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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F/AAMENDMENT NO. 3

[   ] 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 February 28, 2006

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-30084

LINUX GOLD CORP.(Exact name of registrant as specified in its charter)

British Columbia, Canada(Jurisdiction
of incorporation or organization)

1103-11871 Horseshoe WayRichmond, British
Columbia V7A 5H5, Canada(Address of principal executive
offices)

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value(Title of Class)

Indicate by check mark if the registration is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act [  
] Yes [X] No

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

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

|Title of Each Class         | Outstanding at February 28, 2006
|--------------------------- | --------------------------------
|Common Shares, no par value | 68,287,773                      

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 [  
]   No [X]

Indicate by check mark whether the registrant is a large
accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the
Exchange Act.

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

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

Item 17.[   ]      Item 18.
[X]

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

1

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TABLE OF CONTENTS

PART I
      
      7ITEM 1.
      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
        AND ADVISORS
      7ITEM 2.
      OFFER AND STATISTICS AND
        EXPECTED TIMETABLE
      7ITEM 3.
      KEY INFORMATION
      7A.
      SELECTED FINANCIAL DATA
      7B.
      CAPITALIZATION AND INDEBTEDNESS
      9C.
      REASON FOR THE OFFER AND
        USE OF PROCEEDS
      9D.
      RISK FACTORS
      9ITEM 4.
      INFORMATION ON THE COMPANY
      13A.
      HISTORY AND DEVELOPMENT
      13B.
      BUSINESS OVERVIEW
      14C.
      ORGANIZATIONAL STRUCTURE
      28D.
      PROPERTY, PLANT AND EQUIPMENT
      28ITEM 5.
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS
      28A.
      OPERATING RESULTS
      28B.
      LIQUIDITY AND CAPITAL RESOURCES
      29C.
      RESEARCH AND DEVELOPMENT,
        PATENTS AND LICENSES, ETC.
      30D.
      TREND INFORMATION
      30ITEM 6.
      DIRECTORS, SENIOR MANAGEMENT
        AND EMPLOYEES
      32A.
      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
      32B.
      COMPENSATION
      33C.
      BOARD PRACTICES
      34D.
      EMPLOYEES
      34E.
      SHARE OWNERSHIP
      35ITEM 7.
      MAJOR SHAREHOLDERS AND
        RELATED PARTY TRANSACTIONS
      35A.
      MAJOR SHAREHOLDERS
      35B.
      RELATED PARTY TRANSACTIONS.
      36C.
      INTERESTS OF EXPERTS AND COUNSEL
      36ITEM 8.
      FINANCIAL INFORMATION
      36A.
      CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
        INFORMATION
      36B.
      SIGNIFICANT CHANGES
      36ITEM 9.
      THE OFFER AND LISTING
      36ITEM 10.
      ADDITIONAL INFORMATION
      37A.
      SHARE CAPITAL
      37B.
      MEMORANDUM AND ARTICLES
        OF ASSOCIATION
      37C.
      MATERIAL CONTRACTS
      38D.
      EXCHANGE CONTROLS
      39E.
      TAXATION
      39F.
      DIVIDENDS AND PAYING AGENTS
      39G.
      STATEMENT BY EXPERTS.
      39H.
      DOCUMENTS ON DISPLAY.
      40I.
      SUBSIDIARY INFORMATION
      40ITEM 11.
      QUANTITATIVE AND QUALITATIVE
        DISCLOSURES ABOUT MARKET RISK
      40ITEM 12.
      DESCRIPTION OF SECURITIES OTHER THAN EQUITY
        SECURITIES
      40PART II
      
      40ITEM 13.
      DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES
      40ITEM 14.
      MATERIAL MODIFICATIONS
        TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.
      40A.
      MATERIAL MODIFICATIONS TO THE RIGHTS OF
        SECURITY HOLDERS
      40B.
      USE OF PROCEEDS
      40ITEM 15.
      CONTROLS AND PROCEDURES
      40ITEM 16.
      AUDIT COMMITTEE FINANCIAL
        EXPERT, CODE OF ETHICS AND PRINCIPAL ACCOUNTANT FEES AND SERVICES
      41A.
      AUDIT COMMITTEE FINANCIAL EXPERT
      41B.
      CODE OF ETHICS
      41C.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES
      41PART III
      
      42


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|ITEM 17.       | FINANCIAL STATEMENTS | 42
|-------------- | -------------------- | --
|ITEM 18.       | FINANCIAL STATEMENTS | 42
|ITEM 19.       | EXHIBITS             | 42
|SIGNATURE PAGE | 44                  

3

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GLOSSARY OF MINING TERMS

The following is a glossary of some of the terms used in the
mining industry and referenced herein:

$/yd3 dollars per cubic yard.

Alluvial -a term used to identify particular types of,
or minerals found associated with, deposits made by flowing water, such as
alluvial gold

Arsenopyrite -a major ore of arsenic, Arsenopyite can
  contain a small amount of gold as an impurity

Assay  a precise and accurate analysis of the metal
contents in an ore or rock sample

Au - gold.

Auger drill  a handheld machine that produces small,
continuous core samples in unconsolidated materials

Biotite  dark-colored mica rich in iron,
magnesium, and potassium

Breccia a fragmental rock; any rock formation
essentially composed of uncemented, or loosely consolidated, small angular

Colluvium - A loose deposit of rock debris accumulated
through the action of gravity at the base of a cliff or slope.

Conglomerate  a sedimentary rock composed of rounded
fragments larger than 2 mm in diameter.

Contained gold  total measurable gold in grams or
ounces estimated to be contained within a mineral deposit. Makes no allowance
for economic criteria, mining dilution or recovery losses.

Diamond drill  a large machine that produces a more or
less continuous core sample of the rock or material being drilled.

Dike- a tabular igneous intrusion that cuts across the
layering of the country rock.

Feasibility study  a detailed report assessing the
feasibility, economics and engineering of placing a mineral deposit into
commercial production

Foliated said of a rock in which mineral grains have
been aligned in a planar fabric by shearing or metamorphism.

Fracture -the general term to include any kind of
discontinuity in a body of rock if produced by mechanical process such as shear
stress or tensile stress

gm/mtor gpt- grams per metric tonne.

Gold deposit - means a mineral deposit mineralised with
gold.

Gold resource  see geological or mineral resource

Grams per cubic meter - alluvial mineralisation measured
by grams of gold contained per cubic meter of material, a measure of gold
content by volume not by weight.

Graphite -a allotropic form of carbon found in nature

Greenstone  a rock in which the original igneous
minerals are replaced by dark green metamorphic minerals.

Inferred mineral resource -that part of a mineral resource
  for which quantity and grade or quality can be estimated on the basis of geological
  evidence and limited sampling and reasonably assumed, but not verified, geological
  and grade continuity. The estimate is based on limited information and sampling
  gathered through appropriate techniques from locations such as outcrops, trenches,
  pits, workings and drill holes

Hornblende  a dark a dark-colored, prismatic or
needle-shaped mineral rich in iron, magnesium, sodium and calcium.

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

Intrusive -cuts across (is intrusive into)

4

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Listwanite -(carbonate altered serpentinite) is
associated with gold mineralization.

Lode mining  mining of gold bearing rocks, typically in
the form of veins or stockworks

Mafic  said of a dark-colored, iron and magnesium rich
igneous rock.

Measured resourcemeans that part of a mineral resource
for which quantity, grade or quality, densities, shape, physical characteristics
are so well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.

Mineral claim or mining claim -the portion of
mining ground held under law by a claimant.

Mineralization -implication that the rocks contain
sulphide minerals and that these could be related to ore.

Net profit interest (NPI)  effectively a royalty based
on the net profits generated after recovery of all costs

Net smelter royalty or NSR - a royalty based on
the gross proceeds received from the sale of minerals less the cost of smelting,
refining, freight and other related costs.

Ore  a naturally occurring rock or material from which
economic minerals can be extracted at a profit

Ounce or oz. - a troy ounce or 20 pennyweights or 480
grains or 31.103 grams.

Oz/yd3ounces per cubic
  yard.

opt troy ounces per short ton

Placer -a place where gold is obtained by washing; an
alluvial or glacial deposit, as of sand or gravel, containing particles of gold
or other valuable minerals including gemstones.

Pluton  an igneous rock or body formed at depth within
the earth.

Probable reserve- the economically mineable part of an
indicated, and in some circumstances a measured resource demonstrated by at
least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.

Prospect  an area prospective for economic minerals
based on geological, geophysical, geochemical and other criteria

Proven reservemeans the economically mineable part of a
measured resource demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.

Pyrite  an iron sulfide mineral.

Quartz monzonite - a light-colored intrusive rock
composed of quartz and feldspar with moderately abundant biotite and hornblende
crystals

Reserve -that part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination.

Reverse circulation drill a large machine that
produces a continuous chip sample of the rock or material being drilled

Silicic  said of a light colored rock composed
primarily of silica and aluminum.

Skarn -a finegrained metamorphic rock that is usually
coloured green or red, ocassionally grey, black, brown or white. It forms
through thermal metamorphism as the mineralogical, chemical and crystallographic
changes in a solid-state rock, i.e. without melting, in response to new
conditions of pressure and/or temperature, and/or introduction of fluids.

Slickensides - a polished, striated rock surface caused
by one rock mass sliding over another in a fault plane

Stockwork -small veins of mineralization that have so
penetrated a rock mass that the whole rock mass can be considered mineralized

Syenite  Potassium-rich intrusive rock; at Granite
Mountain the syenite commonly has an abundance of mafic minerals.

Ton- short ton (2,000 pounds).

5

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Tonne- metric tonne (2,204.6 pounds).

Trenching  the surface excavation of a linear trench to
expose mineralization for sampling

Vein  a tabular body of rock typically of narrow
thickness and often mineralized occupying a fault, shear, fissure or fracture
crosscutting another pre-existing rock

For ease of reference, the following conversion factors are
provided:

1 mile
    = 1.609 kilometres
    2,204 pounds
    = 1 tonne1 yard
    = 0.9144 meter
    2,000 pounds/1 short ton
    = 0.907 tonne1 acre
    = 0.405 hectare
    1 troy ounce
    = 31.103 grams


Unless the context otherwise requires, all references to the
Registrant or the Company or Linux refer to Linux Gold Corp. All monetary
figures are in terms of United States dollars unless otherwise indicated.

6

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Foreign Private Issuer Status

Foreign Private Issuer Status:

Linux Gold Corp. (the "Company), is a Canadian corporation
incorporated under the laws of the Province of British Columbia. Over 50% of its
common stock is held by non-United States citizens and residents; our business
is administered principally outside the United States; and more than 50% of our
assets are located outside the United States. As a result, we believe that we
qualify as a "foreign private issuer" for continuing to report regarding the
registration of our common stock using this Form 20-F annual report format.

PART I

ITEM 1.         
 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 1 is not
required. Please see Item 6  Directors, Senior Management and Employees 
Directors and Senior Management.

ITEM
2.           OFFER
STATISTICS AND EXPECTED TIMETABLE

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 2 is not
required.

ITEM
3.           KEY
INFORMATION

A.           SELECTED
FINANCIAL DATA

The summary consolidated financial information set forth below
should be read in conjunction with, and is qualified in its entirety by
reference to, the Consolidated Financial Statements, as of and for the years
ended February 28, 2006 and February 28, 2005, together with the notes thereto,
which appear elsewhere in this annual report. The Consolidated Financial
Statements as of and for the years ended February 28, 2006 and February 28, 2005
have been audited by Smythe Ratcliffe and Manning Elliott, respectively. The
Consolidated Financial Statements are prepared in accordance with U.S. GAAP. See
Note 2 of the Notes to Consolidated Financial Statements.

The selected financial data set forth in the following table is
expressed in Canadian dollars. Since June 1, 1970, the Government of Canada has
permitted a floating exchange rate to determine the value of the Canadian dollar
as compared to the United States dollar. At February 28, 2006, US$1.00 was equal
to approximately C$1.1379.

The following represents our selected financial data for each
of the past five fiscal years, ending on February 28/29. The data presented is
prepared in accordance with generally accepted accounting principles in the
United States:

7

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Fiscal Years Ended February 28/29

2006
    2005 (Re-stated)
    2004 (Re-stated)
    2003
    2002Net Revenue
    $ -
    $ -
    $ -
    $ -
    $ -Income (loss) from continuing operations
    (830,605)
    (793,940)
    (433,297)
    (125,020)
    (420,261)Income (loss) from discontinued operations
    -
    -
    369,213
    (25,000)
    (366,448)Income (loss) from continuing operations per Common Share
    (0.01)
    (0.01)
    (0.00)
    -
    (0.02)Income (loss) from discontinued operations per Common Share
    -
    -
    (0.01)
    -
    (0.01)Total Assets
    542,640
    544,708
    322,610
    92,719
    11,240Working Capital (deficit)
    69,670
    128,204
    (91,924)
    (514,235)
    (1,549,592)Shareholders Equity (deficit)
    79,845
    148,729
    (85,924)
    (514,233)
    (1,542,141)Cash Dividends per common share
    $ nil
    $ nil
    $ nil
    $ nil
    $ nil


Reference is made to "Item 4. Information on the Company" and
"Item 5. Operating and Financial Review and Prospects for a description of the
initiation and progression of our activities since incorporation.

Currencies and Exchange Rates:

We publish our financial statements in Canadian dollars. Unless
otherwise indicated, monetary amounts referred to in this annual report are in
Canadian dollars. Unless otherwise indicated, all translations from Canadian
dollars to US dollars have been made at a rate of CDN$ 1.1379 to US$ 1.00, the
noon buying rate as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate") on February 28, 2006. We do not represent
that Canadian dollar or US dollar amounts could be converted into US dollars or
Canadian dollars, as the case may be, at any particular rate, the rates below or
at all. On June 8, 2006, the Noon Buying Rate was CDN$ 1.1233 to US$ 1.00. The
following table sets forth noon buying rate for US dollars in New York City for
cable transfers in Canadian dollars as certified for customs purposes by the
Federal Reserve Bank of New York for the periods indicated:

The following table reflects the monthly high and low exchange
rates for U.S.$1.00 to the Canadian dollar for the following periods.

