in the  event  the  services  are
         terminated  without cause or upon a change in control of the Company, a
         termination  payment would include eighteen months of compensation plus
         a bonus amount agreed to by the parties.

5).      The  following  table  provides a listing of the  offerings and private
         placements conducted by the Company,  during the period from January 1,
         2004  through  June 19,  2006,  along  with the names of the  officers,


                                     - 60 -
<PAGE>


         directors and/or principal  shareholders which purchased  securities in
         these offerings and private placements and the use of proceeds:


<TABLE>
<CAPTION>
                                                                                               PURCHASE   MARKET
                                                                               PARTICIPATION     PRICE    PRICE(1)
         PLACEE                                                                 BY INSIDERS        $         $
         ---------------------------------------------------------------------------------------------------------
        <S>                                                                        <C>         <C>       <C>

         PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 19, 2006
         -----------------------------------------------------------------

         Exercise of Greenshoe Option - 225,000 units.                                            0.45       N/A

         The agent exercised the greenshoe option in January 2004. The
         option entitled the agent to purchase 225,000 units at $0.45
         less an 8% commission.

              Gross Proceeds:                $ 101,250
              Commissions and Finders' Fees: $ 8,100
              Offering Costs:                $ None
              Net Proceeds:                  $ 93,150
              Use of Proceeds:               Working Capital

         No participation by officers, directors or principal shareholders             None
         -----------------------------------------------------------------       ==========

         Private Placement - 1,257,000 units.                                                     0.55      0.68

         Each unit comprised one common share and one non-transferable
         share purchase warrant. Each warrant entitles the holder to
         purchase one additional common share at a price of $0.67 per
         share on or before January 20, 2005. As at December 31, 2003,
         $658,350 had been received by the Company on account of the
         private placement and had been recorded as share subscriptions
         received.

              Gross Proceeds:                $ 691,350.00
              Commissions and Finders' Fees: $ none
              Offering Costs:                $ 3,956.75
              Net Proceeds:                  $ 687,393.25
              Use of Proceeds:   Mineral Exploration, administration
                                 costs and working capital

         No participation by officers, directors or principal shareholders             None
         -----------------------------------------------------------------       ==========

         Private Placement - 2,750,000 units.                                                     0.80      0.98

         Each unit comprised one common share and one non-transferable
         share purchase warrant. On the non-brokered portion, each
         warrant entitles the holder to purchase one additional common
         share for a period of two years, at a price of $1.00 per share
         on or before March 24, 2005 and at $1.20 per share on or before
         March 24, 2006. On the brokered portion, each warrant entitles
         the holder to purchase one additional common share for a
         period of two years, at a price of $1.00 per share on or before
         March 31, 2005 and at $1.20 per share on or before March 31, 2006.

              Gross Proceeds:                $ 2,200,000.00
              Commissions and Finder's Fees: $ 96,560 in cash.
                                 The Company also issued 55,300 units
                                 on the same terms and basis
                                 as the private placement, and issued
                                 168,000 warrants. Each warrant entitles
                                 the holder to purchase one common share
                                 of the Company at $0.90 per share on or
                                 before March 31, 2006
              Offering Costs:                $ 57,401.19
              Net Proceeds:                  $ 2,001,798.81
              Use of  Proceeds:  Mineral Exploration, administration
                                 costs, offering costs and working capital

         Nikolaos Cacos (2)                                                         208,000
         Robert Coltura                                                               6,000
         Lindsay Bottomer                                                             5,000
                                                                                 ----------
         Total                                                                      219,000
         -----------------------------------------------------------------       ==========


                                     - 61 -
<PAGE>

<CAPTION>
                                                                                               PURCHASE   MARKET
                                                                               PARTICIPATION     PRICE    PRICE(1)
         PLACEE                                                                 BY INSIDERS        $         $
         ---------------------------------------------------------------------------------------------------------
        <S>                                                                        <C>         <C>       <C>

         Private Placement - 1,650,000 units.                                                    $0.55     $0.58

         Each unit comprised one common share and one/half non-transferable
         share purchase warrant. Each whole warrant entitles the holder
         thereof to purchase one common share in the capital of the Company
         for one year at a purchase price of $0.60 per share on or before
         March 18, 2006.

              Gross Proceeds:                $ 907,500.00
              Commissions and Finder's Fees: $ 35,510.00 in cash
                                 plus $5,300.00 in
                                 administration fees and expenses. The
                                 Company issued 14,962 units, on the
                                 same terms and basis as the private
                                 placement, and issued 66,750 warrants
                                 on the same terms. The Company also
                                 issued 27,000 common shares and 13,500
                                 warrants representing the corporate
                                 finance fee on the brokered portion.
                                 All of the warrants are exercisable for
                                 one year at a purchase price of $0.60
                                 per share on or before March 18, 2006.
              Offering Costs:                $ None
              Net Proceeds:                  $ 845,549.10
              Use of  Proceeds:  Mineral Exploration, administration costs,
                                 offering costs and working capital

         Lindsay Bottomer                                                             5,000
         Robert Coltura                                                              10,000
         Evelyn Grosso (wife of Joseph Grosso)                                      100,000
                                                                                 ----------
         Total                                                                      115,000
         -----------------------------------------------------------------       ==========

         Private Placement - 1,412,000 units                                                      $0.60      $0.59

         Each unit  comprised  one  common  share and one  non-transferable
         share purchase  warrant.  Each warrant entitles the holder thereof
         to purchase  one common  share in the capital of the Company on or
         before February 2, 2008 at a purchase price of $0.65.

              Gross Proceeds:                $847,200
              Commissions and Finder's Fees: None
              Offering Costs:                $4,735
              Net Proceeds:                  $842,465.
              Use of Proceeds:   Mineral Exploration, administration costs and
                                 working capital

         Nikolaos Cacos                                                             200,000
         Joseph Grosso                                                              100,000
         Robert Coltura                                                               7,000
         Lindsay Bottomer                                                            10,000
         Jerry Minni                                                                 17,000
         David Terry                                                                 12,000
         Arthur Lang                                                                  5,000
                                                                                 ----------
         Total                                                                      351,000
         -----------------------------------------------------------------       ==========
</TABLE>

         (1)   Quoted closing price on date of announcement of private placement
               or offering.
         (2)   Includes 10,000 units purchased by Nikolaos Cacos (RRSP Account).

         (3)   A greenshoe option is an underwriting  agreement  provision of an
               IPO (Initial Public  Offering) that allows  syndicate  members to
               buy  additional  shares at the  original  price if the  demand is
               high.  The name comes from the fact that the "Green Shoe Company"
               was the first to issue this type of option.

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

7).      The Company has engaged  the  services of the Grosso  Group,  effective
         January  1,  2005.  See  "Item  6.  Directors,  Senior  Management  and
         Employees  -  Employment  Agreements  - Grosso  Group." The Company has
         entered  into an  Administration  Services  Agreement  by and among the
         Company,  Golden Arrow,  Gold Point , IMA, Astral and the Grosso Group,
         effective  January 1, 2005. Mr. Cacos became an officer and director of
         the Grosso Group.  Joseph  Grosso,  an officer,  director and principal
         shareholder  of the  Company is also an officer  and  director  of IMA,


                                     - 62 -
<PAGE>


         Golden Arrow, Gold Point and the Grosso Group.  David Terry, an officer
         of the Company,  is an officer and  director of IMA,  Astral and Golden
         Arrow.  Arthur  Lang,  an officer  of the  Company,  is an officer  and
         director of IMA,  Golden Arrow and the Grosso  Group.  Nick DeMare,  an
         officer and director of Gold Point , is a director of the Grosso Group.
         Chase  Management  Ltd.,  a  company  indirectly  owned by Mr.  DeMare,
         provides  services  to  the  Company  and  to the  other  Grosso  Group
         shareholder companies.

INDEBTEDNESS OF DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT

During the fiscal  years  ended  December  31,  2003,  2004,  2005,  none of the
following were indebted to the Company:

         (a)      enterprises  that directly or  indirectly  through one or more
                  intermediaries,  control  or are  controlled  by, or are under
                  common control with, the Company;
         (b)      associates;
         (c)      individuals owning, directly or indirectly, an interest in the
                  voting  power  of the  Company  that  gives  them  significant
                  influence  over the  Company,  and close  members  of any such
                  individuals' family;
         (d)      key   management   personnel   and  close   members   of  such
                  individuals' families; or
         (e)      enterprises  in which a  substantial  interest  in the  voting
                  power  is  owned,  directly  or  indirectly,   by  any  person
                  described in (c) or (d) or over which such a person is able to
                  exercise significant influence.

INTERESTS OF EXPERTS AND COUNSEL

Not applicable.


ITEM 8.  FINANCIAL INFORMATION.
--------------------------------------------------------------------------------

DESCRIPTION                                                            PAGES
-------------------------------------------------                    -----------
Audited Financial Statements for the Years Ended
December 31, 2005, 2004 and 2003                                     F-1 to F-25


SIGNIFICANT CHANGES

Subsequent to December 31, 2005, the Company received  $847,200 less share issue
costs of $4,735 from private placement and $716,700 from exercise of warrants.

DIVIDEND POLICY

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

LEGAL PROCEEDINGS

None.


ITEM 9.  THE OFFER AND LISTING.
--------------------------------------------------------------------------------

PRICE HISTORY

The Company's  common stock commenced  trading on the TSX Venture on December 2,
2003. The Company's stock  currently  trades on the TSX Venture under the symbol
"AMS" and CUSIP number 02351P105.