Month
    Year
    High (CAD$)
    Low (CAD$)November
    2005
    1.196
    1.1656December
    2005
    1.1736
    1.1507January
    2006
    1.1726
    1.1436February
    2006
    1.1577
    1.1379March
    2006
    1.1722
    1.132April
    2006
    1.1708
    1.1203May
    2006
    1.1232
    1.0989


8

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The following table lists the average exchange rate for US$1.00
to the Canadian dollar for the last five years based on the average month-end
exchange rates.

Year
    Average
    Low/High
    February 29/282006
    1.1992
    1.1379/ 1.2425
    1.13792005
    1.2888
    1.1774/1.3968
    1.23142004
    1.3667
    1.269 / 1.4905
    1.34052003
    1.5438
    1.5995 / 1.488
    1.48802002
    1.5625
    1.5102/1.6128
    1.6049


B.           CAPITALIZATION
AND INDEBTEDNESS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in this Item 3.B is
not required

C.           REASON
FOR THE OFFER AND USE OF PROCEEDS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 3.C is not
required.

D.           RISK
FACTORS

The occurrence of any of the following risks could hurt our
business, financial condition or results of operations. In such case, the
trading price of our shares could decline and you could lose all or part of your
investment. Other risks and uncertainties not now known to us or that we think
are immaterial may also impair our business.

RISK FACTORS RELATED TO OUR BUSINESS

Our Limited and Changing Operating History.We initially focused the business of the Company on natural resource
development. We changed direction becoming involved in the information
technology industry to take advantage of the booming technology sector and the
declining precious metals markets. We were not successful in that industry
segment. We have returned our focus on mining and exploration.

Financing Risks.There is no assurance that we
will be able to secure the financing necessary to explore, develop and produce
our mineral properties.

We do not presently have sufficient financial resources or
operating cash-flow to undertake solely all of our planned exploration and
development programs. The development of our properties may therefore depend on
obtaining a joint venture partners, and on our ability to obtain additional
required financing. There is no assurance we will be successful in obtaining the
required financing, the lack of which could result in the loss or substantial
dilution of our interests (as existing or as proposed to be acquired) in our
properties as disclosed herein. In addition, we have no experience in developing
mining properties into production and its ability to do so will be dependent
upon securing the services of appropriately experienced personnel or entering
into agreements with other major mining companies which can provide such
expertise.

As noted in our audited consolidated financial statements for
the year ended February 28, 2006 we have incurred significant operating losses
and have an accumulated deficit of $ 9,212,774 at February 28, 2006.
Furthermore, we had working capital deficit of $ 69,670 as at February 28, 2006,
which is not sufficient to achieve our planned business objectives. Our ability
to continue as a going concern is dependent on continued financial support from
our shareholders and other related parties, the ability of the Registrant to
raise equity financing, and the attainment of profitable operations, external
financings and further share issuances to meet our liabilities as they become
payable.

Our ability to continue as a going concern is dependent on
continued financial support from our shareholders and other related parties, our
ability to raise equity capital financing, and the attainment of profitable
operations, external financings and further share issuance to satisfy working
capital and operating needs. The auditors report on the February 28, 2006
consolidated financial statements include additional comments for U.S. readers
that states that

9

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conditions exist that raise substantial doubt about our ability
to continue as a going concern. The consolidated financial statements do not
include adjustments that might result from the outcome of this uncertainty.

Significant Losses for the Foreseeable Future.We expect to incur significant losses for the foreseeable future and cannot
be certain when or if we will achieve profitability. Failure to become and
remain profitable will adversely affect the value of our Common Shares and our
ability to raise capital and continue operations.

Going concern assumption used by our auditor highlights
doubts on our ability to successfully continue.Our consolidated
financial statements have been prepared assuming we will continue on a going
concern basis; however unless additional funding is obtained this assumption
will have to change.

Volatility of The Over-the-Counter Bulletin Board (OTC
BB) may adversely affect the price of the Common Stock.Certain
stocks listed on the OTC BB have recently experienced significant price and
volume fluctuations and decreases which have adversely affected the market price
of our and other stocks listed on the OTC BB without any regard to the
underlying fundamentals of such stocks. These broad market fluctuations, which
may occur in the future may continue to adversely affect the market price of the
Common Stock.

We do not expect to pay cash dividends.We
intend to retain any future earnings to finance our business and operations and
any future growth. Therefore, we do not anticipate paying any cash dividends in
the foreseeable future.

Potential lack of attractive investment targets.Continued volatility of stock prices on the OTC BB may have a material
adverse effect on our ability to raise capital on the OTC BB or by private
investment, and the price of our common stock could fluctuate substantially.

Other Factors. Our areas of business may
be affected from time to time by such matters as changes in general economic
conditions, changes in laws and regulations, taxes, tax laws, prices and costs,
and other factors of a general nature which may have an adverse effect on our
business.

Conflict of Interest. Some of our current
officers and directors have other unrelated full-time positions or part-time
employment. Some officers and directors will be available to participate in
management decisions on a part-time or as-needed basis only. Our management may
devote its time to other companies or projects which may compete directly or
indirectly with us.

U.S. Investors May Not Be Able To Enforce Their Civil
Liabilities Against Us or Our Directors, Controlling Persons and Officers.We are organized under the laws of Canada. All of our directors,
controlling persons and officers are residents of Canada and all or a
substantial portion of their assets and substantially all of our assets are
located outside of the United States. As a result, it may be difficult for U.S.
holders of our common shares to effect service of process on these persons
within the United States or to realize in the United States upon judgments
rendered against them. In addition, you should not assume that the courts of
Canada (i) would enforce judgments of U.S. courts obtained in actions against us
or such persons 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 us or such persons predicated
upon the U.S. federal securities laws or other laws of the United States.

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

|- | where the U.S. court where the judgment was rendered had
      no jurisdiction according to applicable Canadian law;                                                                                                                                                                                       
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                            
|- | the judgment was subject to ordinary remedy (appeal,
      judicial review and any other judicial proceeding which renders the
      judgment not final, or enforceable under the laws of the applicable state)
      or not final, conclusive or enforceable under the laws of the applicable
      state;
|  |                                                                                                                                                                                                                                                                                                            
|- | the judgment was obtained by fraud or in any manner
      contrary to natural justice or rendered in contravention of fundamental
      principles of procedure;                                                                                                                                           

10

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|- | 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;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                             
|- | the outcome of the judgment of the U.S. court was
      inconsistent with Canadian public policy;                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                             
|- | 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                                                                                                         
|  |                                                                                                                                                                                                                                                                             
|- | there has not been compliance with applicable Canadian
      law dealing with the limitation of actions.                                                                                                                                                                    

Changes to Economic Policies in China.We are
currently exploring our property in China. We could be adversely affected if
China changes its economic policies. As part of its economic reform, China has
designated certain areas as Special Economic Zones. Foreign enterprises in these
areas benefit from greater economic autonomy and more favorable tax treatment
than enterprises in other parts of China. Changes in the policies or laws
governing Special Economic Zones could have a material adverse effect on us.
Moreover, economic reforms and growth in China have been more successful in
certain provinces than others, and the continuation or increase of these
disparities could affect the political or social stability of China.

Management has no Significant Minerals Exploration
Technical Training.No member of our management team has significant
technical training in minerals exploration or mining and starting and operating
a mine. Due to these factors, our management may not be fully aware of many of
the specific requirements related to working within his industry, that their
decisions may not take into account standard engineering or managerial
approaches mineral exploration companies commonly use. This risk is that our
operations, earnings and ultimate financial success could suffer due to
managements lack of experience in this industry.

RISK FACTORS RELATED TO THE NATURAL RESOURCE INDUSTRY

Exploration and Development Risks.There is no
assurance given by the Company that our exploration and development programs and
properties will result in the discovery, development or production of a
commercially viable ore body. The business of exploration for minerals and
mining involves a high degree of risk. Few properties that are explored are
ultimately developed into producing mines. At present, none of the Registrants
properties have defined ore bodies with reserves and resources, and the proposed
exploration programs are an exploratory search for ore. There is no assurance
that our mineral exploration and development activities will result in any
discoveries of bodies of commercial ore. The probability of an individual
prospect ever having reserves and being commercially viable is extremely
remote, and, in all probability, our properties do not contain any reserves, and
any funds spent on exploration will probably not be recovered. Unusual or
unexpected geological structures or formations, fires, power outages, labour
disruptions, floods, explosions, cave-ins, land slides and the inability to
obtain suitable or adequate machinery, equipment or labour are other risks
involved in the operation of mines and the conduct of exploration programs. We
have relied and may continue to rely upon consultants and others for
construction and operating expertise. The economics of developing gold and other
mineral properties are affected by many factors including capital and operating
costs, variations of the grade of ore mined, fluctuating mineral markets, costs
of processing equipment and such other factors as government regulations,
including regulations relating to royalties, allowable production, importing and
exporting of minerals and environmental protection. Depending on the price of
gold or other minerals produced, we may determine that it is impractical to
commence or continue commercial production. Substantial expenditures are
required to establish reserves through drilling, to develop metallurgical
processes to extract metal from ore and to develop the mining and processing
facilities and infrastructure at any site chosen for mining. No assurance can be
given that funds required for development can be obtained on a timely basis. The
marketability of any minerals acquired or discovered may be affected by numerous
factors which are beyond our control and which cannot be accurately foreseen or
predicted, such as market fluctuations, the global marketing conditions for
precious and base metals, the proximity and capacity of milling facilities,
mineral markets and processing equipment, and such other factors as government
regulations, including regulations relating to royalties, allowable production,
importing and exporting minerals and environmental protection.

11

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Estimates of Mineral Deposits.There is no
assurance that any estimates of mineral deposits herein will not change.
Although all figures with respect to the size and grade of mineralized deposits
included herein have been carefully prepared by the Company, or, in some
instances have been prepared, reviewed or verified by independent mining
experts, these amounts are estimates only and no assurance can be given that any
identified mineralized deposit will ever qualify as a commercially viable
mineable ore body that can be legally and economically exploited.

Mineral Prices.There is no assurance that
mineral prices will not change. The mining industry is competitive and mineral
prices fluctuate so that there is no assurance, even if commercial quantities of
a mineral resource are discovered, that a profitable market will exist for the
sale of same.

Title Opinions. The existence of title
opinions should not be construed to suggest that we have good and marketable
title to all of our properties. We follow the usual industry practice in
obtaining title opinions with respect to our lands. No examination has been made
of the ground to determine if any of our mineral claims have been staked or
assessment work carried out.

Regulatory Approvals. Our operations
require the procurement of numerous permits and compliance with an extensive
number of codes and regulations. Mining, exploration and exploitation permits
are required. While we believe that all requirements in this regard have been
met, failure to comply with regulatory requirements could result in permits
being withdrawn or suspended. Further, changes in these regulations or in their
application may adversely affect our operations.

Environmental Issues. We must comply with
environmental laws and regulations. There can be no assurance that violations
will not occur. In the event of a future violation of environmental laws we
could be held liable for damages and for the costs of remedial actions.
Environmental laws could become more stringent over time imposing greater
compliance costs and increasing risks and penalties associated with a violation.

Third Party Reliance.Our rights to acquire
interests in certain mineral properties have been granted by third parties who
themselves hold only an option to acquire such properties. As a result, we may
have no direct contractual relationship with the underlying property holder.

UNCERTAINTIES AND RISKS RELATING TO COMMON SHARES

There is only a limited public market for our common
shares on the OTC Bulletin Board and that market is extremely volatile.There is only a limited public market for our common shares on the OTC
Bulletin Board, and there is a risk that that a broader or more active public
trading market for our common shares will never develop or be sustained, or that
current trading levels will not be sustained.

The market price for the common shares on the OTC Bulletin
Board has been and we anticipate will continue to be extremely volatile and
subject to significant price and volume fluctuations in response to a variety of
external and internal factors. This is especially true with respect to emerging
companies such as ours. Examples of external factors, which can generally be
described as factors that are unrelated to the operating performance or
financial condition of any particular company, include changes in interest rates
and worldwide economic and market conditions, as well as changes in industry
conditions, such as changes in oil and natural gas prices, oil and natural gas
inventory levels, regulatory and environment rules, and announcements of
technology innovations or new products by other companies. Examples of internal
factors, which can generally be described as factors that are directly related
to our consolidated financial condition or results of operations, would include
release of reports by securities analysts and announcements we may make from
time-to-time relative to our operating performance, drilling results, advances
in technology or other business developments.

Because we have a limited operating history and no profits to
date, the market price for the common shares is more volatile than that of a
seasoned issuer. Changes in the market price of the common shares, for example,
may have no connection with our operating results or prospects. No predictions
or projections can be made as to what the prevailing market price for the common
shares will be at any time, or as to what effect, if any, that the sale of
shares or the availability of common shares for sale at any time will have on
the prevailing market price.

You will be subject to the penny stock rules to the
extent our stock price on the OTC Bulletin Board is less Than $5.00.Since the common shares are not listed on a national stock exchange or
quoted on the NASDAQ Market within the United States, trading in the common
shares on the OTC Electronic Bulletin Board is subject, to the extent the market
price for the common shares is less than $5.00 per share, to a number of
regulations known as the "penny

12

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stock rules". The penny stock rules require a broker-dealer to
deliver a standardized risk disclosure document prepared by the SEC, to provide
the customer with additional information including current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, monthly account statements showing the market
value of each penny stock held in the customer's account, and to 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. To
the extent these requirements may be applicable they will reduce the level of
trading activity in the secondary market for the common shares and may severely
and adversely affect the ability of broker-dealers to sell the common shares.

You should not expect to receive dividends.We
have never paid any cash dividends on shares of our capital stock, and we do not
anticipate that we will pay any dividends in the foreseeable future. Our current
business plan is to retain any future earnings to finance the expansion of our
business. Any future determination to pay cash dividends will be at the
discretion of our board of directors, and will be dependent upon our
consolidated financial condition, results of operations, capital requirements
and other factors as our board of directors may deem relevant at that time.