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


                                     - 63 -
<PAGE>


                   TSX VENTURE EXCHANGE STOCK TRADING ACTIVITY

                                                    ---------------------------
                                                          SALES PRICE ($)
---------------------         ---------             ---------------------------
YEAR ENDED                       VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
December 31, 2005            12,673,600                 0.94            0.35
December 31, 2004             7,113,900                 1.12            0.35
December 31, 2003(1)          1,444,847                 0.95            0.60

(1) Period from December 2, 2003 to December 31, 2003.

                                                    ---------------------------
                                                          SALES PRICE ($)
---------------------         ---------             ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
March 31, 2006                2,249,900                 0.70            0.41
December 31, 2005             3,247,900                 0.73            0.51
September 30, 2005            1,290,900                 0.80            0.46
June 30, 2005                 8,988,100                 0.35            0.94
March 31, 2005                1,537,808                 0.74            0.40
December 31, 2004             1,076,700                 0.77            0.48
September 30, 2004            1,033,400                 0.70            0.35
June 30, 2004                 1,931,600                 1.12            0.40

                                                    ---------------------------
                                                          SALES PRICE ($)
---------------------         ---------             ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
May 31, 2006                    763,800                 0.60            0.41
April 30, 2006                1,440,600                 0.70            0.52
March 31, 2006                1,325,400                 0.70            0.54
February 28, 2006               837,400                 0.64            0.51
January 31, 2006              1,085,100                 0.73            0.51
December 31, 2005               491,700                 0.57            0.46


                           PINK SHEET TRADING ACTIVITY

The Company's common shares have been listed in the Pink Sheets under the symbol
"AJRSF"  since January  2004.  The  following  tables set forth the market price
ranges and the  aggregate  volume of trading of the common shares of the Company
in  the  Pink  Sheets  for  the  periods  indicated.  These  quotations  reflect
inter-dealer  prices without retail mark-up,  mark-down,  or commissions and may
not necessarily represent actual transactions.

                                                    ---------------------------
                                                      CLOSING SALES PRICE (US$)
---------------------         ---------             ---------------------------
YEAR ENDED                       VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
December 31, 2005               365,910                 0.76            0.30
December 31, 2004               330,750                 0.84            0.27

                                                    ---------------------------
                                                      CLOSING SALES PRICE (US$)
---------------------         ---------             ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
March 31, 2006                  151,900                 0.62            0.47
December 31, 2005                87,970                 0.68            0.41
September 30, 2005              145,430                 0.76            0.30


                                     - 64 -
<PAGE>

                                                    ---------------------------
                                                      CLOSING SALES PRICE (US$)
---------------------         ---------             ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
June 30, 2005                    76,230                 0.41            0.30
March 31, 2005                   56,280                 0.54            0.41
December 31, 2004                34,450                 0.64            0.41
September 30, 2004               75,200                 0.30            0.27
June 30, 2004                    79,300                 0.84            0.30

                                                    ---------------------------
                                                      CLOSING SALES PRICE (US$)
---------------------         ---------             ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
---------------------         ---------             ------------   ------------
May 31, 2006                     66,800                 0.48            0.41
April 30, 2006                  103,950                 0.57            0.47
March 31, 2006                   77,000                 0.562           0.465
February 28, 2006                24,000                 0.62            0.47
January 31, 2006                 50,900                 0.58            0.48
December 31, 2005                31,200                 0.53            0.46

As of June 19, 2006,  the Company's  shares were not being traded on an exchange
in the United States,  and there was no established  market in the United States
for the Company's shares.

The  Company  intends to seek a listing  for its shares on the  Over-the-Counter
Bulletin Board operated by the National  Association of Securities Dealers.  The
Company does not know if, or when, it will obtain such a listing.

REGISTRATION, TRANSFER AND PAR VALUE

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

RESTRICTIONS ON TRANSFERABILITY

A total of 652,396 common shares are subject to TSX Venture resale  restrictions
and are held in escrow as of June 19, 2006. See "Item 7. Major  Shareholders and
Related Party Transactions - Escrow Shares."


ITEM 10.  ADDITIONAL INFORMATION.
--------------------------------------------------------------------------------

SHARE CAPITAL

Not Applicable

MEMORANDUM AND ARTICLES OF ASSOCIATION

Previously  described  in  registration  statement  with  an  effective  date of
December 27, 2004

MATERIAL CONTRACTS

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

1.       Stock Option Plan dated April 13, 2004. See "Item 6. Directors,  Senior
         Management  and  Employees  -  Options,  Warrants  and Other  Rights to
         Acquire Securities - Stock Options."

2.       Management  Agreement  with Nikolaos  Cacos dated January 2, 2004.  See
         "Item 6.  Directors,  Senior  Management  and  Employees  -  Employment
         Agreements."


                                     - 65 -
<PAGE>


3.       Amending Letter Agreement made among the Company,  IMA Exploration Inc.
         and Inversiones  Mineras Argentinas S.A. dated April 8, 2004. See "Item
         4.  Information  on the  Company  -  Property,  Plant and  Equipment  -
         Principal  Properties - Mogote Project" and "Item 7. Major Shareholders
         and Related Party Transactions - Related Party Transactions."

4.       Assignment  and  Assumption  Agreement  dated  June 28,  2004 among the
         Company,  IMA Exploration Inc.,  Inversiones  Mineras  Argentinas S.A.,
         Golden Arrow Resources  Corporation,  and Inversiones Mineras Australes
         S.A. relating to the Company's Argentinean properties.

5.       Assignment  and  Assumption  Agreement  dated  June 28,  2004 among the
         Company,  IMA Exploration Inc.,  Inversiones  Mineras  Argentinas S.A.,
         Golden Arrow Resources  Corporation,  and Inversiones Mineras Australes
         S.A. relating to the Mogote property.

6.       Letter Agreement dated August 24, 2004 between the Company and Arcturus
         Ventures Inc. See "Item 4. Information on the Company - Property, Plant
         and Equipment - Other Properties - Esperanza Project."

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

8.       Property  option  agreement  between  the  Company  and  Carlos  Martin
         Thompson Palacoos dated May 11, 2005, pursuant to which the Company may
         earn up to 100% undivided interest in the Cruz de Mayo Property located
         in the southern portion of the Department of Cuzco in Peru. To earn the
         interest in the  property  the  Company  must pay US $150,000 in option
         payments to the Vendor over the period of four years (US $15,000  paid)
         and incur US $1,500,000 expenditures over the four years as follows:

                            EXPLORATION
                            EXPENDITURES     DATE
                                US $

                                 50,000      May 11, 2006
                                200,000      May 11, 2007
                                500,000      May 11, 2008
                                750,000      May 11, 2009
                              ---------
                              1,500,000
                              =========

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


                                     - 66 -
<PAGE>


EXCHANGE CONTROLS

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

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

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

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

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

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

TAXATION

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES

Management  of the  Company  considers  that  the  following  discussion  fairly
describes the material Canadian federal income tax consequences  applicable to a
holder of common stock of the Company who is a resident of the United States and
who is not a resident of Canada and who does not use or hold,  and is not deemed


                                     - 67 -
<PAGE>


to use or hold,  his shares of common  stock of the Company in  connection  with
carrying on a business in Canada (a "non-resident shareholder").

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

DIVIDENDS

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

CAPITAL GAINS

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

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

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

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

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

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



                                     - 68 -
<PAGE>


U.S. HOLDERS

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

DISTRIBUTIONS ON SHARES OF COMMON STOCK

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

FOREIGN TAX CREDIT

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

DISPOSITION OF SHARES OF COMMON STOCK

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


                                     - 69 -
<PAGE>

are corporations (other than corporations  subject to Subchapter S of the Code),
an unused net  capital  loss may be carried  back three years from the loss year
and carried  forward five years from the loss year to be offset against  capital
gains until such net capital loss is thereby exhausted.

OTHER CONSIDERATIONS

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

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

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

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

INFORMATION REPORTING AND BACKUP WITHHOLDING

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

CONSENTS OF EXPERTS

The Company's  auditors for its financial  statements  for each of the preceding
three years was Moore Stephens Ellis Foster, Chartered Accountants, (now Ernst &
Young ) of 700 West Georgia Street, P.O. Box 10101, Vancouver, British Columbia,
V7Y 1C7,  Canada.  See "Item 1.  Directors,  Senior  Management  and  Advisors -
Auditors." Their audit report for the fiscal years ended December 31, 2005, 2004
and 2003 are  included  with the  related  financial  statements  in this annual
report statement with their consent.

INSPECTION OF DOCUMENTS

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


                                     - 70 -
<PAGE>


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


ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------------------

Not applicable.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
--------------------------------------------------------------------------------

OPTIONS AND OTHER RIGHTS TO PURCHASE SECURITIES

Stock options to purchase  securities from the Company are currently  granted to
directors,  officers and employees of the Company and independent consultants on
terms and conditions under the Plan, as described in "Item 6. Directors,  Senior
Management  and  Employees  -  Options,  Warrants  and Other  Rights to  Acquire
Securities."

As of June  19,  2006,  the  Company  had  granted  an  aggregate  of  1,504,500
non-transferable  incentive  stock  options to purchase  shares of the Company's
common stock. See "Item 6. Directors, Senior Management and Employees - Options,
Warrants and Other Rights to Acquire Securities."