Our right to issue additional capital stock at any time
could have an adverse effect on your proportionate ownership and voting rights.We are authorized under our Articles of Incorporation to issue
200,000,000 common shares. Subject to compliance with applicable corporate and
securities laws, we may issue these shares under such circumstances and in such
manner and at such times, prices, amounts and purposes as our board of directors
may, in their discretion, determine to be necessary and appropriate. Your
proportionate ownership and voting rights as a common shareholder could be
adversely affected by the issuance of additional common shares, including a
substantial dilution in your net tangible book value per share.

ITEM
4.           INFORMATION
ON THE COMPANY

A.           HISTORY
AND DEVELOPMENT

The Company was incorporated on February 27, 1979 under a
perpetual charter pursuant to the British Columbia Company Act by registration
of its Memorandum and Articles and was extraprovincially registered in the
Province of Alberta on October 12, 1995 under the name Flame Petro-Minerals
Corp. At an extraordinary general meeting held on March 15, 2000, our
shareholders approved the change of name of the Company from Flame
Petro-Minerals Corp. to LinuxWizardry Systems, Inc, which name change was
effected on March 21, 2000. At our annual meeting of shareholders on February
20, 2003, our shareholders approved the change of name of the Company from
LinuxWizardry Systems, Inc. to Linux Gold Corp., which name change was effected
March 18, 2003. Our authorized capital consists of 200,000,000 Common Shares
without par value. Of these, 68,287,773 shares were issued and outstanding as of
February 28, 2006 and 68,387,773 shares were issued and outstanding as of the
date of this Form 20-F. Our head office is located at #1103 -11871 Horseshoe
Way, Richmond, B.C., V7A 5H5.

On February 20, 2003 we held a shareholders meeting at which
our shareholders voted to change our name from LinuxWizardry Systems, Inc. to
Linux Gold Corp. and obtained a new OTC BB trading symbol LNXGF. We believe our
new name, Linux Gold Corp. more closely represents our true business activities.

On March 29, 2004, the new British Columbia Business
Corporations Act (the "BCA") came into force in British Columbia and replaced
the former British Columbia Company Act (Former Act) , which is the statute
under which we were previously governed. Under the BCA, we have two years within
which to transition ("Transition") under the new statute. In accordance with the
BCA, we cannot amend our Articles or Notice of Articles until the Transition to
the BCA is completed. We filed a transition application with the Registrar of
Companies British Columbia and completed the Transition on June 11, 2004.

Concurrent with the completion of the Transition, we were
required in accordance with the BCA to incorporate certain provisions known as
the "Pre-Existing Company Provisions" (the "Pre-Existing Company Provisions")
into our Notice of Articles, which replaced the existing Memorandum . The
Company is a pre-existing company under the BCA (that is, a company in
existence at the time the BCA came into force). The Pre-Existing Company
Provisions provide our company with certain default provisions in case certain
provisions which are required to be included in the Articles under the BCA are
not included in our Articles.

We filed our Notice of Articles with the Registrar of Companies
which contains basic information relating to the Company, including our name,
the particulars of the directors and the authorized capital. This was a
mandatory requirement for transition to the BCA.

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On August 16, 2004, at the Annual General Meeting of
shareholders, our shareholders passed a special resolution that the Notice of
Articles, filed September 15, 2005, be altered to remove the Pre-existing
Company Provisions set forth in Part 16 of the Regulations to the Business
Corporations Act (British Columbia); and delete and replace our Articles in
their entirety and no longer apply to Linux Gold Corp. The New Articles, among
other things, incorporate and amend certain of the information required by the
Pre-Existing Company Provisions.

Our Incorporation Number is BC0187279. Our Articles do not
restrict the nature of the business that may be carried on by the Company.

Since our inception and during the three fiscal years ending in
February 2006, we had been involved in oil and gas exploration/production and
mineral property exploration. We have investigated several mineral properties in
Canada, the United States, China and Chile.

We also own a 1.277% net working interest in an oil well
located in Fayette County, Texas. To date, we have received no revenues from our
mining property activities, and have received negligible net revenues after
operating costs from our interest in the Fayette County oil well during the past
five fiscal years. As a result, we wrote off our interest in the oil well
located in Fayette County.

We have no current plans to pursue further activities in either
the oil or gas business.

Our current plans are to joint venture and explore our mineral
properties in Northern B.C., Alaska and China. The Company has acquired a 100%
interest in the TY and ORO properties in B.C. and has a 50% interest in the Fish
Creek property in Alaska, which is optioned to Teryl Resources Corp., and an
option on a private company, which has an option to earn up to 85% of a mining
property in Hebei Province, China.

We are currently in the exploration stage and equity financing
is required to continue exploration work on our mineral claims. As a result of
the uncertainty that is typical in an explorative company there is doubt about
our ability to continue as going concern as ultimate success will be based on
securing adequate equity financing and/or the determination of economically
recoverable mineral reserves on its mineral property claims.

B.           BUSINESS
OVERVIEW

Nature of the Companys Operations

Mineral Properties

We are an exploration stage company and there is no assurance
that a commercially viable mineral deposit exists on any of our properties.
Further exploration will be required before a final evaluation as to the
economic and legal feasibility is determined.

If we complete our current exploration programs and if we are
successful in identifying a mineral deposit, we will have to spend substantial
funds on further drilling and engineering studies before we will know if we have
a commercially viable mineral deposit or reserve on any of our properties.

We will seek equity financing to provide working capital and to
meet exploration commitments on all our properties.

Fish Creek Claims, Alaska

We currently own a 50% joint venture interest in 30 state of
Alaska mining claims, comprising 1,032 acres, known as the Fish Creek Prospect,
located in the Fairbanks Mining District in Alaska. These claims are subject to
an option agreement with Teryl Resources Corp. Teryl Resources Corp. may
purchase the 5% net royalty for $500,000 U.S. within 1 year after production on
a 25% working interest. Teryl also agrees to expend a minimum of $500,000 U.S.
after three years from the date of the agreement. The claims are legally
maintained by recording an affidavit of annual labor for a minimum expenditure
of $100 per claim ($3,000 total) and by paying annual rental to the State of
Alaska in the amount of $130 per claim ($3,900 total). All mechanized
exploration activity must be permitted by the Alaska Division of Mining, Alaska
Department of Fish and Game, and the U.S. Corps of Engineers. Water can be
withdrawn from Fish Creek to support exploration activities with oversight from
the Alaska Department of Conservation. Currently, we are permitted to conduct
exploration by drilling. To the best of our knowledge, we are operating in
compliance with all applicable environmental regulations. There currently are no
unusual social, political or environmental encumbrances to mining on the
project. We currently holds a valid exploration permit on

14

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the project. Additional permits for future work will be
acquired from the Division of Mining, Alaska Department of Fish and Game, and
the U.S. Corps of Engineers on an as-needed basis.

The Fish Creek project is located 25 miles north of Fairbanks
in an important mining district with permissive land status and excellent road
access to the property. Currently, there are only primitive trails developed
within the property to access exploration sites. The project is located within
metamorphic and plutonic host rocks that are similar in composition and age to
rock units that contain commercially viable mineralization elsewhere in the
Fairbanks Mining District. The property is also located on a drainage that was
mined extensively for alluvial gold in the past both upstream and downstream of
the Fish Creek project. Limited exploration conducted between 1992 and 2003 did
not reveal significant bedrock exposures of mineralization, however, very widely
spaced placer drilling over a large area of the property conducted in 1996
indicated the presence of placer gold in the alluvial deposits. More extensive
and closer spaced placer gold drilling conducted in 2004 confirmed the presence
of significant concentrations of placer gold on the claims.

Two independent technical consultants are utilized by the
Company for work on the Fish Creek property. Evaluations for alluvial (placer)
gold are managed by Jeff Keener of NordWand Enterprize, P.O. Box 82811,
Fairbanks, Alaska, 99708, USA. Mr. Keener is a graduate of the University of
Alaska, with a B.S. degree in Geology (1991). Mr. Keener is a member of the
Alaska Miners Association and has applied for membership with the American
Institute of Professional Geologists. From 1986 to the present he has been
actively employed in various capacities in the mining industry in numerous
locations in Alaska, Nevada, Arizona, and California and is recognized as an
expert in the field of placer examination.

For lode gold exploration we utilize Avalon Development Corp.
of Fairbanks, Alaska, to conduct any proposed exploration work on the Fish Creek
Property. Mr. Curt Freeman is the President of Avalon Development Corporation,
P.O. Box 80268, Fairbanks, Alaska, 99708, USA. Mr. Freeman is a graduate of the
College of Wooster, Ohio, with a B.A. degree in Geology (1978), and a graduate
of the University of Alaska with an M.S. degree in Economic Geology (1980). Mr.
Freeman is a licensed geologist in Alaska (AA#159) and is a member of the
American Institute of Professional Geologists (CPG#6901), the Society of
Economic Geologists, the Geological Society of Nevada, the Alaska Miners Assoc.
and the Prospectors and Developers Assoc. of Canada. From 1980 to the present,
he has been actively employed in various capacities in the mining industry in
numerous locations in North America, Central America, South America, New Zealand
and Africa.

The following map shows the location of and access to our
property.



A ground magnetic survey was completed on the Fish Creek
property on November 20, 2003 on the right limit (southeast) side of Fish Creek
Valley, approximately 600  700 feet down-valley from the toe of the Fort Knox
mine fresh water supply dam. This program was an orientation survey to test the
right limit bench of Fish Creek for a suspected buried placer gold-bearing
channel. Magnetic surveys of this type have been successful in locating elevated
magnetic

15

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field intensities associated with the heavy, magnetic mineral
concentrations often associated with placer gold accumulations. The field survey
consisted of two lines with 200-foot line spacing and 10-foot station spacing,
which appears to provide sufficient detail to extrapolate magnetic data between
lines. Signatures from the two traverses are interpreted to cross five features,
of which three have the possibility of being associated with alluvial
concentrations of various characteristics. A program of additional ground
magnetics surveying followed by trenching and/or large-diameter auger drilling
to evaluate the two most promising alluvial gold targets was recommended for
early 2004.

In May, 2004, we commenced a closely spaced magnetic survey
over the previous magnetic targets that were discovered in 2003. The magnetic
survey located two anomalies indicative of a potential buried placer gold
bearing channel. Total cost of this program was about $8,500.

In July, 2004, a total of 20 soil samples were collected near
Odden Creek with a hand held power auger to depths from 2 to 7.5 feet. These
holes were placed on a grid pattern with a hole spacing of 200 feet to test for
metal anomalies and to examine bedrock chips in proximity to intrusive colluvium
found at the surface and in the stream bed. Several groupings of holes were
weakly anomalous in gold pathfinder elements and identified as prospective lode
gold targets. Total cost of this program was $1,800.

In September and October, 2004, a 22 hole (1,506 feet) reverse
circulation drilling program was completed on the property. Twenty holes were
drilled on two widely spaced lines (4,000 feet apart) to test the placer gold
potential while two deeper holes were drilled near Odden Creek to test an
intrusive-related lode gold target (Keener, 2005b). One of the deep holes
intersected weakly anomalous concentrations of gold at a depth of 195 to 205
feet, whereas six of the twenty placer holes returned intervals with gold values
in excess of 0.01 ounces of gold per cubic yard (Table 1.).

Fish Creek Hole Number
    From (ft)
    To (ft)
    Thickness (ft)
    Grade (oz/yd3)
    Value ($/yd3)UFL2 H1
    40
    45
    5
    0.0116
    4.18UFL2 H1.5
    40
    45
    5
    0.0129
    4.64UFL2 H2
    40
    45
    5
    0.0223
    8.03UFL2 H3
    40
    45
    5
    0.0629
    22.64UFL2 H3.5
    40
    47
    7
    0.0159
    5.72UFL10 H13
    52
    58
    6
    0.0108
    3.89


Table 1. Significant drill holes from the 2004 Fish Creek
placer drilling program. Gold price used is 3-year average (2002 to 2004).

These values suggest that there is a potential to develop a
commercially viable alluvial gold resource on the Fish Creek project. Total cost
of the combined placer and lode drilling program was approximately $54,000.

In the 2004 drilling program, samples were collected every five
feet. Placer samples were concentrated on-site with a small hydraulic
concentrator and panned to extract the visible gold. The placer gold particles
were dried and weighed with a precision Haigis balance and retained in glass
sample vials. Placer analysis was performed by Mr. Keener, who also is storing
the gold samples and concentrate reject in his office located in Fairbanks,
Alaska. Bedrock samples were collected in large sample bags and transported to
the Kinross rock core storage facility in Fox, Alaska where they were
subsequently transferred to Alaska Assay Laboratory for splitting and
preparation. Reduced samples were sent to Nevada Assay Laboratory of Reno,
Nevada to be analyzed for 69 elements by ICP-MS techniques and for gold by fire
assay. The pulps and rejects are being stored by Alaska Assay Laboratory at
their facility in Fairbanks, Alaska. Bedrock chip samples, collected every five
feet from the two lode holes, are retained in conventional chip trays and are
being stored in Mr. Keeners Fairbanks office.

In June, 2005, we commenced an auger drilling program near Too
Much Gold Creek to collect soil samples from the top of bedrock. An auger track
rig was used to drill 36 holes to a maximum depth of 60 feet on lines spaced 500
feet apart where holes were spaced 200 feet apart. No significant mineralization
was found in the 2005 soil sampling program. Soil samples were transferred to
Alaska Assay Laboratory in Fairbanks, Alaska, for preparation and were analyzed
by ICP-MS for 69 elements and fire assay for gold by Reno Assay Laboratory in
Reno, Nevada. Pulps and rejects are being stored by Alaska Assay Laboratory at
their Fairbanks facility. The total cost for the 2005 soil sampling program was
$16,000.

Currently, there are no resources or reserves on the Fish Creek
property that comply with the Canadian Institute of Mining and Metallurgy (CIM)
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted
by

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CIM Council on August 20, 2000. While encouraging in its
results, the drill-hole density of the 2004 placer drilling campaign at Fish
Creek was not sufficient to allow estimation of CIM compatible resources or
reserves.

Additional work on the Fish Creek property will be based on
results from the previous drilling programs. Each successive phase of
exploration is dependent on generation of encouraging results from the previous
programs and the increasing potential for delineation of commercially viable
resources on the project.

We anticipate utilizing the services of NordWand Enterprize and
Avalon Development Corp. in the future to advance the exploration of the Fish
Creek property. A two phase program has been recommended as follows:

| | 1. | Phase One Infill Reverse Circulation Drilling: Infill
      drilling using large diameter reverse circulation methods is warranted on
      the property to better define the placer gold mineralization outlined in
      2004. Previous experience by Keener and other operators within the Fish
      Creek drainage has shown that drilling is an effective method of sampling
      and valuating the placer deposit and provides predictable estimates of
      recovered gold in subsequent production. Sampling procedures similar to
      those utilized in 2004 should be followed. Additionally, all holes should
      be continued into bedrock for at least 25 feet to test for the presence of
      lode gold mineralization. The primary goal of this program would be to
      develop measured mineral resources compliant with industry criteria (CIM).
      A secondary goal would be to determine if significant lode gold
      mineralization exists in the area drilled. Recommended future work on the
      Fish Creek property should include drilling 20 reverse circulation drill
      holes (8 diameter) for a total of 1,600 feet of drilling. Construction of
      an all-weather creek crossing for off-road vehicles, near the mouth of
      Odden Creek, will facilitate this work. The estimated cost of such work is
      $50,000. Fieldwork will take about one to two weeks, whereas sample
      analysis and reporting will take an additional two to four
weeks.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 2. | Phase Two Step-out Reverse Circulation Drilling: if
      results of the Phase One infill drilling are encouraging, step-out
      drilling using large diameter reverse circulation methods is warranted, to
      add greater detail to the outlined mineral resource and to develop
      additional measured mineral resources. Recommended Phase Two work on the
      Fish Creek property should include drilling 55 reverse circulation drill
      holes (8 diameter) for a total of 4,400 feet of drilling. The estimated
      cost of such work is $150,000. Fieldwork will take about two to three
      weeks, whereas sample analysis and reporting will take an additional four
      to six weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

In August 2005, we commenced an extensive auger drilling
program on the All Gold Creek geophysical anomaly. The auger track rig can drill
up to a depth of 80, several auger drill holes are planned to test the aerial
geophysical anomaly and the coincident gravity low target for future R/C
drilling, based on positive results for the auger drilling program.

TY Gold Property, Bralorne Mining District, British
Columbia

The Ty and ORO properties are located adjacent to one another
and roughly 6 miles east of Goldbridge, British Columbia. Access to the property
from either Goldbridge (10 km west) or Lillooet (96 km east) is readily gained
by way of a gravel highway, which runs along the north side of Carpenter Lake.
Since the property is situated close to the coast of British Columbia and lies
between 640 and 1040 meters altitude, it has reasonably long, warm summers and
short, crisp winters.

The Alpha zone is situated in a 20 meter wide shear zone in
massive green and purple volcanics. It strike N80E and dips vertically. The Beta
zone is not explored over its full width due to bedrock depths at both ends of
the backhoe trenches being beyond the digging range of a backhoe. The zone
strikes NE/SW and dips 30° - 50° NW. It is bounded on the hanging wall by a 3 
5 cm wide, rusty shear which shows well developed slickensides and graphite (the
footwall side was not exposed because the bedrock surface slopes off too steeply
and is beyond digging range).

The Beta zone may have a hanging wall and footwall vein  as is
typical of gold systems in the Bridge River area and many other vein gold
districts (ie the Motherlode system of California). This would explain the
presence of two intersections in some of the holes. The geology of the zone is
not yet understood, as rotary drill cuttings are not as informative as drill
core.

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On May 2, 2003 we announced that we had acquired an option to a
100% interest in 21 units in the Bralorne/Lillooet mining division in British
Columbia, called the TY Gold Property. We will pay $30,000 over three years and
150,000 common shares. The TY Gold Property is subject to a 2% net smelter
interest (NSR). We have an option to purchase each 1% NSR for $1,000,000 prior
to production. The TY Gold Property is adjacent to our newly acquired ORO
Property. We now have a total of 41 units in the Bralorne area.

Previous drilling completed on the TY Gold Property on the Beta
zone encountered values up to 5 feet of 5.86 oz/ton silver and 1.129 oz/ton
gold. Additional drilling was recommended by Sampson Engineering Inc. to further
explore the Beta zone.

In August 2003, we completed a phase I drill program. Four
diamond drill holes of approximately 200 feet each in length were drilled in the
Beta Gold zone to confirm the high-grade results of drilling in 1987.

All four holes drilled have encountered extensive stockwork
zones and listwanite alteration, favourable geology for hosting Bralorne-type
gold deposits. The core was split and assayed for gold and silver. Soil sampling
is also underway to ascertain the strike length and surface extent of the Beta
zone. Based on drill results, a phase II, 3,000 foot diamond drilling program
will be recommended to explore the western side of the Beta zone.

On September 2, 2003, we announced that additional units had
been staked surrounding the Companys TY Gold property and in several strategic
locations in the Bralorne Mining District. Four diamond drill holes have been
completed on the TY Gold property to confirm the high-grade results. Results
from the 4 holes are expected in early September.

In September 2003, we continued a second phase of drilling on
the TY Gold property. The purpose of the program was to confirm high-grade
results encountered by previous drilling on the property.

On November 6, 2003, we announced that diamond drilling results
from Holes 3TD-1 through 6. Gold values were mixed though generally low-grade
with slightly elevated lead/zinc values over minor intervals. The highest gold
value seen (1.48 g/t  hole 3TD 1:84-89) occurred within a highly stockworked,
altered volcanic breccia.

While favorable gold indicators such as listwanite alteration,
abundant stockworking and arsenopyrite mineralization were frequently
encountered gold values were somewhat lower than anticipated. The drill program
is to be extended for additional holes in an attempt to intercept higher-grade,
known mineralization encountered by previous drilling in the 1980s.

We will continue exploration work on the TY Gold property and
will meet the terms of the acquisition agreement unless the Company decides to
not continue due to poor results or economic reasons.

There currently are no resources or reserves on the Ty property
that comply with the Canadian Institute of Mining and Metallurgy (CIM) Standards
on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM
Council on August 20, 2000. While encouraging in its results, the previous
drilling at Ty was not sufficient to allow estimation of CIM compatible
resources or reserves

We do not consider the Ty property to be a material property.

ORO Property, Lillooet Mining Division, British Columbia

The Ty and ORO properties are located adjacent to one another
and roughly 6 miles east of Goldbridge, British Columbia. Access to the property
from either Goldbridge (10 km west) or Lillooet (96 km east) is readily gained
by way of a gravel highway, which runs along the north side of Carpenter Lake.
Since the property is situated close to the coast of British Columbia and lies
between 640 and 1040 meters altitude, it has reasonably long, warm summers and
short, crisp winters.

The Alpha zone is situated in a 20 meter wide shear zone in
massive green and purple volcanics. It strike N80E and dips vertically. The Beta
zone is not explosed over its full width due to bedrock depths at both ends of
the backhoe trenches being beyond the digging range of a backhoe. The zone
strikes NE/SW and dips 30° - 50° NW. It is bounded on the hanging wall by a 3 
5 cm wide, rusty shear which shows well developed slikensides and graphite (the
footwall side was not exposed because the bedrock surface slopes off too steeply
and is beyond digging range).

The Beta zone may have a hanging wall and footwall vein  as is
typical of gold systems in the Bridge River area and many other vein gold
districts (ie the Motherloade system of California). This would explain the
lower intersection in some of the holes. The geology of the zone is not yet
understood, as rotary drill cuttings are not as informative as drill

18

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core.

In April 2003, we acquired a 100% interest in 20 mineral claim
units, subject to a 2% net smelter return, called the ORO property in the
Lillooet Mining Division, BC, for $10,000 and 100,000 shares of Linux Gold Corp.
We have the option to purchase back each 1% NSR return for $1,000,000 prior to
production. Several Very Low Frequency  Electromagnetic (VLF-EM) conductive
zones have been located on the ORO property. The magnetic survey shows the
entire property is underlain with sediments and volcanics, which are important
in the placement of gold bearing quartz veins.

The Company has met the terms and conditions of the acquisition
agreement by issuing 25,000 of its shares to the vendor during the nine months
ended November 30, 2004. This was the final requirement of the purchase
agreement. The vendor retains a 2% net smelter return interest.

We will continue exploration work on the ORO Gold property and
will meet the terms of the acquisition agreement unless the Company decides to
not continue due to poor results or economic reasons.

There currently are no resources or reserves on the ORO
property that comply with the Canadian Institute of Mining and Metallurgy (CIM)
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted
by CIM Council on August 20, 2000.

We do not consider the Oro property to be a material property.

BLN Gold Property, Hebei Province, China

The Bo Luo Nuo (BLN) covers an area of 161km2. It
is connected by road to Beijing (about 4 hours drive). The elevation of this
mountainous area is between 750-900 meters. The highest point is the peak of
Mount Guang Ling which is 1,434 meters high and consists of Mesozoic granite.
The climate is cool continental. The maximum annual temperature ranges between
35.7°C and -28.3°C.

BLN is located at the northern edge of the Northern China
Platform, which is mainly composed of Archean crystallized basement. The most
common rocks in this area are Archean metamorphic rocks including schist,
gneiss, granulite, plagioamphibolite, marble, quartzite, and migmatite Locally,
the outcrops of the Jurassic sedimentary and volcanic rocks can be seen, which
include shale, sandstone, basalt and andesite.



Faults and folds are also well developed in the area. There are
three groups of structures in the area. NNE, NNW and EW faults. The former two
are the vital ore-host structures in the area.

The strike of the mineralization bodies in the north half part
of the BLN is different from that of those in the southern part. The NNW or NW
strike of the mineralization bodies in the north appears to have a dip to the NE
while the NNE strike of mineralization bodies in the south have a dip to the SE.
This may imply that the gold mineralization bodies are controlled by at least
two different groups of faults.

The gold mineralization can be divided into two types: brown
oxidized mineralizations and primary quartz-sulphide mineralization. The Oxided
mineralization mainly consist of gold, quartz, hematite and limonite. Primary
mineralization mineral assemblage is mainly gold, quartz cubic pyrite, galena,
sphalerite, magnetite, chalcopyrite

19

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and chlorite. There is almost no difference about the mineral
assemblage of primary mineralization in the various mines in the area.

On January 20, 2004 the Company acquired an option to purchase
100% of the shares of Ginyen Recovery Inc. Ginyen Recovery Inc. has an 85%
interest in a co-operative joint venture with Bo Luo Neo Wang Yuan Gold Mine
Company (BLN Gold) of Heibei Province, China. BLN Gold holds an operational
gold recovery mill; option to acquire the and license to operate all existing
small mines in the district; the option to explore, develop and produce gold and
silver in the district and options to expand to other districts. The Company can
earn a 100% interest in the private company, subject to a 5% net profits
interest, by issuing 200,000 shares of Linux Gold Corp. in four stages and
paying $50,000 cash, and expending a total of $500,000 in a three-phase work
program.

We entered into a consulting agreement with Jim Yin, Ph.D.,
consulting geologist. Mr. Yin completed his Ph.D. of Science at the China
University of Geosciences, Beijing, China. Mr. Yin has previously supervised
four joint ventures as the project representative for mining exploration in
China and completed a preliminary investigation report on the Linux Gold
optioned property in December 2002.

In April, 2004 we announced assay results indicating high grade
gold and silver on the Tuo Dao Gou gold zone, one of many prospects on the Bo
Luo Nuo property in China. The Tuo Dao Gou gold zone reported 5.5 ounces of gold
per ton with 9 ounces of silver by Acme Analytical Laboratories on April 1,
2004. The Lan Ying has the highest results, with one sample which assayed 11.75
ounces of gold and 5.75 ounces of silver per ton. The average grade from 15
samples on the Ge Di Gou was 23.36 grams per ton. The third important zone is
the Tuo Dao Gou, which was a gold producer zone with stable higher grade gold.
The average grade from 18 samples was 11.58 grams per ton gold.

A total of 118 samples were collected from 12 different known
gold zones for gold and silver and 32 samples were collected from the platinum,
palladium prospect .

The gold zones/veins should be the main targets to follow up in
the next exploration program to develop economic high grade gold reserves to
feed the 50 ton a day mill.

On June 9, 2004 we announced that Bisheng Liu, of Beijing,
China, has been appointed Vice President Corporate Administrator for our gold
mining interests in the Peoples Republic of China. Mr. Bisheng is a resident of
Beijing, the Peoples Republic of China, educated in the Tianjins Institute of
Foreign Trade and received a Bachelor of Economics degree in China. Previous
jobs included a position with the Ministry of Foreign Trade in Beijing and also
work with the Chinese Embassy in Singapore for a three year period as Third
Secretary for the commercial office. Mr. Liu is currently working as project
manager with Cirque Du Soleil. The board of directors is very pleased to have a
representative in China, such as Bisheng Liu, which is the fastest growing
economy in the world today, and look forward to a successful relationship with
our projects in China.

On October 12, 2004 we announced that we had received
confirmation of approval for exploration for Wang Yuan Mine, an additional
permit for exploration is to be submitted on the nearby Lan Ying Mine. The
objective of this years exploration program is to develop sufficient gold
reserves to feed the 50 ton per day mill, which is located on our optioned
property. An exploration program has commenced on the Wang Yuan mine to dewater
the mine and commence a sampling program on the known gold zone.