The  Company  has  issued  warrants  which  are  exercisable  for  shares of the
Company's common stock. As of June 19, 2006, there were non-transferable  common
share purchase warrants exercisable for the purchase of 1,412,000 common shares,
as described in "Item 6. Directors,  Senior  Management and Employees - Options,
Warrants and Other Rights to Acquire Securities."

All of the  Company's  outstanding  options and warrants are subject to standard
anti-dilution provisions.

As of June 19, 2006, the Company had entered into property acquisition or option
agreements pursuant to which up to 1,635,000 common shares of the Company may be
issued. See "Item 4. Information on the Company - Property,  Plant and Equipment
-  Principal  Properties  - Mogote  Project"  and ""Item 4.  Information  on the
Company - Property, Plant and Equipment - Other Properties - Esperanza Project."


                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
--------------------------------------------------------------------------------

Not applicable.


ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 15. CONTROLS AND PROCEDURES.
--------------------------------------------------------------------------------

An evaluation was performed under the supervision and with the  participation of
the Company's  management,  including Mr. Cacos,  the Company's  chief executive
officer,   and  Mr.  Lang,  the  Company's  chief  financial  officer,   of  the


                                     - 71 -
<PAGE>


effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures  pursuant to Rules  13a-15(b)  and  15d-15(b) of the  Securities
Exchange Act of 1934 (the  "Exchange  Act") as of December 31, 2005.  Based upon
that evaluation, Messrs. Cacos and Lang, concluded that the Company's disclosure
controls and procedures are effective to ensure that information  required to be
disclosed by the Company in reports that it files or submits  under the Exchange
Act is recorded,  processed,  summarized  and  reported  within the time periods
specified in Securities and Exchange Commission rules and forms.

During the fiscal year ended  December  31,  2005,  there were no changes in the
Company's  internal  control  over  financial  reporting  that  have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT.
--------------------------------------------------------------------------------

The Board of Directors  has  determined  that the Company has at least one audit
committee  financial expert,  Mr. Jerry Minni, who serves on the Company's audit
committee.


ITEM 16B.   CODE OF ETHICS.
--------------------------------------------------------------------------------

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

    -    Honest and ethical conduct, including the ethical handling of actual or
         apparent  conflicts  of  interest  between  personal  and  professional
         relationships;
    -    Full, fair, accurate,  timely, and understandable disclosure in reports
         and  documents  that we file with,  or submit to,  the  Securities  and
         Exchange Commission and in other public communications;
    -    Compliance with applicable governmental laws, rules and regulations;
    -    The prompt  internal  reporting of  violations  of our Code of Business
         Conduct and Ethics;  and
    -    Accountability  for  adherence  to our  Code of  Business  Conduct  and
         Ethics.

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

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

The  Company's  Code of Business  Conduct and Ethics,  Whistleblower  Policy and
Corporate  Disclosure and Insider  Trading Policy may be viewed at the following
website: http://www.ameraresources.com/s/CorporateGovernance.asp.  Additionally,
each document is available in its entirety, free of charge, upon written request
to us,  attention of our Secretary,  at the address listed on the front cover of
this filing.


ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES .
--------------------------------------------------------------------------------

AUDIT FEES

For the fiscal year ended December 31, 2005, the Company's principal  accountant
is  expected  to bill  approximately  $30,000,  and for the  fiscal  year  ended
December 31, 2004,  the  Company's  principal  accountant  billed  approximately
$15,700 for the audit of the Company's annual  financial  statements or services
that are normally  provided by the  accountant in connection  with statutory and
regulatory filings or engagements for those fiscal years.



                                     - 72 -
<PAGE>


AUDIT RELATED AND TAX FEES

The Company's principal accountant billed $1,785 and $Nil amounts for the fiscal
years ended  December 31, 2005 and 2004,  respectively,  for assurance , tax and
related services that were reasonably related to the performance of the audit or
review of the Company's  financial  statements  outside of those fees  disclosed
above under "Audit Fees"

OTHER ACCOUNTING FEES

The Company's  principal  accountant billed $Nil and $3,735 for the fiscal years
ended December 31, 2005 and 2004,  respectively,  for other accounting  services
performed.

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


ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
--------------------------------------------------------------------------------

Not applicable.


ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
--------------------------------------------------------------------------------

Not applicable.



                                    PART III

ITEM 17.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
                                                                        Pages
Audited Financial Statements for the Years Ended
December 31, 2005, 2004 and 2003                                     F-1 TO F-25


ITEM 18.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 19.  EXHIBITS.
--------------------------------------------------------------------------------

      EXHIBIT
      NUMBER      DESCRIPTION

         1.1      Articles (1)
         1.2      Memorandum and Certificate of Incorporation (1)
         1.3      Certificate of Change of Name and Altered Memorandum (1)
         1.4      Notice of Articles (1)
         4.1      Letter  Agreement  dated  October  1,  2002 made  between  the
                  Company and IMA Exploration Inc. (1)
         4.2      Letter of Intent made  between the  Company,  IMA  Exploration
                  Inc. and  Inversiones  Mineras  Argentinas S.A. dated March 6,
                  2003 (1)
         4.3      Property  Purchase  Agreement  made between the  Company,  IMA
                  Exploration Inc. and Inversiones Mineras Argentinas S.A. dated
                  March 6, 2003 (1)


                                     - 73 -
<PAGE>


         4.4      Stock Option Plan dated April 13, 2004 (1)
         4.5      Escrow  Agreement  among  the  Company,   Computershare  Trust
                  Company  of Canada and the  Principals  of the  Company  dated
                  April 30, 2003 (1)
         4.6      Agency  Agreement  between the Company and  Canaccord  Capital
                  Corporation dated July 31, 2003 (1)
         4.7      Amending  Letter  Agreement  made  between  the  Company,  IMA
                  Exploration Inc. and Inversiones Mineras Argentinas S.A. dated
                  September 30, 2003 (1)
         4.8      Agreement with Nikolaos Cacos dated January 2, 2004 (1)
         4.9      Consulting  Agreement with David Terry dated February 16, 2004
                  (1)
         4.10     Engagement Agreement between the Company and Canaccord Capital
                  Corporation dated March 8, 2004 (1)
         4.11     Amending  Letter  Agreement  made  between  the  Company,  IMA
                  Exploration Inc. and Inversiones Mineras Argentinas S.A. dated
                  April 8, 2004 (1)
         4.12     Amendment to Consulting  Agreement with David Terry dated June
                  29, 2004 (1)
         4.13     Assignment and Assumption  Agreement dated June 28, 2004 among
                  IMA Exploration  Inc.,  Inversiones  Mineras  Argentinas S.A.,
                  Golden  Arrow  Resources   Corporation,   Inversiones  Mineras
                  Australes  S.A. and the Company  (relating to the  Argentinean
                  properties) (1)
         4.14     Assignment and Assumption  Agreement dated June 28, 2004 among
                  IMA Exploration  Inc.,  Inversiones  Mineras  Argentinas S.A.,
                  Golden  Arrow  Resources   Corporation,   Inversiones  Mineras
                  Australes  S.A.  and  the  Company  (relating  to  the  Mogote
                  Property) (1)
         4.15     Letter Agreement dated August 24, 2004 between the Company and
                  Arcturus Ventures Inc. (1)
         4.16     Acknowledgement  between the Company and Steven K. Jones dated
                  December 31, 2004(2)
         4.17     Agency Letter  Agreement  dated  February 18, 2005 between the
                  Company and Canaccord Capital Corporation(2)
         4.18     Form of Agreement with the Grosso Group Management Ltd.(2)
         4.19     Amendment to consulting  agreement  with Nikolaos  Cacos dated
                  April 12, 2006.
         4.20     Letter of Intent made  between  the Company and Astral  Mining
                  Corporation dated June 9, 2006.
         4.21     Agreement  between  Recursos  de lo  Andes  S.A.C.,  Company's
                  wholly owned  subsidiary,  and Carlos Martin Thompson Palacoos
                  dated May 11, 2005.
         8.1      List of Subsidiaries(2)
         12.1     Certification of Nikolaos Cacos Pursuant to Rule 13a-14(a)
         12.2     Certification of Arthur Lang Pursuant to Rule 13a-14(a)
         13.1     Certification of Nikolaos Cacos Pursuant to 18 U.S.C.  Section
                  1350
         13.2     Certification  of Arthur Lang  Pursuant  to 18 U.S.C.  Section
                  1350

(1)      Incorporated by reference to the exhibits to the Company's registration
         statement  on  Form  20-F  filed  with  the   Securities  and  Exchange
         Commission on October 28, 2004, file number 0-51005.
(2)      Incorporated by reference to the exhibits to the Company's registration
         statement  on  Form  20-F  filed  with  the   Securities  and  Exchange
         Commission on April 28, 2005, file number 0-51005.
(3)      Incorporated by reference to the exhibits to the Company's registration
         statement  on  Form  20-F  filed  with  the   Securities  and  Exchange
         Commission on June 29, 2005, file number 0-51005.