In November 2004, we announced that the exploration license for
the Dong Gou Gold project has been negotiated by Bisheng Liu, of Beijing, China,
our Vice President Corporate Administrator for this project. The terms and
conditions are pursuant to the co-operative joint venture company agreement that
has an option on mineral exploration rights in Hebei Province, China, covering
an area of 161 kilometres.

The Dong Gou Gold project consists of 5.12 square kilometres.
This area has had three small mines operating in the last seven years, which
were mined mainly by hand by the Chinese farmers in the area. One of the past
producing mines, the Lan Ying Mine, appears to be the best organized mine in the
area. About 90,000 tons of mineralization has been mined out by hand in the
past, at rates of 35 tons of ore per day, grading 11 grams (1/3 of an ounce) of
gold per tonne. The exploration goal for this property, together with the
adjacent Wang Yuan Gold project, is to develop sufficient economic gold reserves
for the 50 ton per day mill, which is on the property. The sampling program on
the Wang Yuan property known gold zones completed and the assays were completed
in February 2005.

The term of the license is effective until a production
decision is made by the Company.

In February 2005, we announced assays results for 22 rock
samples on the Wang Yuan mine. Based on the results of the

20

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samples, a drilling program was recommended.

There currently are no resources or reserves on the BLN
property that comply with the Canadian Institute of Mining and Metallurgy (CIM)
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted
by CIM Council on August 20, 2000.

Additional work on the BLN property will be based on results
from the previous exploration programs. Each successive phase of exploration is
dependent on generation of encouraging results from the previous programs and
the increasing potential for delineation of commercially viable resources on the
project.

We do not consider the BLN gold property to be a material
property.

Granite Mountain Property, Seward Peninsula, Alaska

In March 2005, we staked several mineralized areas in western
Alaska, near Granite Mountain on the eastern Seward Peninsula, Alaska. Granite
Mountain lies on the boundary of the historic Koyuk Mining District and
Fairhaven Mining District and is known for the productive placer gold and
platinum group metal deposits and igneous hosted base-metal, precious metal and
uranium prospects located on its flanks. All the staked lands are State of
Alaska public lands and open to mineral entry. A portion of the claims lie
within the North West Arctic Borough. Staking was accomplished by helicopter and
conforms to the MTRSC method of locating 160 acre state mining claims.

The Kiwalik igneous-hosted polymetallic property is located in
western Alaska, approximately 240 kilometers (150 miles) northeast of the city
of Nome and 56 kilometers (35 miles) north of the village of Koyuk (Candle B-5
and C-5 quadrangles). The propertys east boundary is four kilometers (21⁄2 miles)
west of Granite Mountain the tallest point on this part of the eastern Seward
Peninsula, at 864 meters (2,835 feet) above sea level. The continental divide
runs just east of the Kiwalik property and all streams originating within the
property flow to the Kiwalik River, which flows north to Kotzebue Sound.



21

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The Kiwalik Claim Block includes 120 State of Alaska 160 acre
MTRSC mining claims covering almost 7770 hectares (19,200 acres) of state lands
open to mineral entry The mining claims are located on the Quartz Creek pluton
and the surrounding volcanic and sedimentary country rock and is thought to be
prospective for lode deposits of precious metals and base metals.

The Peace River Claim Block includes 16 mining claims (4
square-miles) and is located on a satellite intrusive stock on the east flank of
Granite Mountain at the headwaters of the Peace River. This area was examined in
the early 1950s for its potential as a uranium prospect and was re-examined
during the 1968 USGS Heavy Minerals Program. Samples of soil and rock indicated
anomalous concentrations of base metals including over 2,000 ppm molybdenum
obtained from a composite grab sample of veined syenite rubble. Pan concentrates
collected from these headwater streams by the U.S. Geological Survey in 1951 and
1952 (Gault, et al, 1953, USGS Circ-250) showed an abundance of base metal
sulfide minerals including bornite, as well as concentrations of uranothorianite
and gummite (up to 0.76%eU) . Particles of placer gold were also found. The
local concentration of uranothorianite in the placer deposits is believed to be
the best lead to a potentially economic uranium lode deposit.

The Dime Creek Claim Block is located about 15 miles to the
south of Granite Mountain and is composed of 12 mining claims (3 square-miles).
The placer gold-platinum deposits on Dime Creek were discovered in 1910, but it
wasnt until 1915 that rich pay was found, setting off a stampede to the area.
By 1917, about 12,500 ounces of gold and platinum were recovered from
shoveling-in on the creek placer and from underground drifting on several bench
placers (Harrington, 1917, USGS B-692). The placer gold is unusually pure with a
fineness of 960 and occurs in placer concentrates in a ratio to native platinum
particles of 25:1 to 10:1. In later years, a small bucket-ladder dredge operated
on the valley bottom from 1928 to 1941 while small open-cut and drifting
operations continued on the

22

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benches until at least 1955. Total production is not known, but
incomplete historical data shows production to be at least 25,000 ounces of gold
and platinum. The placer deposit is considered to be highly prospective for
significant additional placer reserves, as well as for lode sources of the
placer gold and platinum.



ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND
PHYSIOGRAPHY

The property is located in a remote region in western Alaska,
about 240 kilometers (150 miles) by air northeast of the city of Nome. Nome is a
modern city of about 4,000 residents with an international airport, a recently
improved small boat harbor, and barge loading facilities. Villages near the
property include Koyuk, 56 kilometers (35 miles) to the south, Council, about
130 kilometers (80 miles) to the west, and Buckland, about 97 kilometers (60
miles) to the north. There are several winter trails that may be permitted by
government regulatory agencies to access the property with heavy equipment from
Koyuk, Council, or Kiwalik Lagoon, about 64 km (40 miles) to the north.
Currently, there is no improved overland access to the property and the only
immediate access is by air transport. Koyuk, the nearest village to the Kiwalik
property, is located at the mouth of the Koyuk River at the northeast head of
Norton Bay. Koyuk enjoys a 760 meter (2,500 foot) airstrip capable of landing a
loaded DC-6. Barge facilities are limited to loading from a stationary barge
moored to the western bank of the Koyuk River. Koyuk is the seat of the Koyuk
Village Corporation and owns the surface of the lands from the coast to the
south shore of the Koyuk River near

23

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Dime Landing, 35 kilometers (22 miles) to the north. The Koyuk
River is shallow and, without dredging, is only navigable by shallow-draft
watercraft, barges and landing craft.

A fifty-foot easement from Koyuk to Dime Landing exists through
the private corporate lands and allows for passage of heavy equipment. A native
allotment at Dime Landing has been applied for by a resident of Koyuk, however,
the grant has not been approved by the Bureau of Land Management. From Dime
Landing to the Kiwalik mining claims, access is by way of existing winter trails
for which authorization from the appropriate regulatory agencies must be
acquired. Several airstrips are located near the Kiwalik property: at Granite
Mountain, Quartz Creek, Bear Creek and at Haycock, near the Dime Creek claim
block. The Granite Mountain airstrip was constructed by the U.S. Air Force in
1957 to support the U. S. Department of Defense microwave relay facility (White
Alice) on the summit of Granite Mountain. This facility was decommissioned in
1978 and lies abandoned. The Granite Mountain airstrip is located about five
kilometers (three miles) east of the Kiwalik property at an elevation of 380-
400 meters (1250-1300 feet ) above sea level. It is improved with crushed and
graded gravel over a length of 1220 meters (4,000 feet ). The landing surface is
occasionally maintained by local miners and hunters who use it as primary access
to stage equipment and supplies to outlying mines and hunting camps. The Granite
Mountain airstrip is formally closed to the public, however, local air charter
services have permission to land there.

The Quartz Creek airstrip, at 305 meters (1,000 feet) above sea
level, is limited to short take-off and landing aircraft and is located about
800 meters (one-half mile) east of the Kiwalik property. The Bear Creek airstrip
is150 meters (500 feet) above sea level and about 460 meters (1,500 feet) long
and has been maintained well by the local placer miners. This airstrip is
located about 15 kilometers (9 miles) northeast of the Kiwalik property and is
linked the Granite Mt. airstrip and the Kiwalik property by unimproved trails.
The airstrip at Haycock is 520 meters (1,700 feet) long, but has not been
maintained for several years.

The property is rugged and dominated by tundra and talus
covered hills and ridges. Elevation varies from approximately 137 meters (450
feet) along the Kiwalik River, to 512 meters (1680 feet) on Weather Ridge; and
climbs to 864 meters (2835 feet) a few kilometers to the east at Granite
Mountain. Outcroppings of bedrock are sparse. Valley floors are narrow and
recently developed, perhaps initiated by former alpine glaciation and controlled
by regional structures. The climate is semi-arid with short moderate summers and
long cold winters, typical of subarctic, interior Alaska.

The area is usually snow-free from early June to mid-September.
There is no infrastructure developed on the any of the claim blocks on the
property and no power is available. As development of the property progresses
roads and other infrastructure may allow for year-round operation.

GEOLOGIC SETTING

Country rocks underlying the Granite Mountain area consist of
interlayered mafic lava flows and sedimentary rocks deposited over a time span
lasting from about 160 million years to about 110 million years ago. The
sedimentary rocks are predominantly pebbly sandstone, but include sparsely
scattered conglomerate and mudstone. The mudstone is composed of numerous layers
that are one to several centimeters thick. In the conglomerate well rounded
volcanic fragments as large as 5 cm in diameter are suspended within a fine to
medium grained sandy matrix. Layering in the conglomerate, if present, is too
thick to be observed in outcrop.

The interlayered lava flows and sedimentary rocks are crosscut
by numerous dikes and larger intrusive bodies. The Kiwalik claim block is
centered around the ~109 million year old quartz monzonite of the Quartz Creek
pluton. The Peace River claim block is underlain in part by a syenitic intrusion
that is a satellite of the larger Granite Mountain syenite. Dikes range in
composition from mafic rocks similar to the lava flows, to silicic rocks more
like the larger plutonic bodies. All of the volcanic rocks in the prospect area
have been metamorphosed to greenstone. Many of the volcanic rocks are magnetic;
some have traces of very fine-grained sulfide minerals, probably pyrite. Primary
igneous and sedimentary features are preserved and the rocks are not foliated.

The structural geology of the Granite Mountain area is poorly
understood, but landforms and drainage patterns suggest that the bedrock in the
prospect area is tilted, folded, and faulted. The few bedding orientations
measured during reconnaissance mapping in 2005 suggest broad folding around a
west or northwest trending axis and are consistent with bedding orientations
mapped in outcroppings north and east of the prospect area. In some parts of the
Dime Creek claim block the tilted lava flows and sedimentary rocks are overlaid
by younger, mostly flat-lying lava flows. These younger flows have been eroded
away in the Kiwalik and Peace River claim blocks.

Mineralization within the Kiwalik claim block is concentrated
along the eastern contact of the Quartz Creek pluton,

24

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where it abuts volcanic and sedimentary country rocks. At the
north end of the Kiwalik claim block mineralized rocks and silicic dikes are
exposed in a fault zone that crops out along the west bank of Quartz Creek. On
Gossan Ridge, deeply weathered sulfide veins are marked by rusty orange and red
altered rock that locally have elevated contents of gold and base metals.

During August of 2005, we conducted geologic mapping and
geochemical sampling on the Kiwalik, Peace River, and Dime Claim Blocks.
Although the results to date are very encouraging, no trenching or drilling has
taken place. No quantifiable mineral resource has been established on any part
of the properties. Phase I orientation and reconnaissance exploration consisted
of mapping rock contacts and units and collecting rock, soil, stream sediment
and pan concentrate samples during ridge and stream traverses. This work
confirmed and added more detail to previous mapping and sampling performed by
the U.S. Geological Survey. Phase II mineral exploration during 2006 is
recommended to consist of an airborne geophysical survey, additional geological
mapping and geochemical sampling, and drilling two- 1,000 ft and four- 500 ft
(total 4,000 ft) diamond drill holes.

Four types of geochemical samples were collected from the
Kiwalik and Peace claim blocks, including 153 soil samples, 93 rock samples, 45
stream sediment samples, and 31 pan concentrate samples. The results of this
program indicate that on the Kiwalik claims, a mineralized trend, striking north
with a length of over 11 kilometers, is spatially associated with the eastern
contact of the Quartz Creek pluton (quartz monzonite) and the andesitic flows
and volcaniclastic country rock. A similar trend was detected on the Peace
claims, where mineralization was found within plutonic (syenite) bedrock over a
strike length of 1.7 kilometers. On both properties the limits of the
mineralized trends are not clearly defined and may be more extensive than
currently known.

At the ground surface, the Quartz Creek mineral trend appears
to be zoned and can be partitioned into base-metal deposits within the volcanic
wallrock and precious-metal deposits within both intrusive and volcanic rocks.
Soil and rock samples collected within the base-metal zones are anomalous in
gold, silver, and antimony and highly anomalous in lead and zinc. Precious metal
zones were sampled with a soil grid placed on veined, brecciated, and oxidized
volcanic rock, as well as with grab samples of veined and intensely altered
intrusive rock, resulting in anomalous concentrations of gold, silver, arsenic,
lead, copper, and antimony. Pan concentrates that were collected on the upper
branches of the Kiwalik River show a marked enrichment of gold where the streams
erode mineralized intrusive bedrock.

The Peace claims were sampled similarly to the Kiwalik claims,
but to less extent. This work indicates that the eastern branch of the
headwaters of the Peace River is eroded into mineralized syenite and is
anomalous in precious and base metals in a relatively narrow trend, striking
northeast. Pan samples resulted in highly anomalous concentrations of gold,
tungsten, and uranium; whereas, rock and soil samples were anomalous in gold,
silver, antimony, and lead and were highly anomalous in molybdenum, copper, and
bismuth.

Exploration and development activities, require permits from
various foreign, federal, state and local governmental authorities. To the best
of our knowledge, we are operating in compliance with all applicable
environmental regulations. There currently are no unusual social, political or
environmental encumbrances to mining on the project. Linux currently holds a
valid Hardrock Exploration Permit on the project. Additional permits for future
work will be acquired from the Alaska Department of Natural Resources on an
as-needed basis.