                                     - 74 -
<PAGE>


                                   SIGNATURES


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


                                         AMERA RESOURCES CORPORATION



Dated:   JUNE 19, 2006                   /s/ NIKOLAOS CACOS
                                         --------------------------------------
                                         Nikolaos Cacos, President and Director


                                     - 75 -
<PAGE>








                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2005, 2004 AND 2003

                         (EXPRESSED IN CANADIAN DOLLARS)







                                      F-1
<PAGE>















MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The  accompanying  consolidated  financial  statements  of the Company have been
prepared by  management  in  accordance  with  accounting  principles  generally
accepted in Canada and reconciled to accounting principles generally accepted in
the  United  States  as set  out in Note  9,  and  contain  estimates  based  on
management's  judgement.  Management maintains an appropriate system of internal
controls to provide  reasonable  assurance  that  transactions  are  authorized,
assets safeguarded, and proper records maintained.

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

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



/s/ NIKOLAOS CACOS                                  /s/ ART LANG

Nikolaos Cacos                                      Art Lang
President                                           Chief Financial Officer






                                      F-2
<PAGE>


[GRAPHIC OMITTED][GRAPHIC OMITTED]
Omitted graphic is ERNST & YOUNG LOGO





                         REPORT OF INDEPENDENT AUDITORS





To the Shareholders of
AMERA RESOURCES CORPORATION
(AN EXPLORATION STAGE COMPANY)

We have audited the  consolidated  balance sheet of AMERA RESOURCES  CORPORATION
(AN  EXPLORATION  STAGE  COMPANY) as at December  31, 2005 and the  consolidated
statements  of loss and deficit  and cash flows for the year then  ended.  These
financial  statements are the  responsibility of the company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with Canadian  generally  accepted auditing
standards and the standards of the Public  Company  Accounting  Oversight  Board
(United  States).  Those standards  require that we plan and perform an audit to
obtain  reasonable  assurance  whether  the  financial  statements  are  free of
material misstatement.  We were not engaged to perform an audit of the Company's
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of the Company as at
December 31, 2005 and the  consolidated  results of its  operations and its cash
flows for the year ended December 31, 2005 in accordance with Canadian generally
accepted accounting principles.

The  financial  statements  as at December 31, 2004 and for each of the years in
the two year period ended  December 31, 2004 were audited by other  auditors who
expressed an opinion  without  reservation  on those  statements in their report
dated April 22, 2005.


Vancouver, Canada,                          /s/     ERNST & YOUNG LLP
March 17, 2006                                    Chartered Accountants





                                      F-3
<PAGE>


                           AMERA RESOURCES CORPORATION
                   (AN EXPLORATION STAGE COMPANY - SEE NOTE 1)
                           CONSOLIDATED BALANCE SHEETS
                                AS AT DECEMBER 31
                         (EXPRESSED IN CANADIAN DOLLARS)


                                                       2005            2004
                                                         $               $

                                   A S S E T S

CURRENT ASSETS

Cash and cash equivalents                               522,327       1,679,232
Accounts receivable, prepaids and deposits              136,218          57,335
                                                   ------------    ------------
                                                        658,545       1,736,567

MINERAL PROPERTIES AND DEFERRED COSTS (Note 3)        3,184,844       2,014,978

EQUIPMENT                                                     -           2,796
                                                   ------------    ------------
                                                      3,843,389       3,754,341
                                                   ============    ============


                              L I A B I L I T I E S

CURRENT LIABILITIES

Accounts payable and accrued liabilities                142,275          50,447

FUTURE INCOME TAX LIABILITIES (Note 7)                  154,881          99,757
                                                   ------------    ------------
                                                        297,156         150,204
                                                   ------------    ------------


                      S H A R E H O L D E R S ' E Q U I T Y

SHARE CAPITAL (Note 4)                                5,854,335       4,527,878

CONTRIBUTED SURPLUS                                     433,995         383,805

DEFICIT                                              (2,742,097)     (1,307,546)
                                                   ------------    ------------
                                                      3,546,233       3,604,137
                                                   ------------    ------------
                                                      3,843,389       3,754,341
                                                   ============    ============

COMMITMENTS (Note 3)

APPROVED BY THE BOARD

/s/ NIKOLAOS CACOS   , Director
---------------------

/s/ JERRY MINNI      , Director
---------------------



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

                                      F-4
<PAGE>


                           AMERA RESOURCES CORPORATION
                   (AN EXPLORATION STAGE COMPANY - SEE NOTE 1)
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                         FOR THE YEARS ENDED DECEMBER 31
                         (EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>

                                                       2005            2004            2003
                                                         $               $               $
<S>                                               <C>             <C>             <C>

EXPENSES

Accounting and audit                                     28,385           8,200          22,341
Advertising                                              59,537          60,745          18,505
Corporate development and investor relations            182,702         151,739           9,675
General exploration                                     199,264          18,318               -
Legal                                                    55,058          63,058           5,302
Management fees                                          73,500          72,400          25,000
Office and sundry                                        92,724          51,173          10,548
Professional fees                                        15,926          48,200          32,924
Rent                                                     73,573          29,511          20,000
Salaries                                                294,170         154,074               -
Stock based compensation                                 52,500         131,805         252,000
Transfer agent and regulatory fees                       22,868          27,258           9,889
Travel                                                   37,721          47,018           2,168
                                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS                             (1,187,928)       (863,499)       (408,352)
                                                   ------------    ------------    ------------
OTHER EXPENSE (INCOME)

Foreign exchange                                         36,624          25,104             896
Interest income                                         (15,001)        (14,271)         (3,492)
Write-off of mineral properties (Note 3 (a) ii))        225,000               -               -
                                                   ------------    ------------    ------------
                                                       (246,623)        (10,833)          2,596
                                                   ------------    ------------    ------------
LOSS FOR THE YEAR                                    (1,434,551)       (874,332)       (405,756)
                                                   ------------    ------------    ------------
DEFICIT - BEGINNING OF YEAR                          (1,307,546)       (433,214)        (27,458)
                                                   ------------    ------------    ------------
DEFICIT - END OF YEAR                                (2,742,097)     (1,307,546)       (433,214)
                                                   ============    ============    ============


BASIC AND DILUTED LOSS PER SHARE                         $(0.09)         $(0.07)         $(0.08)
                                                   ============    ============    ============

WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING                       15,916,822      13,192,736       4,848,716
                                                   ============    ============    ============
</TABLE>



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

                                      F-5
<PAGE>


                           AMERA RESOURCES CORPORATION
                   (AN EXPLORATION STAGE COMPANY - SEE NOTE 1)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31
                         (EXPRESSED IN CANADIAN DOLLARS)


<TABLE>
<CAPTION>

                                                       2005            2004            2003
                                                         $               $               $
<S>                                               <C>             <C>             <C>

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Loss for the year                                    (1,434,551)       (874,332)       (405,756)
Adjustment for item not affecting cash
     Write-off of mineral properties                    225,000               -               -
     Stock based compensation                            52,500         131,805         252,000
                                                   ------------    ------------    ------------
                                                     (1,157,051)       (742,527)       (153,756)
Change in non-cash working capital balances              25,940        (103,461)         73,146
                                                   ------------    ------------    ------------
                                                     (1,131,111)       (845,988)        (80,610)
                                                   ------------    ------------    ------------
FINANCING ACTIVITIES

Issuance of common shares                             1,232,199       2,851,391         908,649
Share subscriptions received                                  -               -         658,350
Share issuance costs                                    (61,751)       (210,257)       (151,754)
                                                   ------------    ------------    ------------
                                                      1,170,448       2,641,134       1,415,245
                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Expenditures on mineral properties
     and deferred costs                              (1,196,242)     (1,230,962)       (414,259)
Purchase of equipment                                         -          (2,797)              -
                                                   ------------    ------------    ------------
                                                     (1,196,242)     (1,233,759)       (414,259)
                                                   ------------    ------------    ------------
(DECREASE) INCREASE IN CASH AND
     CASH EQUIVALENTS DURING THE YEAR                (1,156,905)        561,387         920,376

CASH AND CASH EQUIVALENTS
     - BEGINNING OF YEAR                              1,679,232       1,117,845         197,469
                                                   ------------    ------------    ------------
CASH AND CASH EQUIVALENTS
     - END OF YEAR                                      522,327       1,679,232       1,117,845
                                                   ============    ============    ============

CASH AND CASH EQUIVALENTS COMPRISE OF:

Cash                                                    522,327         679,232       1,117,845
Term deposit                                                  -       1,000,000               -
                                                   ------------    ------------    ------------

                                                        522,327       1,679,232       1,117,845
                                                   ============    ============    ============

SUPPLEMENTARY CASH FLOW INFORMATION

     Income taxes paid in cash                                -               -               -
                                                   ============    ============    ============
     Interest paid in cash                                    -               -               -
                                                   ============    ============    ============
</TABLE>

Other Supplementary Cash Flow Information (Note 9)


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

                                      F-6
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)



1.       EXPLORATION STAGE COMPANY - NATURE OF OPERATIONS

         The  Company  was  incorporated  on April 11,  2000 in the  Province of
         British Columbia and was transitioned  under the Business  Corporations
         Act (BC) on June 17, 2004.  The Company is a natural  resource  company
         engaged in the acquisition  and  exploration of resource  properties in
         the Americas.  The Company presently has no proven or probable reserves
         and on the  basis of  information  to date,  it has not yet  determined
         whether these properties contain economically recoverable ore reserves.
         Consequently the Company  considers  itself to be an exploration  stage
         company.  The amounts  shown as mineral  property  interests  represent
         costs incurred to date, less amounts  amortized and/or written off, and
         do not necessarily  represent present or future values.  The underlying
         value  of  the  mineral  properties  and  deferred  costs  is  entirely
         dependent  on  the  existence  of  economically  recoverable  reserves,
         securing  and  maintaining   title  and  beneficial   interest  in  the
         properties,  the  ability  of  the  Company  to  obtain  the  necessary
         financing to advance the properties  beyond the exploration  stage, and
         future  profitability of the properties.  The Company considers that it
         has  adequate  resources to maintain  its core  activities  and planned
         exploration  programs for the next fiscal year but  currently  does not
         have sufficient  working capital to fund all of its future  exploration
         activities.   The  Company  will  continue  to  rely  on   successfully
         completing additional equity financing.


2.       SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         These   consolidated   financial   statements  have  been  prepared  in
         accordance  with  Canadian  generally  accepted  accounting  principles
         ("Canadian GAAP"). The significant measurement difference between those
         principles  and  those  that  would  be  applied  under  United  States
         generally accepted accounting principles ("US GAAP") as they affect the
         Company are disclosed in Note 8.

         USE OF ESTIMATES

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

         PRINCIPLES OF CONSOLIDATION

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

         CASH AND CASH EQUIVALENTS

         Cash and cash  equivalents  include  cash  and  short-term  investments
         maturing within 90 days of initial investment.


                                      F-7
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         MINERAL PROPERTIES AND DEFERRED COSTS

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

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

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

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

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

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

         EQUIPMENT

         Equipment is recorded at cost less accumulated  depreciation calculated
         using the  straight-line  method over their  estimated  useful lives of
         five years.

         ASSET RETIREMENT OBLIGATIONS

         Asset   retirement   obligations   are  recognized   when  a  legal  or
         constructive  obligation  arises.  This  liability is recognized at the
         fair value of the asset  retirement  obligation.  When the liability is
         initially  recorded the Company  capitalizes the cost by increasing the
         carrying  amount  of the  related  long-lived  assets.  Over  time  the
         liability  is  accreted  to its  present  value  each  period,  and the
         capitalized  cost is  amortized  over the  useful  life of the  related
         asset.  Upon settlement of the liability,  the Company may incur a gain
         or loss.  As at December  31, 2005 the Company  does not have any asset
         retirement obligations.


                                      F-8
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         LONG-LIVED ASSETS IMPAIRMENT

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

         TRANSLATION OF FOREIGN CURRENCIES

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

         FAIR VALUES OF FINANCIAL INSTRUMENTS

         The fair value of the  Company's  financial  instruments  consisting of
         cash and cash equivalents, accounts receivable and accounts payable and
         accrued  liabilities  approximate  their  carrying  values  due  to the
         short-term nature of those instruments.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments  that  potentially  subject  the  Company  to  a
         significant  concentration of credit risk consist primarily of cash and
         cash  equivalents  and  amounts  receivable.  The  Company  limits  its
         exposure to credit loss by placing its cash and cash  equivalents  with
         major financial institutions.

         INCOME TAXES

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

         LOSS PER SHARE

         Loss per share is calculated on the weighted  average  number of common
         shares issued and outstanding  during the year. The effect of potential
         issuances of shares under options and warrants  would be  anti-dilutive
         and therefore basic earnings and diluted losses per share are the same.
         Information  regarding  securities that could potentially  dilute basic
         earnings per share in the future is presented in Note 4.


                                      F-9
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         STOCK BASED COMPENSATION

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

         VARIABLE INTEREST ENTITIES

         Effective  January 1, 2005, the Company  adopted  Accounting  Guideline
         AcG-15,  Consolidation of Variable  Interest  Entities,  which requires
         consolidation  of entities  in which the Company  expects to receive or
         absorb the majority of the entity's expected losses, expected residual,
         returns or both. The Company has determined  that it has no involvement
         with variable interest entities.

         COMPARATIVE FIGURES

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


3.       MINERAL PROPERTIES AND DEFERRED COSTS
<TABLE>
<CAPTION>

                                   --------------------------------------------    --------------------------------------------
                                                DECEMBER 31, 2005                               DECEMBER 31, 2004
                                   --------------------------------------------    --------------------------------------------

                                    ACQUISITION     EXPLORATION                     ACQUISITION     EXPLORATION
                                       COSTS       EXPENDITURES        TOTAL           COSTS       EXPENDITURES        TOTAL
                                         $               $               $               $               $               $
                                   ------------    ------------    ------------    ------------    ------------    ------------
        <S>                       <C>             <C>             <C>             <C>             <C>             <C>

         Argentina
            Mogote Property             891,062       1,242,942       2,134,004         667,697         707,631       1,375,328
            Chubut Properties                 -               -               -         225,000               -         225,000
         Peru
            Esperanza Property          186,741         279,615         466,356         102,997          41,016         144,013
            Korimarca                    11,844          17,887          29,731               -               -               -
            Cruz de Mayo                 26,079          27,754          53,833               -               -               -
            Cocha                        10,211          14,094          24,305               -               -               -
            Other                        14,086          25,364          39,450               -               -               -
         USA
            Walker Lane, Nevada          97,010          21,173         118,183          77,304               -          77,304
                                   ------------    ------------    ------------    ------------    ------------    ------------

                                      1,237,033       1,628,829       2,865,862       1,072,998         748,647       1,821,645
         Foreign value added tax              -         164,101         164,101               -          93,576          93,576
         Future income tax               81,270          73,611         154,881          81,270          18,487          99,757
                                   ------------    ------------    ------------    ------------    ------------    ------------
                                      1,318,303       1,866,541       3,184,844       1,154,268         860,710       2,014,978
                                   ============    ============    ============    ============    ============    ============
</TABLE>

         See attached Mineral Property Interests and Deferred Costs Schedules.



                                      F-10
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


3.       MINERAL PROPERTIES AND DEFERRED COSTS (continued)

         (a)      The  Company  and IMA  Exploration  Inc.  ("IMA"),  a publicly
                  traded  company with common  management  and  directors,  have
                  entered  into  agreements  whereby  the  Company  optioned  or
                  acquired interests in various mineral  concessions  located in
                  Argentina.  On  July  7,  2004,  IMA  completed  its  plan  of
                  arrangement in which the following agreements were transferred
                  into  a  separate  public  company,   Golden  Arrow  Resources
                  Corporation ("Golden Arrow"), as follows:

                  i)       to earn a 51% interest in eight mineral  concessions,
                           comprising  8,009  hectares (the "Mogote  Property"),
                           located in San Juan Province,  Argentina, the Company
                           must  issue a total of  1,650,000  common  shares and
                           conduct  a   minimum   of  US  $1.25   million   (CDN
                           $1,453,750)  of exploration  expenditures,  including
                           work  programs and  underlying  option  payments (the
                           final  underlying  option payment was paid on June 6,
                           2005), as follows:

                             SHARES TO         EXPLORATION
                             BE ISSUED         EXPENDITURES    DATE
                                                    US $

                               100,000                  -      Issued in 2003
                               100,000            250,000      Issued in 2004
                               250,000            300,000      Issued in 2005
                               300,000            300,000      July 1, 2006
                               900,000            400,000      July 1, 2007
                             ---------          ---------
                             1,650,000          1,250,000
                             =========          =========

                           The Company had also agreed to reimburse IMA for past
                           payments  made  and   expenditures   which  had  been
                           incurred by IMA on Mogote  property.  The Company had
                           reimbursed IMA $197,854.  The  reimbursement has been
                           included   in  the   calculation   of   the   minimum
                           expenditures required of the Company.

                           On April 8, 2004,  the Company and IMA entered into a
                           further agreement on the Mogote Property. The Company
                           can earn an additional 24% interest,  for a total 75%
                           interest,  after earning the initial 51% interest, by
                           issuing 300,000 common shares (issued) and conducting
                           an  additional  US $3  million  (CDN  $3,489,000)  of
                           exploration expenditures, as follows:

                                      US $             DATE

                                   1,000,000           Completed
                                   1,000,000           May 30, 2006
                                   1,000,000           May 30, 2007
                                   ---------
                                   3,000,000
                                   =========

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


                                      F-11
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)



3.       MINERAL PROPERTIES AND DEFERRED COSTS (continued)

                  ii)      purchased a 100% undivided  interest in three mineral
                           properties  (the  "Chubut  Properties"),   comprising
                           24,280   hectares,   located   in  Chubut   Province,
                           Argentina,  by issuing  500,000  common  shares for a
                           fair value of  $225,000.  In  addition,  in the event
                           that  a   decision   is  made  to  place  the  Chubut
                           Properties  into commercial  production,  the Company
                           will pay a bonus of US $250,000 (CDN  $290,750) and a
                           3% net smelter return royalty.  In the fourth quarter
                           of 2005, the Chubut  Properties  were written off, as
                           there is no active  exploration on the properties and
                           the   Company   has   postponed    any    exploration
                           indefinitely.

         (b)      On  August  24,  2004  the  Company  entered  into  an  option
                  agreement with Arcturus Ventures Inc.  ("Arcturus") whereby it
                  may  earn up to an 80%  undivided  interest  in the  Esperanza
                  Property  located in northern  Arequipa  Province,  Peru.  The
                  Company  may earn an initial  55%  interest  in the  Esperanza
                  Property  by paying  $40,000  to  Arcturus  (paid),  incurring
                  $750,000  in work  expenditures  over three  years and issuing
                  250,000 common shares (75,000 shares issued).  The Company can
                  earn  an  additional  25%  interest  by  incurring  additional
                  exploration  expenditures on the Esperanza property to take it
                  up to the  bankable  feasibility  stage within three years and
                  issuing a further 260,000 shares.