Detailed analysis of the geochemical data is ongoing, however,
the results to date suggest that several types of polymetallic deposits may be
found near the surface along the Quartz Creek mineral trend and that a large
porphyry system may lie at depth. The relationship of the Peace River
polymetallic deposit to the Quartz Creek mineral belt is not known, but may
represent another phase or portion of a larger plutonic porphyry system. A
US$1.5 million budget is recommended in 2006 to explore the igneous system at
depth and to search for additional evidence of mineral deposits near the
surface. This work should include:

1. A regional airborne geophysical survey to indicate rock
contacts, structure and alteration, as well as for the presence of sulfide
enrichment zones;

2. Additional geological mapping and geochemical sampling to
explore the extensions of the known mineralized trends and to investigate
unexplored areas;

3. Diamond drill holes to explore the rocks underlying
significant geochemical and (anticipated) geophysical anomalies;

4. Structural, chemical, and geochronological studies to
examine the relationship of the Kiwalik and Peace igneous rocks and mineral
trends with the goal of expanding the potential mineral resource.

This report was prepared by Jeffrey O. Keener, project
geologist for the Granite Mountain exploration program and

25

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reviewed and approved by Robert B. Murray, registered geologist
with the state of Oregon. Robert Murray is currently completing a National
Instrument 43-101 report on the Granite Mountain property.

Robert Murray, registered geologist and qualified person for
the 2005 project has recommended the following drilling and exploration plan for
2006.

Objectives for Drilling and Exploration Plan for 2006:

To initiate a scout drilling program by placing four
diamond-core drill holes on the mineral deposits located in 2005.

•      The Gossan Ridge sub-volcanic
  gold-silver-copper prospect.

•       The Saddle cordilleran-vein
  lead-zinc-silver prospect.

•      The Quartz Creek plutonic
  gold-copper-bismuth prospect.

•      The Peace River plutonic
  molybdenum-copper-gold-uranium prospect.

•      An additional hole will
  be placed to drill into the cupola of the Quartz Creek pluton to investigate
  the volcanic thermal contact zone overlying the intrusive.

Continue the geochemical surveying program by expanding the
soil grids on the Gossan Ridge and Peace River prospects, place a soil grid on
the Saddle prospect, and run discreet soil lines across linear structures
identified in the geophysical survey or through surface geological mapping.
Ongoing geological mapping will be conducted at a scale of 1:63,360 in
previously unmapped areas and at a scale of 1:10,000 for detailed structural and
mineralogical data.

The proposed budget to accomplish these goals is (U.S.)
$1,500,000. Contracts and permits are currently being negotiated and applied for
to start-up field work. There are no conditions that must be met in order to
obtain or retain title to the property.

Corporate Finance

During the year ended February 28, 2006:

| | a) | During the year ended February 28, 2006, the Company
      issued 50,000 common shares at a value of $0.41 per share pursuant to the
      Ty mineral property option agreement.                                                                                                                                                                   
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | b) | During the year ended February 28, 2006, the Company
      completed a private placement and issued 3,000,000 shares at a price of
      US$0.20 per share for proceeds of $695,127 (US$600,000) before issue costs
      of $42,571. The Company issued 100,000 shares as a finders fee in
      connection with this private placement offering.
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | c) | During the year ended February 28, 2006, the Company
      issued 93,750 common shares at a value of US$0.10 per share pursuant to
      the exercise of stock options.                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | d) | During the year ended February 28, 2006, the Company
      issued 92,500 common shares at a value of US$0.20 per share pursuant to
      the exercise of share purchase warrants.                                                                                                                                                                  

During the year ended February 28, 2005:

| | a) | During the year ended February 28, 2005, the Company
      issued 25,000 common shares at a value of $0.10 per share pursuant to the
      mineral Oro mineral property option agreement .                                                                                                                                                                                                                                                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | b) | During the year ended February 28, 2005, the Company
      issued 50,000 common shares at a value of $0.39 per share and issued
      50,000 common shares as a finders fee pursuant to the BLN Gold Property
      option agreement .                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | During the year ended February 28, 2005, the Company
      completed a private placement and issued 2,777,777 units at a price of
      US$0.18 per unit for proceeds of $620,850 (US$500,000) before issue costs
      of $2,185. Each unit consisted of one common share and one warrant. One
      whole warrant entitles the holder to purchase one share at a price of
      US$0.18 per share for a two year period. The Company issued 208,333 shares
      as a finders fee in connection with this private placement
    offering.

26

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| | d) | During the year ended February 28, 2005, the Company
      completed a private placement and issued 1,219,500 units at a price of
      US$0.15 per unit for proceeds of $241,424 (US$182,925). Each unit
      consisted of one common share and one-half warrant. One whole warrant
      entitles the holder to purchase one share at a price of US$0.20 per share
      in the first year and US$0.25 per share in the second
  year.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additionally, 87,500 stock options were exercised.

During the year ended February 28, 2004:

| | e) | During the year ended February 29, 2004, the Company
      completed a private placement and issued 875,000 units at a price of
      US$0.20 per unit for proceeds of US$175,000. Each unit consisted of one
      common share and one- half warrant. One whole warrant entitles the holder
      to purchase one additional common share at a price of US$0.20 per share
      for a one year period.                                               
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | f) | During the year ended February 29, 2004, the Company
      issued 175,000 common shares at a value of $0.10 pursuant to the BLN
      property option agreement .                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | g) | During the year ended February 29, 2004, the Company
      issued 1,000,000 shares pursuant to a consulting agreement for services
      beginning April 2, 2003 for a period of six months. The Company was also
      obligated to issue 100,000 shares per month starting May 2, 2003. On July
      11, 2003, the Company terminated this agreement due to non-performance and
      has demanded return of the 1,000,000 shares previously issued.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | h) | The Company issued 200,000 shares to settle a prior
      years rental agreement.                                                                                                                                                                                                                                                                                                                                                                     

Shareholder approval for the granting and exercise of incentive
stock options was obtained at the Companys annual general meeting held on
August 26, 2005.

Description of the Markets in Which the Company Competes

This is no longer applicable due to the discontinuance of the
business operations of our wholly-owned subsidiary.

Competition

Significant and increasing competition exists for the limited
number of gold acquisition opportunities available in North, South and Central
America and elsewhere in the world. As a result of this competition, some of
which is with large established mining companies which have greater financial
and technical resources than the Registrant, the Registrant may be unable to
acquire additional attractive gold mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that the Registrants
exploration and acquisition programs will yield any new reserves or result in
any commercial mining operation.

Seasonality

We believe that there is no seasonality which affects our
business.

Availability of Raw Materials

We do not manufacture any products directly.

Marketing Strategy

We do not have any plans for a marketing strategy at this
time.

Dependence on Certain Commercial Agreements or
Intellectual Property

We do not have any material agreements upon which we are
dependent.

Material effects of Government Regulation

27

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Exploration and development activities, require permits from
various foreign, federal, state and local governmental authorities. To the best
of our knowledge, we are operating in compliance with all applicable
environmental regulations.

C.          
ORGANIZATIONAL STRUCTURE

For a list of our significant subsidiaries, see Item 10 
Additional Information  Subsidiary Information.

D.           PROPERTY,
PLANT AND EQUIPMENT

We do not own any properties. We currently utilize office space
in a commercial business park building located in Richmond, British Columbia,
Canada, a suburb of Vancouver. The space is shared with several other companies
which share common management. The monthly rent for its portion of this 1,500
square foot space is $500.00. The present facilities are believed to be adequate
for meeting our needs for the immediate future. If required in the future, we do
not anticipate that we will have any difficulty in obtaining additional space at
favorable rates. There are no current plans to purchase or otherwise acquire any
properties in the near future.

Since our inception and during the three fiscal years ending in
February 2006, we had been involved in oil and gas exploration/production and
more recently, mineral property exploration and development.

Please refer to section 4.B. BUSINESS OVERVIEW, Nature of the
Companys Operations, Mineral Properties for a description of our mineral
properties.

ITEM
4A.        UNRESOLVED STAFF COMMENTS

This section is not applicable as we are not an accelerated
filer or a large accelerated filer, as defined in Rule 12b-2 of the Exchange
Act, or a well-known seasoned issuer as defined in Rule 405 of the Securities
Act.

ITEM
5.           OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with the
  Consolidated Financial Statements and Notes thereto included elsewhere herein.
  The Consolidated Financial Statements have been prepared in accordance with
  US GAAP.

A.           OPERATING
RESULTS

Discontinued Operations

During fiscal 2002, we discontinued the business operations of
our wholly-owned subsidiary, LinuxWizardry, Inc.

Continuing Operations

Fiscal Year Ended February 28, 2006 compared to Fiscal year
Ended February 28, 2005

Results of Operations

During fiscal 2006, we received no revenues from operations as
compared to $nil revenues in 2005.

Administrative expenses in 2006 totaled $501,000 as compared to
$611,000 in 2005. The expenses decreased from the prior year due not issuing
stock-based compensation in 2006. Travel totaled $24,000 compared to $40,000 in
2005. A significant portion of the decrease relates to the decrease in
consulting costs of $134,000 in 2006 as compared to $234,000 in 2005. This
decrease was due to not granting stock options for stock-based compensation as
compared to 2005.

We paid $330,000 for mining acquisitions and related
exploration work in 2006 as compared to $183,000 in 2005.

Fiscal Year Ended February 28, 2005 compared to Fiscal year
Ended February 28, 2004

Results of Operations

During fiscal 2005, we received no revenues from operations as
compared to $nil revenues in 2004.

28

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Administrative expenses in 2005 totaled $611,000 as compared to
$312,000 in 2004. The expenses increased from the prior year due to the
increased activity of the Company. Office, rent and telephone totaled $194,000
compared to $62,000 in 2004. Professional fees totaled $42,000 compared to
$28,000 in 2004. We also incurred an imputed interest charge of $35,000 compared
to $23,000 in 2004. Imputed interest at 15% was charged to operations based on
the advances from related parties and treated as donated capital. This amount
increased during 2005 due to the additional advances received in the first three
fiscal quarters of 2005, before being paid down in the last fiscal quarter of
2005. Consulting and subcontract expenses increased to $234,000 in 2005 from
$174,000 in 2004. This increase was due to the inclusion of stock-based
compensation of $100,000 recognized from the granting of stock options. Travel
increased from $4,000 in 2004 to $40,000 in 2005 due to increased operations.

We paid $183,000 for mining acquisitions and related
exploration work in 2005 as compared to $122,000 in 2004.

Fiscal Year Ended February 28, 2004 compared to Fiscal year
Ended February 28, 2003

Results of Operations

During fiscal 2004, we received no revenues from operations as
compared to $nil revenues in 2003.

Administrative expenses in 2004 totaled $312,000 as compared to
$201,000 in 2003. The expenses increased from the prior year due to the
increased activity of the Company. Office, rent and telephone totaled $62,000
compared to $13,000 in 2003. Professional fees totaled $28,000 compared to
$16,000 in 2003. We also incurred an imputed interest charge of $23,000 compared
to $90,000 in 2003. Imputed interest at 15% was charged to operations based on
the advances from related parties and treated as donated capital. This amount
decreased during 2004 due to the settlement of debt in 2003. Filing and
regulatory expenses increased due to increased reporting activities. Consulting
and subcontract expenses increased to $174,000 in 2004 from $17,000 in 2003.
This increase was due to a payment of $100,000 to Barry Clarke and a payment of
$30,000 to Capital Research for financing consulting.

In 2003 we recorded an option payment of $80,000 which
represented the 200,000 shares we received pursuant to the joint venture
agreement with Teryl Resources Corp. We paid $122,000 for mining acquisitions
and related exploration work as compared to $6,000 in 2003. In 2003 we issued
3,000,000 shares to purchase a license from Mailprotek.com. The license value
was valued at $238,000 but Mailprotek.coms was $25,000 which resulted in a
deemed dividend of $213,800.

B.           LIQUIDITY
AND CAPITAL RESOURCES

Liquidity and Capital Resources

The audited financial statements have been prepared assuming
that the Company will continue as a going-concern. As discussed in note 2 to the
financial statements, the Company has no revenues and limited capital, which
together raise substantial doubt about its ability to continue as a
going-concern. Management plans in regard to these matters are also described in
note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

In the past, we have derived most of our development and
operating capital primarily from the issuance of capital stock. Minor amounts
were derived from interest.

We have been successful in the past in acquiring capital
through the issuance of shares of our Common Stock, and through advances from
related parties. Although we intend to continue utilizing these sources, there
has been no assurance in the past that these sources and methods would continue
to be available in the future. On July 16, 1999, we received from John G.
Robertson, its then President, currently the Chairman of the Board, a
"Commitment to Provide Financing to Flame Petro-Minerals Corp. as Required for
Ongoing Operations". In substance, the Commitment states that if we are not able
to obtain funds required for maintaining our ongoing operations and status as a
publicly traded company, from other sources, Mr. Robertson agrees and commits to
provide, and/or arrange for any such funds for us on either a loan, equity, or
combination basis, on mutually agreeable terms, and which comply with any
regulatory rules and regulations applicable to such transactions. Mr. Robertson
further states that such maintenance funding requirements are estimated at
approximately $50,000 per year and that he is capable of arranging for such
funding and/or is able to generate net earnings from revenues which will sustain
our ongoing operations.

In the event that Mr. Robertson were not able to raise funds,
and no other sources of capital were available to us in the future, on a
reasonable financial basis, it would face the same obstacles as many small,
undercapitalized companies do, and, in the worst case, we could be forced to
reorganize or liquidate, either of which consequence would likely have an

29

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adverse financial effect upon our shareholders.

Liquidity

Fiscal Year Ended February 28, 2006 compared to Fiscal year
Ended February 28, 2005

During 2006 we financed our operations by the issue of
3,336,250 common shares for cash proceeds of $727,790. This consists of the
issue of 3,000,000 common shares pursuant to private placement offerings
completed during the year to raise cash proceeds of $652,556 after issue costs,
the issue of 93,750 common shares pursuant to the exercise of stock options for
cash proceeds of $10,838, and the issue of 92,500 shares pursuant to the
exercise of share purchase warrants for cash proceeds of $21,825.