         (c)      On May 11, 2005 the Company  entered into an option  agreement
                  with a third party vendor ("Vendor") whereby it may earn up to
                  100% undivided  interest in the Cruz de Mayo Property  located
                  in the southern portion of the Department of Cuzco in Peru. To
                  earn the  interest in the  property  the  Company  must pay US
                  $150,000 (CDN $174,450) in option  payments to the Vendor over
                  the period of four years (US $15,000 (CDN  $17,445)  paid) and
                  incur US $1,500,000  (CDN  $1,744,500)  expenditures  over the
                  four years as follows:

                               EXPLORATION
                               EXPENDITURES        DATE
                                   US $

                                    50,000         May 11, 2006
                                   200,000         May 11, 2007
                                   500,000         May 11, 2008
                                   750,000         May 11, 2009
                                 ---------
                                 1,500,000
                                 =========



                                      F-12
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


4.       SHARE CAPITAL

         Authorized - unlimited common shares without par value

                                                      NUMBER             $
         Issued - common shares

         Balance, December 31, 2002                   4,000,000          80,000
         Initial public offering                      1,500,000         675,000
         Special warrants                             2,876,832         363,900
         Exercise of warrants                            10,000           5,000
         For agent's fees                               100,000          45,000
         For mineral properties                         600,000         270,000
         Less share issue costs                               -        (210,505)
                                                   ------------    ------------
         Balance, December 31, 2003                   9,086,832       1,228,395

         Private placements                           4,007,000       2,891,350
         Exercise of warrants                           288,750         143,650
         Greenshoe option                               225,000         101,250
         For agent's fees                                55,300          44,240
         For mineral properties                         425,000         329,250
         Less share issue costs                               -        (210,257)
                                                   ------------    ------------
         Balance, December 31, 2004                  14,087,882       4,527,878

         Private placements                           1,650,000         907,500
         Exercise of warrants                           508,248         326,649
         Exercise of options                             11,000           8,250
         For agent's fees                                41,962          23,078
         For mineral properties                         300,000         143,500
         Contributed surplus reallocated
              on exercise of options                          -           2,310
         Less share issue costs                               -         (84,830)
                                                   ------------    ------------
         Balance, December 31, 2005                  16,599,092       5,854,335
                                                   ============    ============

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

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


                                      F-13
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


4.       SHARE CAPITAL (continued)

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

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

                  ii)      a private  placement  financing of 2,750,000 units at
                           $0.80 per unit,  for gross  proceeds  of  $2,200,000.
                           Each  unit   comprised   one  common  share  and  one
                           non-transferable share purchase warrant. Each warrant
                           entitles the holder to purchase one additional common
                           share at a price of $1.00  per  share for a period of
                           one year  from  date of issue  and at $1.20 per share
                           for a period of two years from date of issue.

                           In connection with the private  placement the Company
                           paid cash  commissions  and finder's  fees  totalling
                           $96,560,  issued  55,300  units on the same terms and
                           basis as the private  placement,  and issued  168,000
                           warrants.   Each  warrant   entitles  the  holder  to
                           purchase one common share of the Company at $0.90 per
                           share on or before March 31, 2006;

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

         (c)      The  Company  grants  stock  options  in  accordance  with the
                  policies  of the TSX  Venture  Exchange  ("TSXV").  The  stock
                  options  granted  during 2005 are subject to a four month hold
                  period and  exercisable  for a period of five years. A summary
                  of the  Company's  outstanding  options at December  31, 2005,
                  2004 and 2003 and the  changes  for the years  ending on those
                  dates is presented below:
<TABLE>
<CAPTION>

                                   ----------------------------    ----------------------------    ----------------------------
                                               2005                            2004                            2003
                                   ----------------------------    ----------------------------    ----------------------------
                                      OPTIONS         WEIGHTED        OPTIONS         WEIGHTED        OPTIONS         WEIGHTED
                                    OUTSTANDING       AVERAGE       OUTSTANDING       AVERAGE       OUTSTANDING       AVERAGE
                                        AND           EXERCISE          AND           EXERCISE          AND           EXERCISE
                                    EXERCISABLE        PRICE        EXERCISABLE        PRICE        EXERCISABLE        PRICE
                                                         $                               $                               $
                                   ------------    ------------    ------------    ------------    ------------    ------------
                 <S>              <C>             <C>             <C>             <C>             <C>             <C>

                  Balance, Begin-
                     ning of year     1,354,500        0.70             900,000        0.60                   -           -
                  Granted               250,000        0.75             454,500        0.90             900,000        0.60
                  Exercised             (11,000)       0.75                   -           -                   -           -
                  Cancelled             (89,000)       0.75                   -           -                   -           -
                                   ------------                    ------------                    ------------
                  Balance,
                     end of year      1,504,500        0.70           1,354,500        0.70             900,000        0.60
                                   ============                    ============                    ============
</TABLE>



                                      F-14
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)



4.       SHARE CAPITAL (continued)

                  Stock  options  outstanding  and  exercisable  at December 31,
                  2005, are as follows:


                      NUMBER OF OPTIONS
                       OUTSTANDING AND      EXERCISE       EXPIRY DATE
                         EXERCISABLE          PRICE

                            900,000           $0.60         December 12, 2008
                            454,500           $0.90         April 2, 2009
                            150,000           $0.75         March 21, 2010
                          ---------
                          1,504,500
                          =========

                  During fiscal 2005, the Company granted stock options at $0.75
                  per  share to its  directors,  employees  and  consultants  to
                  acquire 250,000 common shares (2004 - 454,500; 2003 - 900,000)
                  and recorded stock based compensation expense of $52,500 (2004
                  - $131,805, 2003 - $252,000).  The fair value of stock options
                  granted  is  estimated  on  the  dates  of  grants  using  the
                  Black-Scholes   Option   Pricing   Model  with  the  following
                  assumptions used for the grants made during the year:

                                                2005        2004         2003

                  Risk-free interest rate     3.10%        2.18%        3.26%
                  Estimated volatility         75%          36%          30%
                  Expected life             2.5 years    2.5 years    2.5 years
                  Expected dividend yield       0%           0%           0%


                  The weighted  average  fair value per share of stock  options,
                  calculated  using  the  Black-Scholes  Option  Pricing  Model,
                  granted  during  the year was $0.21  per share  (2004 - $0.29;
                  2003 -  $0.28).  Option  pricing  models  require  the  use of
                  estimates and assumptions  including the expected  volatility.
                  Changes in the underlying  assumptions  can materially  affect
                  the fair value  estimates and,  therefore,  existing models do
                  not necessarily  provide reliable measure of the fair value of
                  the Company's stock options.

         (d)      A summary of the number of common shares reserved  pursuant to
                  the  Company's   outstanding   warrants  and  agents  warrants
                  outstanding  at  December  31,  2005,  2004  and  2003 and the
                  changes for the years ending on those dates is as follows:
<TABLE>
<CAPTION>

                                                       2005            2004            2003
                 <S>                              <C>             <C>             <C>


                  Balance, beginning of year          4,230,300         965,000               -
                  Issued                                912,731       4,342,800         975,000
                  Exercised                            (508,248)       (288,750)        (10,000)
                  Expired                              (947,000)       (788,750)              -
                                                   ------------    ------------    ------------
                  Balance, end of year                3,687,783       4,230,300         965,000
                                                   ============    ============    ============
</TABLE>



                                      F-15
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

4.       SHARE CAPITAL (continued)

                  Common shares reserved pursuant to warrants and agent warrants
                  outstanding at December 31, 2005 are as follows:

                    NUMBER         EXERCISE PRICE               EXPIRY DATE
                                         $

                    714,483             0.60                    March 18, 2006
                  1,500,000             1.20                    March 24, 2006
                     18,000             0.90                    March 24, 2006
                  1,305,300             1.20                    March 31, 2006
                    150,000             0.90                    March 31, 2006
                  ---------
                  3,687,783
                  =========

                  See Note 10.

         (e)      As at December 31, 2005,  1,304,793  common shares are held in
                  escrow and are released  every six months,  ending on December
                  2, 2006.


5.       RELATED PARTY TRANSACTIONS

         Effective  January 1, 2005, the Company engaged Grosso Group Management
         Ltd.,  ("Grosso  Group")  to provide  services  and  facilities  to the
         Company.  On May 6, 2005 the formal agreement among the Company and the
         Grosso  Group was  finalized.  The  Grosso  Group is a private  company
         equally owned by the Company,  IMA,  Golden Arrow and Gold Point Energy
         Corp.  The  Grosso  Group  provides  its  shareholder   companies  with
         geological,   corporate  development,   administrative  and  management
         services on a cost recovery  basis.  During the year ended December 31,
         2005,  the  Company  incurred  fees of  $377,410  to the Grosso  Group:
         $290,858 was paid in twelve monthly  payments (plus deposit of $95,000)
         and $86,552 is included in accounts  payable as a result of a review of
         the  allocation  of the Grosso Group costs to the member  companies for
         the year. This balance was paid subsequent to the year end.