During 2006, we spent $703,000 of these funds on operating
activities as discussed above under Results of Operation for the Year Ended
February 28, 2006 as compared to $665,000 the year ended February 28, 2005.

Our cash position has decreased by $2,000 to $396,000 and our
working capital as at February 28, 2006 was $70,000.

Fiscal Year Ended February 28, 2005 compared to Fiscal year
Ended February 28, 2004

During 2005 we financed our operations by the issue of
4,543,110 common shares for cash proceeds of $931,580. This consists of the
issue of 4,205,610 common shares pursuant to private placement offerings
completed during the year to raise cash proceeds of $860,089 after issue costs,
the issue of 87,500 common shares pursuant to the exercise of stock options for
cash proceeds of $10,606, and the issue of 250,000 shares pursuant to the
exercise of share purchase warrants for cash proceeds of $37,500.

During 2005, we spent $665,000 of these funds on operating
activities as discussed above under Results of Operation for the Year Ended
February 28, 2005 as compared to $154,000 the year ended February 28, 2004.

Our cash position has increased by $247,000 to $398,000 and our
working capital as at February 28, 2005 was $98,000.

Fiscal Year Ended February 28, 2004 compared to Fiscal year
Ended February 28, 2003

Liquidity

During 2004 we financed our operations and received $479,000
by:

| | (i)  | receiving financial support from companies affiliated
      with the President of the Company in the amount of $179,000. These amounts
      are unsecured, non-interest bearing and due on demand;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                    
| | (ii) | issuing shares for $301,000.                                                                                                                                                                       

During 2004, we spent $154,000 of these funds on operating
activities as discussed above under Results of Operation for the Year Ended
February 29, 2004 as compared to $144,000 the Year Ended February 28, 2003.

Our cash position has increased by $141,000 to $152,000 and our
working capital deficit, as at February 29, 2004 was $92,000.

C.           RESEARCH
AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Our aggregate research and development expenditures over the
past three years ended February 29, 2004, February 28, 2005 and February 28,
2006 amount to $nil, $nil and $nil respectively. We do not hold any patents,
trademarks or copyrights.

D.           TREND
INFORMATION

We currently have no active business operations that would be
effected by recent trends in productions, sales, etc. We have no material net
sales or revenues that would be affected by recent trends other than the general
effect of mineral prices on our ability to raise capital and those other general
economic items.

E.          
OFF-BALANCE SHEET ARRANGEMENTS

30

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There are no known off-balance sheet arrangements other than
those disclosed in this Form 20-F and in our audited consolidated financial
statements for the year ended February 28, 2006.

F.           TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table provides information as of the latest
fiscal year end balance sheet date with respect to the Companys known
contractual obligations specified below.

Payments due by periodContractual Obligations
      Total
      Less than 1 
        year
      1-3 years
      3-5 years
      More than 
        5 yearsMineral Property Obligations 
        (option payments necessary to retain 
        property interests)(1)
      $555,000 
        and 200,000 
        shares
      -
      $555,000 and 
        200,000 shares
      -
      -Long-term debt obligations
      -
      -
      -
      -
      -Capital (Finance) Lease obligations
      -
      -
      -
      -
      -Operating lease obligations
      $28,395
      $25,918
      $2,477
      -
      -Purchase Obligations
      $25,000
      $25,000
      -
      -
      -Other Long-term liabilities reflected on the 
        Companys Balance sheet under US 
        GAAP
      -
      -
      -
      -
      -Total
      $608,395 
        and 200,000 
        shares
      $50,918
      $557,477 and 
        200,000 shares
      -
      -


(1) On January 20, 2004, the Company
acquired an option to purchase 100% of the shares of Ginyen Recovery Inc. Ginyen
Recovery Inc. has an 85% interest in a co-operative joint venture with Bo Luo
Neo Wang Yuan Gold Mine Company (BLN Gold) of Heibei Province, China. BLN Gold
holds an operational gold recovery mill; the right and license to operate all
existing small mines in the district; the right to explore, develop and produce
gold and silver in the district and options to expand to other districts.

To complete the option agreement, the
Company must:

(i) pay $55,000 as follows: $10,000
upon regulatory approval (paid); $15,000 upon completion of Phase I; $15,000
upon completion of Phase II; and a minimum of $15,000 annually or 5% of net
profits paid quarterly, whichever is greater. The Company is currently in Phase
I.

(ii) issue 200,000 shares as follows:
50,000 upon regulatory approval (issued); 50,000 upon completion of Phase I;
50,000 upon completion of Phase II; and 50,000 upon completion of Phase III. The
Company also issued 50,000 common shares as a finders fee. The Company is
currently in Phase I.

(iii) incur production expenses,
subject to successful results in each phase, of $500,000 as follows: $160,000
($114,457 incurred) for Phase I; $130,000 for Phase II; and $210,000 for Phase
III.

We do not deem this to be a material
property.

As we explore our properties, we decide which ones to proceed
with and which ones to abandon. To fully exercise the options under various
agreements for the acquisition of interests in properties located in Canada,
Alaska and China, we must incur exploration expenditures on the properties and
make payments to the optionors as follows:

31

---

Property
    Calendar Year
    Option/Advance Royalty Payment
    Expenditure 
        Commitment  Number of 
        SharesTY, BC, Canada
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -ORO, BC, Canada
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -BLN Gold Property, Hebei Province, China
    2005- 2006
    $55,000
    $500,000
    150,000


These amounts may be reduced in the future as we determine
which properties are of merit and abandon those with which we do not intend to
proceed.

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

This annual report includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may include conclusions of prefeasibility and
feasibility studies, estimates of future production, capital and operating
costs, prices of silver and gold and other known and unknown risks. These and
other factors and uncertainties may cause material differences from future
results as expressed or implied by these forward looking statements. These
risks, uncertainties and other factors include but are not limited to the risks
involved in the exploration, development and mining business.

All statements, other than statements of historical facts,
included in this annual report that address activities, events or developments
which we expect or anticipate will or may occur in the future are
forward-looking statements. The words "believe", "intend", "expect",
"anticipate", "project", "estimate", "predict" and similar expressions are also
intended to identify forward-looking statements.

Our estimated or anticipated future results or other
non-historical facts are forward-looking and reflect our current perspective of
existing trends and information. These statements involve risks and
uncertainties that cannot be predicted or quantified, and consequently actual
results may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among others,
the success of our exploration and development activities, environmental and
other regulatory requirements, foreign exchange issues, mineral deposit
estimates and mineral prices, competition by other mining companies, financing
risks, mineral title issues, insider conflicts of interest, political stability
issues, and other risks and uncertainties detailed in this report and from time
to time in our other Securities and Exchange Commission (SEC) filings.

Consequently, all of the forward-looking statements made in
this annual report are qualified by these cautionary statements. We cannot
assure you that the actual results or developments anticipated by us will be
realized or, even if substantially realized, that they will have the expected
effect on us or our business or operations.

Forward-looking statements are subject to a variety of risks
and uncertainties in addition to the risks referred to in Risk Factors under
Item 3.D above.

ITEM
6.           DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES

A.           DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES

As of February 28, 2006, our Board of Directors consisted of
four Directors, two of whom are independent (or outside) non-executive
Directors. The following table provides certain information about the members of
our Board of Directors as of February 28, 2006.

32

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Name
      Position with Registrant
      Term of Office
      Office Held SinceJohn G. Robertson
      President, CEO and Chairman of the Board and
        Director, and Director of Subsidiary
      Annual Shareholders Meeting in 2003
      3/05/79Jennifer Lorette
      Director
      Annual Shareholders Meeting in 2003
      6/01/94Susanne Robertson
      Director
      Annual Shareholders Meeting in 2003
      8/28/02Monique van Oord
      Chief Financial Officer and Corporate Secretary
      Annual Shareholders Meeting in 2004
      8/16/04


John G. Robertson. Mr. Robertson is the Chairman of the
Board, CEO and founder of the Company and a Director of the Company since its
inception. Mr. Robertson has been the Chairman, President and Chief Executive
Officer of REGI U.S., Inc., an Oregon corporation traded on the OTC bulletin
board, since July 1992, a U.S. public company engaged in the development of a
rotary engine/compressor (Rand Cam Engine) and hydrogen separator technology.
Since October 1984 Mr. Robertson has been President and a Director of Reg
Technologies Inc., a British Columbia corporation listed on the TSX Venture
Exchange that has financed the research on the Rand Cam Engine since 1986. REGI
U.S. is ultimately controlled by Reg Technologies Inc. Mr. Robertson has been
the President and Principal Executive Officer and a Director of IAS
Communications, Inc. since its formation in December 1994, a U.S. public company
which is developing and marketing proprietary antenna technology. Since June
1997 Mr. Robertson has been President, Principal Executive Officer and a
Director of Information Highway.com, Inc., a Florida corporation. Mr. Robertson
is also the President and founder of Teryl Resources Corp., a British Columbia
company trading on the TSX Venture Exchange involved in mineral exploration.
Since May 1977 Mr. Robertson has been President and a member of the Board of
Directors of SMR Investments Ltd., a private British Columbia corporation
engaged in management of public companies. Mr. Robertson is also the President
and Director of the following private companies: JGR Petroleum, Inc., BlueCrow
Internet Co. Ltd., 394754 B.C. Ltd., dba SOVO Computer Centre, Pavlik Travel
Services Ltd., World Tel-Internet (Toronto) Ltd., International Diamond
Syndicate Ltd., Argon Investment Corporation, and Airstream Communications, Inc.
Mr. Robertson is a citizen and resident of Canada.

Jennifer Lorette - Ms. Lorette has held several
positions with the Company since June 1994. Also, since June 1994 Ms. Lorette,
has been Vice President of REGI U.S., Inc., an Oregon corporation traded on the
OTC bulletin board. Since April 1994 she has also been Vice President of
Administration for Reg Technologies, Inc., a British Columbia corporation listed
on the TSX Venture Exchange. REGI U.S. is ultimately controlled by Reg
Technologies Inc. Since June 1997 Ms. Lorette has been Secretary/Treasurer, and
a Director of Information Highway.com, Inc., a Florida corporation. Ms. Lorette
is a founder, and has been Secretary/Treasurer of IAS Communications, Inc. since
February 1995. Ms. Lorette is a citizen and resident of Canada.

Susanne Robertson - Ms. Robertson was elected a director
of the Company in August 2001. She is also a director of Teryl Resources Corp.
and owns SMR Investments Ltd. a company providing management services to public
companies. Ms. Robertson is a citizen and resident of Canada.

Monique van Oord  Ms. van Oord was elected a director
of the Company in August 2004. She is the Companys Chief Financial Officer and
Secretary. She is also a director of Teryl Resources Corp. Ms. van Oord is a
citizen and resident of Canada.

B.          
COMPENSATION

For the fiscal year ended February 29, 2006 the Company and its
subsidiaries paid $42,000 in compensation to directors, officers and related
companies as a group. $30,000 of this amount was not paid, but was accrued.

SMR Investments Ltd., a company owned by Susanne M. Robertson,
wife of John G. Robertson, receives, in accordance with a management agreement
$2,500 per month for management fees provided to the Company. A further $1,000
per month is paid to the Chairman of the Board of the Company, John G.
Robertson, as a director's fee. John G. Robertson is also president and a
director of SMR Investments Ltd.

No cash or non-cash compensation was paid or distributed to the
executive officers of the Company under any pension or other plans nor is there
any plan for such payments or distributions during the following fiscal year
contributed to the

33

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directors and officers.

During the fiscal year ended February 28, 2006 no new stock
options were granted pursuant to stock option plans, 93,750 options were
exercised and 1,050,000 options were cancelled (expired)(see Note 8 to our
Financial Statements).

Total options currently exercisable at the date of this 20-F
are 2,343,750. All exercise prices are US dollars. Of those, 1,800,000 are
exercisable at $0.10 expiring on dates ranging from February 21, 2008 to October
20, 2008. 318,750 options are exercisable at $0.18 and expire on September 17,
2007, 225,000 are exercisable at $0.30 expiring between June 9, 2006 and April
22, 2009. Please see Note 8 to the financial statements.

Options to Purchase Registrant's Common Shares Held by Officers
  and Directors of Registrant

NAME OF OPTIONEE
    NUMBER OF OPTIONS
    EXERCISE PRICE (US $)
    EXPIRY DATEJohn G. Robertson
    1,000,000
    $0.10
    February 21, 2008Jennifer Lorette
    150,000
    $0.10
    February 21, 2008Monique van Oord
    50,000
    $0.30
    April 22, 2009Susanne Robertson
    300,000
    $0.10
    February 25, 2008TOTAL HELD AS A GROUP:
    1,500,000


Options to Purchase Registrants Common Shares Held by
Persons Other than Officers and Directors of the Registrant

Name of Optionee
    No. of Optioned Shares
    Exercise Price Per Share
    Expiry DateJames Vandeberg
    75,000
    $0.10 US
    February 21, 2008Bruce Bragagnolo
    50,000
    $0.10 US
    February 25, 2008James Kerr
    75,000
    $0.10 US
    February 25, 2008Arnie Winrob
    12,500
    $0.10 US
    February 25, 2008James Kerr
    75,000
    $0.10 US
    September 17, 2008Peter Zihlmann
    62,500
    $0.10 US
    October 20, 2008Jillian Thow
    300,000
    US$0.18
    Sept. 17, 2007Arnie Winrob
    25,000
    US$0.30
    April 22, 2009Wazmakay Charlwood
    150,000
    US$0.30
    June 9, 2006Jagdish Singh
    -
    US$0.20
    November 9, 2009Cindy Broad
    18,750
    US$0.20
    November 9, 2009Hal Clark
    -
    US$0.05
    April 1, 2006TOTAL HELD AS A GROUP:
    843,750


C.           BOARD
PRACTICES

Under section 224 of the Business Corporations Act,S.B.C. 2002, c. 57, the directors of a company must, at their first meeting
on or after each annual reference date, elect an audit committee, to hold office
until the next annual reference date. The audit committee must be composed of at
least 3 directors, and a majority of the members of the committee must not be
officers or employees of the company or of an affiliate of the company. The
members must elect a chair from among their number and determine their own
procedures. The auditor of a company must be given reasonable notice of, and has
the right to appear before and to be heard at each meeting of the companys
audit committee and must appear before the audit committee when request to do so
by the committee and after being given reasonable notice to do so. Our Board of
Directors established an Audit Committee which members consist of Monique van
Oord, Susanne Robertson and Jennifer Lorette.