         Effective  January 2, 2004, the Company  entered into an agreement with
         the President of the Company for his  services.  Under the contract the
         President  is  currently  paid $6,125 per month.  During the year ended
         December 31, 2005,  the Company  paid $73,500  (2004 - $72,400;  2003 -
         $25,000) to the  President.  The contract  also  provides  that, in the
         event the services  are  terminated  without  cause or upon a change in
         control of the Company,  a termination  payment would include  eighteen
         months of  compensation  plus a bonus amount  agreed to by the parties.
         During the year the Company also paid $4,298 (2004 - $540; 2003 - $Nil)
         for consulting services performed by a director of the Company.

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



                                      F-16
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

6.       SEGMENTED INFORMATION

         The Company is primarily involved in mineral exploration  activities in
         Argentina,  Peru and the USA. The Company is in the  exploration  stage
         and,  accordingly,  has no  reportable  segment  revenues or  operating
         revenues for the years ended December 31, 2005 and 2004.

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

<TABLE>
<CAPTION>

                                                                DECEMBER 31, 2005
                                   ----------------------------------------------------------------------------
                                     CORPORATE
                                       CANADA        ARGENTINA         PERU             USA            TOTAL
                                         $               $               $               $               $
        <S>                       <C>             <C>             <C>             <C>             <C>

         Current assets                 572,465          54,120          31,960               -         658,545
         Mineral properties and
             deferred costs                   -       2,270,735         731,983         182,126       3,184,844
                                   ------------    ------------    ------------    ------------    ------------
                                        572,465       2,324,855         763,943         182,126       3,843,389
                                   ============    ============    ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>

                                                                DECEMBER 31, 2004
                                   ----------------------------------------------------------------------------
                                     CORPORATE
                                       CANADA        ARGENTINA         PERU             USA            TOTAL
                                         $               $               $               $               $
        <S>                       <C>             <C>             <C>             <C>             <C>

         Current assets               1,706,891          11,151          18,525               -       1,736,567
         Mineral properties and
             deferred costs                   -       1,693,904         200,999         120,075       2,014,978
         Equipment                            -               -           2,796               -           2,796
                                   ------------    ------------    ------------    ------------    ------------
                                      1,706,891       1,705,055         222,320         120,075       3,754,341
                                   ============    ============    ============    ============    ============
</TABLE>


7.       INCOME TAXES

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

                                                                       2005            2004            2003
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Statutory tax rate                                              34.12%          35.62%          37.62%
                                                                   ============    ============    ============

         Loss for the year                                           (1,434,551)       (874,332)       (405,756)
                                                                   ============    ============    ============

         Provision for income taxes based on statutory
              Canadian combined federal and provincial
                   income tax rates                                    (489,469)       (311,137)       (152,645)

         Differences in foreign tax rates                                (7,210)         (1,170)              -

         Losses for which an income tax benefit
              has not been recognized                                   496,679         312,307         152,645
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>



                                      F-17
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

7.       INCOME TAXES (continued)

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

                                                       2005            2004
                                                         $               $
         Future income tax assets

              Financing costs                            95,867         102,363
              Operating loss carryforward               659,044         367,087
                                                   ------------    ------------
                                                        754,911         469,450

         Valuation allowance for future tax assets     (754,911)       (469,450)
                                                   ------------    ------------
                                                              -               -
                                                   ============    ============

         FUTURE INCOME TAX LIABILITIES

         For  certain  acquisitions  and other  payments  for  mineral  property
         interests,  the Company  records a future  income tax  liability  and a
         corresponding  adjustment to the related asset carrying amount.  During
         the year ended December 31, 2005, the Company  recorded a future income
         tax  liability  of  $55,124  (2004  -  $99,757)  and  a   corresponding
         adjustment to mineral properties.

                                                       2005            2004
                                                         $               $

         Future Income Tax Liabilities                  154,881          99,757
                                                   ============    ============

         The Company has Canadian  non-capital loss  carryforwards of $1,931,548
         that may be available for tax purposes. The losses expire as follows:

                           EXPIRY DATE                   $

                               2007                       1,084
                               2008                         116
                               2009                      26,258
                               2010                     195,857
                               2014                     852,555
                               2015                     855,678
                                                   ------------
                                                      1,931,548
                                                   ============



                                      F-18
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


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

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

                                                                       2005            2004            2003
                                                                         $               $               $
                 <S>                                              <C>             <C>             <C>

                  CONSOLIDATED STATEMENTS OF OPERATIONS

                  Loss for the year under Canadian GAAP              (1,434,551)       (874,332)       (405,756)
                  Mineral properties and deferred costs for
                       the year(i)                                   (1,394,866)     (1,330,719)       (684,259)
                  Reversal of future income tax liability (i)            55,124          99,757               -
                  Mineral properties and deferred costs written
                       off during the year which would have been
                           expensed in the year incurred (i)            225,000               -               -
                                                                   ------------    ------------    ------------
                  Loss for the year under US GAAP                    (2,549,293)     (2,105,294)     (1,090,015)
                                                                   ============    ============    ============

                  Basic and diluted loss per share under US GAAP         ($0.16)         $(0.16)         $(0.22)
                                                                   ============    ============    ============

                  Weighted average number of common
                       shares outstanding                            15,916,822      13,192,736       4,848,716
                                                                   ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>

                                                                       2005            2004
                                                                         $               $
                 <S>                                              <C>             <C>

                  CONSOLIDATED BALANCE SHEETS

                  Shareholders' equity

                  Balance per Canadian GAAP                           3,546,233       3,604,137
                  Mineral properties and deferred costs (i)          (3,184,844)     (2,014,978)
                  Reversal of future income tax liability (i)           154,881          99,757
                                                                   ------------    ------------
                  Balance per US GAAP                                   516,270       1,688,916
                                                                   ============    ============

                  Mineral properties and deferred costs

                  Balance per Canadian GAAP                           3,184,844       2,014,978
                  Mineral property interests and deferred costs
                       under US GAAP                                 (3,184,844)     (2,014,978)
                                                                   ------------    ------------
                  Balance per US GAAP                                         -               -
                                                                   ============    ============


                  Future Income Tax Liabilities

                  Balance per Canadian GAAP                             154,881          99,757
                  Reversal of future income tax liability (i)          (154,881)        (99,757)
                                                                   ------------    ------------
                  Balance per US GAAP                                         -               -
                                                                   ============    ============
</TABLE>


                                      F-19
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


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

<TABLE>
<CAPTION>

                                                                       2005            2004            2003
                                                                         $               $               $
                 <S>                                              <C>             <C>             <C>

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Operating activities

                  Cash used per Canadian GAAP                        (1,131,111)       (845,988)        (80,610)
                  Mineral property interests and deferred costs(i)   (1,196,242)     (1,230,962)       (414,259)
                                                                   ------------    ------------    ------------
                  Cash used per US GAAP                              (2,327,353)     (2,076,950)       (494,869)
                                                                   ============    ============    ============

                  Investing activities

                  Cash used per Canadian GAAP                        (1,196,242)     (1,233,758)       (414,259)
                  Mineral property interests and deferred costs(i)    1,196,242       1,230,962         414,259
                                                                   ------------    ------------    ------------
                  Cash provided (used) per US GAAP                            -          (2,796)              -
                                                                   ============    ============    ============
</TABLE>

                  (i)      Mineral property interests and deferred costs

                           Mineral  property  interests  and deferred  costs are
                           accounted  for in  accordance  with  Canadian GAAP as
                           disclosed in Note 3. The Company has  determined  for
                           US GAAP  purposes to expense the option  payments and
                           exploration costs relating to unproven mineral claims
                           as incurred and in addition has a related  income tax
                           recovery.   In  addition,   US  GAAP   requires  that
                           exploration costs not be capitalized until a positive
                           feasibility study is completed. The capitalized costs
                           of such claims would then be measured,  on a periodic
                           basis,  to  ensure  that the  carrying  value  can be
                           recovered on an undiscounted  cash flow basis. If the
                           carrying value cannot be recovered on this basis, the
                           mineral   claims   would  be  written   down  to  net
                           recoverable value on a discounted cash flow basis.

                  (ii)     Income Tax

                           Under  Canadian  GAAP,  future  income tax assets are
                           calculated based on enacted or substantially  enacted
                           tax rates applicable to future years.  Under US GAAP,
                           only  enacted  rates are used in the  calculation  of
                           deferred  income taxes.  This  difference in GAAP did
                           not have any  effect  on the  financial  position  or
                           results of  operations  of the  Company for the years
                           ended December 31, 2005, 2004 and 2003.

                  (iii)    Other Comprehensive Income

                           US GAAP  requires  that a statement of  comprehensive
                           income be displayed with the same prominence as other
                           financial statements and that the aggregate amount of
                           comprehensive   income   excluding   the  deficit  be
                           disclosed   separately   in   shareholders'   equity.
                           Comprehensive  income,  which  incorporates  the  net
                           loss,  includes all changes in  shareholders'  equity
                           during  a  period   except   those   resulting   from
                           investments by and distributions to owners.  There is
                           currently no  requirement  to disclose  comprehensive
                           income under Canadian GAAP. The Company does not have
                           any other  comprehensive  income  component  in 2005,
                           2004, and 2003.


                                      F-20
<PAGE>



                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


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

         (b)      Recent Accounting Pronouncements

                  ACCOUNTING CHANGES AND ERROR CORRECTIONS

                  SFAS  154  ,  effective  for  accounting   changes  and  error
                  corrections  made in fiscal years beginning after December 15,
                  2005, has been introduced and requires,  unless impracticable,
                  retroactive  application as the required  method for reporting
                  changes   in   accounting   principles   in  the   absence  of
                  transitional   provisions   specific  to  the  newly   adopted
                  accounting principle. The Company will apply this standard for
                  US GAAP purposes commencing in fiscal 2006.

                  CONSOLIDATION OF VARIABLE INTEREST ENTITIES

                  FIN46R became  effective in June 2003 for US GAAP for the year
                  ended December 31, 2004.  The Company has  determined  that it
                  does not have any involvement with variable interest entities.
                  In June  2003,  the  CICA  issued a new  accounting  guideline
                  ACG-15,  "Consolidation of Variable Interest Entities",  which
                  requires  the  consolidation  of  certain  entities  that  are
                  subject to control on a basis other than  ownership  of voting
                  interests. The purpose of the Guideline is to provide guidance
                  for  determining  when  an  enterprise  includes  the  assets,
                  liabilities and results of activities of such an entity in its
                  consolidated  results. It applies to entities with a structure
                  that precludes  control through  ownership of voting interests
                  but over which control may exist  through other  arrangements.
                  The Guideline  generally applies to annual and interim periods
                  beginning on or after November 1, 2004.

                  FINANCIAL INSTRUMENTS

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



                                      F-21
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

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

                  HEDGE ACCOUNTING

                  Handbook   Section   3865,   "Hedges"   provides   alternative
                  treatments to Handbook  Section 3855 for entities which choose
                  to designate qualifying  transactions as hedges for accounting
                  purposes.  The  effective  date of this  section is for fiscal
                  years  beginning on or after  October 1, 2006,  with  optional
                  early  recognition  for  fiscal  years  beginning  on or after
                  December 31, 2004.  The Company  does not  currently  have any
                  hedging relationships.

                  COMPREHENSIVE INCOME

                  New Handbook Section 1530, "Comprehensive Income",  introduces
                  a new  requirement  to temporarily  present  certain gains and
                  losses outside of income.  Section 1530 defines  comprehensive
                  income as a change in value of net  assets  that is not due to
                  owner activities.  Assets that are classified as available for
                  sale will have revaluation  gains and losses included in other
                  comprehensive  income  until  the  asset is  removed  from the
                  balance  sheet.   At  present,   the  Company  does  not  have
                  investments in shares of arm's length corporations that may be
                  classified  as  available  for sale  investments.  The Company
                  would be required to recognize  unrealized gains and losses on
                  such  securities  and include these  amounts in  comprehensive
                  income. The effective date of this section is for fiscal years
                  beginning on or after  October 1, 2006,  with  optional  early
                  recognition  for fiscal years  beginning on or after  December
                  31,  2004.  Implementation  of this  section will more closely
                  align Canadian GAAP with US GAAP.

                  NON-MONETARY TRANSACTIONS

                  CICA Handbook Section 3831 "Non-Monetary Transactions" will be
                  applicable to the company  commencing  with the 2006 financial
                  year.  Under this standard,  exchanges of non-monetary  assets
                  after  January 1, 2006 would be recorded at carrying  value if
                  they lack commercial substance. The Company does not currently
                  have any non-monetary transactions.


9.       SUPPLEMENTARY CASH FLOW INFORMATION

         Non-cash  investing  and  financing  activities  were  conducted by the
         Company  during the years ended  December  31,  2005,  2004 and 2003 as
         follows:
<TABLE>
<CAPTION>

                                                       2005            2004            2003
                                                         $               $               $
        <S>                                       <C>             <C>             <C>

         Investing activity

             Expenditures on mineral property
                interests and deferred costs           (143,500)       (329,250)       (270,000)

             Shares issued for mineral properties       143,500         329,250         270,000
                                                   ------------    ------------    ------------
                                                              -               -               -
                                                   ============    ============    ============
</TABLE>



                                      F-22
<PAGE>



                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

9. SUPPLEMENTARY CASH FLOW INFORMATION (continued)
<TABLE>
<CAPTION>

                                                       2005            2004            2003
                                                         $               $               $
        <S>                                       <C>             <C>             <C>

         Financing activities

             Agent's fees payable                       (23,078)        (44,240)        (45,000)

             Shares issued for payment of
                  agent's fees                           23,078          44,240          45,000
                                                   ------------    ------------    ------------
                                                              -               -               -
                                                   ============    ============    ============
</TABLE>


10.      SUBSEQUENT EVENTS

         Subsequent to December 31, 2005 the Company:

         a)       completed a private placement  financing of 1,412,000 units at
                  $0.60 per unit,  for gross  proceeds  of  $847,200.  Each unit
                  comprised  one  common  share and one  non-transferable  share
                  purchase warrant. Each warrant entitles the holder to purchase
                  one  additional  common share at a price of $0.65 per share on
                  or before January 30, 2008.  The Company  applies the residual
                  approach and allocates the total proceeds to the common shares
                  and $nil to the attached warrants;

         b)       the Company has  requested  and was granted  permission by TSX
                  Venture  Exchange to amend the exercise price for 2,750,000 of
                  $1.20 warrants with the March 24th and March 31st, 2006 expiry
                  date.  The new amended price was $0.60 per warrant.  There was
                  no extension to the term of the warrants; and

         c)       issued 1,194,500 common shares for $716,700 on the exercise of
                  warrants.



                                      F-23
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                            CONSOLIDATED SCHEDULE OF
                  MINERAL PROPERTY INTERESTS AND DEFERRED COSTS
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                         (EXPRESSED IN CANADIAN DOLLARS)



<TABLE>
<CAPTION>
                              --------------------  -----------------------------------------------------  ---------
                                    ARGENTINA                                PERU                             USA
                              --------------------  -----------------------------------------------------  ---------
                                                                                                             WALKER
                                MOGOTE     CHUBUT                          CRUZ DE                            LANE,   ---------
                                         PROPERTIES ESPERANZA  KORIMARCA     MAYO      COCHA      OTHER      NEVADA     TOTAL
                                  $          $          $          $          $          $          $          $          $
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>

Balance,
    beginning of year         1,468,904    225,000    200,999          -          -          -          -    120,075  2,014,978
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

Expenditures during the year
    Acquisition costs           223,365          -     83,744     11,844     26,079     10,211     14,086     19,706    389,035
    Assays                       31,687          -      6,361          -        803      3,020      1,415        198     43,484
    Communications                4,057          -      2,659          -         48          -        252          -      7,016
    Drilling                    312,063          -          -          -          -          -          -          -    312,063
    Geophysics                        -          -     35,490          -          -          -          -      9,368     44,858
    Office                       11,885          -      8,662        550      1,861        412        125          -     23,495
    Salaries and contractors    113,166          -    130,272      6,754     18,347      6,545     20,612     11,607    307,303
    Supplies and equipment        3,276          -     24,389      2,527      1,752      1,178        536          -     33,658
    Transportation               59,177          -     26,592      8,056      1,954      1,591      2,424          -     99,794
    Imagery and base maps             -          -      4,174          -      2,989      1,348          -          -      8,511
    Foreign value added tax      43,154          -     19,059      1,956      1,615      1,350      3,391          -     70,525
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                801,830          -    341,402     31,687     55,448     25,655     42,841     40,879  1,339,742
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Future income tax (Note 7)            -          -     21,212        438      6,137      2,262      3,903     21,172     55,124
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Write-off of mineral
    properties                        -   (225,000)         -          -          -          -          -          -   (225,000)
                              ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Balance, end of year          2,270,734          -    563,613     32,125     61,585     27,917     46,744    182,126  3,184,844
                              =========  =========  =========  =========  =========  =========  =========  =========  =========
</TABLE>




                                      F-24
<PAGE>


                           AMERA RESOURCES CORPORATION
                         (AN EXPLORATION STAGE COMPANY)
                            CONSOLIDATED SCHEDULE OF
                  MINERAL PROPERTY INTERESTS AND DEFERRED COSTS
                      FOR THE YEAR ENDED DECEMBER 31, 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>

                                   ----------------------------    ------------    ------------
                                            ARGENTINA                  PERU             USA
                                   ----------------------------    ------------    ------------
                                                      CHUBUT                          WALKER       ------------
                                      MOGOTE        PROPERTIES       ESPERANZA     LANE, NEVADA        TOTAL
                                         $               $               $               $               $
                                   ------------    ------------    ------------    ------------    ------------
<S>                               <C>             <C>             <C>             <C>             <C>

Balance, beginning of year              459,259         225,000               -               -         684,259
                                   ------------    ------------    ------------    ------------    ------------
Expenditures during the year
    Acquisition costs                   208,438               -         102,997          77,304         388,739
    Assays                               28,326               -               -               -          28,326
    Drilling                             73,581               -               -               -          73,581
    Office                              146,898               -          13,872               -         160,770
    Salaries and contractors            366,341               -          11,627               -         377,968
    Supplies and equipment               68,477               -           6,260               -          74,737
    Transportation                       24,008               -           9,257               -          33,265
    Foreign value added tax              93,576               -               -               -          93,576
                                   ------------    ------------    ------------    ------------    ------------
                                      1,009,645               -         144,013          77,304       1,230,962
                                   ------------    ------------    ------------    ------------    ------------
Future income tax (Note 7)                    -               -          56,986          42,771          99,757
                                   ------------    ------------    ------------    ------------    ------------
Balance, end of year                  1,468,904         225,000         200,999         120,075       2,014,978
                                   ============    ============    ============    ============    ============
</TABLE>


                                      F-25
<PAGE>