The Directors are elected by the shareholders to hold office
for a term of one year or until re-elected at the next annual general
meeting.

D.           EMPLOYEES

We employed no employees during any of the years ended February
28, 2006, February 28, 2005 and February 28, 2004.

34

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Our legal, accounting, marketing and administrative functions
are, and have been during the last three fiscal years, contracted out to
consultants.

We have no employees; as such, no directors of officers belong
to any labor unions. We have not been subject to any strikes or other labor
disturbances that have interfered with our operations.

E.           SHARE
OWNERSHIP

The following table sets forth the ownership of our common
shares by our Directors and Officers as at June 27, 2006:

Shareholder
    Number of shares issued and outstanding
    Percentage ownership (1)John G. Robertson
    2,318,138 (2)
    3.39%Jennifer Lorette
    238,100 (3)
    *Monique van Oord
    75,000 (4)
    *Susanne Robertson
    6,381,327 (5)
    9.3%


| | (1) | as at June 27, 2006, there were 68,287,773 issued and
      outstanding common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (2) | includes 8,482 shares registered in the name of Access
      Information Services, Ltd., a corporation controlled by the Robertson
      Family Trust, and 1,000,000 options that are currently exercisable. Mr.
      Robertson is one of three trustees of the Robertson Family Trust, which
      acts by the majority vote of the three trustees. Mr. Robertson disclaims
      beneficial ownership of the shares owned or controlled by the Robertson
      Family Trust. Mr. Robertson's address is the same as our
address.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (3) | Includes 88,100 options that are currently exercisable.
      Ms. Lorette's address is the same as our address.                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (4) | Includes 25,000 options that are currently exercisable.
      Ms. van Oords address is the same as the Companys.                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (5) | includes 5,284,3278 shares registered in the name of SMR
      Investments Ltd., and 797,000 options that are currently exercisable. Ms.
      Robertson's address is the same as the Companys.                                                                                                                                                                                                                                                                                                                                   

* Beneficially owns less than one percent of our common shares.

For information regarding the ownership of stock options to
acquire our common shares which are held by our Directors and Officers, and also
by our employees, please refer to Item 6.B above  Stock Options Granted to
Employees, Directors and Senior Managers.

ITEM
7.           MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A          .
MAJOR SHAREHOLDERS.

To the best of our knowledge, we are not indirectly owned or
  controlled by any other corporation, foreign government or by any other natural
  or legal person, except as set out below.

As of June 27, 2006, 68,387,773 Common Shares were outstanding.
At such date, we are aware of one shareholder who owns 5% or greater of the
voting shares of the Company. Sue Robertson, our director, owns 6,381,327 of our
issued and outstanding common shares. Of these, 5,284,327 shares are registered
in the name of SMR Investments Ltd., a corporate controlled by Ms. Robertson.
Mrs. Robertson does not have any different voting rights.

Over the past three years, there has not been a significant
change in the percentage ownership held by any major shareholder.

We do not know of any arrangements which could result in a
change in control of the Company.

35

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B.           RELATED
PARTY TRANSACTIONS.

We are a party to a management services agreement with SMR
Investment Ltd. (SMR) under which SMR incurred management fees of $30,000 in
each of fiscal years 2006, 2005 and 2004, and rent of $3,000 in fiscal 2004. SMR
is a private company owned by Susanne M. Robertson, the wife of John G.
Robertson.

We paid a director's fee of $12,000 to John G. Robertson, our
  Chairman of the Board, during each of fiscal years 2006, 2005 and 2004.

We had related party advances outstanding of $204,394 at the
February 2006 year-end, compared to $188,156 at the end of our previous fiscal
year. These were unsecured, non-interest bearing and with no fixed terms of
repayment.

Also refer to Liquidity and Capital Resources regarding the
"Commitment to Provide Financing to Flame Petro-Minerals Corp. as Required for
Ongoing Operations" by John Robertson.

C.           INTERESTS
OF EXPERTS AND COUNSEL.

Not applicable.

ITEM
8.           FINANCIAL
INFORMATION

A.           CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION

See page F-1 to F-13 following Item 19.

Legal Proceedings

We are not a party to any material legal proceedings.

Dividend Distribution Policy

We have not paid any cash dividends to date and we do not
intend to pay cash dividends in the foreseeable future.

B.           SIGNIFICANT
CHANGES

None.

ITEM
9.           THE OFFER
AND LISTING

Not applicable, except for Item 9.A.4 and Item 9.C.

Our shares traded solely on the Alberta Stock Exchange (the
"ASE") between November, 1995 and December 14, 1999, at which time it
voluntarily delisted from the ASE. The Company's stock currently trades on the
Over the Counter Bulletin Board under the symbol LNXGF.

The following table shows the annual high and low closing
prices of our stock traded on the OTC Bulletin Board during the last five fiscal
years as follows:

Year
    High
    Low
    Close2006
    $0.54
    $0.10
    $0.3512005
    $0.35
    $0.12
    $0.192004
    $0.455
    $0.04
    $0.302003
    $0.094
    $0.011
    $0.072002
    $0.14
    $0.01
    $0.013


The following table shows the quarterly high and low closing
  prices of our stock traded on the OTC Bulletin Board during the last two fiscal
  years, for each quarter as follows:

36

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Period
    High
    Low
    Close
    Volume**2006**Q4 2/28/06
    $0.54
    $0.23
    $0.351
    34,939,979Q3 11/30/05
    0.275
    0.11
    0.236
    9,902,368Q2 8/31/05
    0.17
    0.105
    0.1203
    3,250,142Q1 5/31/05
    0.21
    0.10
    0.125
    5,162,4882005 Q4 2/28/05
    $0.35
    $0.12
    $0.19Q3 11/30/04
    0.20
    0.12
    0.185
    6,986,354Q2 8/31/04
    0.24
    0.12
    0.19
    10,631,057Q1 5/31/04
    $0.35
    $0.20
    $0.21
    12,924,7132004 Q1 5/31/03
    $0.08
    $0.04
    $0.05
    5,055,400Q2 8/31/03
    $0.10
    $0.04
    $0.077
    9,792,900Q3 11/30/03
    $0.28
    $0.053
    $0.265
    26,849,789Q4 2/29/04
    $0.45
    $0.20
    $0.30
    32,438,989


_________all prices in US$

(Information provided by The Over The Counter Bulletin Board.
The quotations reflect inter-dealer prices, without retail mark-up, markdown, or
commission and may not represent actual transactions.)

The following table shows the high and low closing prices of
our stock traded on the OTC Bulletin Board during the most recent six months,
for each month as follows:

Month
    High*
    Low*2006, May
    0.575
    0.372006, April
    0.50
    0.332006, March
    0.394
    0.322006, February
    0.41
    0.2852006, January
    0.54
    0.332005, December
    0.33
    0.23


(Information provided by The Over The Counter Bulletin Board.
The quotations reflect inter-dealer prices, without retail mark-up, markdown, or
commission and may not represent actual transactions.)

ITEM
10.           ADDITIONAL
INFORMATION

A.           SHARE
CAPITAL

Not applicable.

B.           MEMORANDUM
AND ARTICLES OF ASSOCIATION

The Memorandum and Articles of the Company are incorporated by
reference to the information in our registration statement on Form 20-F filed
with the Securities and Exchange Commission, in Washington, D.C. on June 4,
1999, which became effective August 3, 1999, to which our Articles of
Incorporation and Memorandum were filed as exhibits.

On March 29, 2004, the new British Columbia Business
Corporations Act (the "BCA") came into force in British Columbia and replaced
the former Company Act (Former Act) , which is the statute under which we were
previously governed. Under the BCA, we have two years within which to transition
("Transition") under the new statute. In accordance with the BCA, we cannot
amend our Articles or Notice of Articles until the Transition to the BCA is
completed. We filed a transition application with the Registrar of Companies
British Columbia and completed the Transition on June 11, 2004.

Concurrent with the completion of the Transition, we were
required in accordance with the BCA to incorporate

37

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certain provisions known as the "Pre-Existing Company
Provisions" (the "Pre-Existing Company Provisions") into our Notice of Articles,
which replaced the existing Memorandum . The Company is a pre-existing company
under the BCA (that is, a company in existence at the time the BCA came into
force). The Pre-Existing Company Provisions provide our company with certain
default provisions in case certain provisions which are required to be included
in the Articles under the BCA are not included in our Articles.

We filed our Notice of Articles with the Registrar of Companies
which contains basic information relating to the Company, including our name,
the particulars of the directors and the authorized capital. This was a
mandatory requirement for transition to the BCA.

On August 16, 2004, at the Annual General Meeting of
shareholders, our shareholders passed a special resolution that the Notice of
Articles, once filed, be altered to remove the Pre-existing Company Provisions
set forth in Part 16 of the Regulations to the Business Corporations Act(British Columbia); and delete and replace our Articles in their entirety
and no longer apply to Linux Gold Corp.

The New Articles, among other things, incorporate and amend
certain of the information required by the Pre-Existing Company Provisions.

Our Incorporation Number is BC0187279. Our Articles do not
restrict the nature of the business that may be carried on by the Company.

On June 6, 2006, we registered in the State of Alaska under a
Certificate of Authority.

C.          
MATERIAL CONTRACTS

During the past two years ended February 28, 2006 and February
28, 2005, we entered into the following material contracts.

Property Option Agreement  Peter Tse

Ginyen Recovery Inc. (Ginyen) has a license to mine the Bo
Luonuo (the BLN Project) District of Hebei Province in China. Peter Tse own
100% of Ginyen. Tse granted Linux the sole, exclusive and irrevocable option to
purchase up to 100% of the rights, title and interest in and to 100% of all the
outstanding shares of Ginyen, subject to the grant of a 5% Net Profits royalty
in the BLN Project.

Linux exercised an option as to 25% of the Optioned Shares by
paying to Tse, $10,000 and issuing 50,000 Linux Shares to Tse and causing to be
carried out the Phase I mining exploration and/or development work in respect of
the BLN and expending in connection therewith the total sum of $160,000.

Linux may exercise the option as to a further 35% of the
Optioned Shares following the completion of the Phase I Program by (i) paying
the additional sum of $15,000 and issuing a further 50,000 Linux Shares to Tse;
and (ii) causing to be carried out the Phase II mining exploration and/or
development work in respect of the BLN Project or such other secondary work
program as shall be recommended by a qualified engineer or geologist acceptable
to the parties hereto (the "Phase II Program") and expending in connection
therewith the total sum of $130,000.

Provided that Linux has previously exercised the 35% Option we
may exercise the option as to a further 25% of the Optioned Shares following the
completion of the Phase II Program by (i) paying the additional sum of $15,000
and issuing a further 50,000 Linux Shares to Tse; and (ii) causing to be carried
out the Phase III mining exploration and/or development work in respect of the
BLN Project or such other continuing work program as shall be recommended by a
qualified engineer or geologist acceptable to the parties hereto (the "Phase III
Program") and expending in connection therewith the total sum of $210,000.
Provided that Linux has previously exercised the above mentioned options, we may
exercise the Option as to the final 5% of the Optioned Shares, following the
completion of the Phase III Program by (i) issuing a further 50,000 Linux Shares
to Tse; and (ii) entering into a Royalty Agreement which grants to Tse a Net
Profits Royalty in the BLN Project.

If and when the option is exercised in full, 100% of all right,
title and interest in and to the Optioned Shares shall vest in Linux free and
clear of all charges, encumbrances and claims.

Fish Creek Joint Venture Agreement

38

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On
March 5, 2002 we announced that a joint venture has been completed for a 50%
interest in 30 Fish Creek claims in Alaska based on the following terms and
conditions. Teryl Resources Corp. will issue 200,000 treasury shares of its
common shares, which shares were issued on December 16, 2002, and will give to
Linux Gold Corp. a 5% royalty interest until $2,000,000 U.S. has been received
from the royalty payments. Teryl Resources Corp. may purchase the 5% net royalty
for $500,000 U.S. within 1 year after production. Teryl also agrees to expend a
minimum of $500,000 U.S. after three years from the date of the agreement.

On
November 4, 2002, we amended the March 5, 2002 agreement with Teryl Resources
Corp. We agreed that in consideration for receiving a mining license which was
not disclosed to us at the time of the March 5, 2002 agreement, both parties
agreed to grant Linux a back in working interest for a 25% interest in the
mining lease after Teryl completes the US$500,000 expenditures.

In
March 2005, the joint venture agreement was extended until March 5, 2007. Other
than the extension, all other terms remain the same. Subject to regulatory
approval, Teryl shall issue 100,000 shares of its common stock to Linux Gold
Corp. as consideration for the extension.

D.           EXCHANGE
CONTROLS.

There are no governmental laws, decrees or regulations in
Canada relating to restrictions on the export of capital affecting the
remittance of interest, dividends or other payments to nonresident holders of
the Registrant's shares. Any such remittances, however, are subject to
withholding tax. See Item 10.E, "Taxation".

There are no limitations under the laws of Canada, the Province
of British Columbia or in the charter or any other constituent documents of the
Company on the right of foreigners to hold or vote the shares of the Company.
However, under the provisions of the Investment Canada Act, when control of a
Canadian business is acquired by a non- Canadian, the transaction may be
reviewable in certain circumstances by Investment Canada, an agency of the
federal government of Canada. Reviewable transactions are those in which a
non-Canadian acquires the assets of a Canadian business or the voting shares of
a Canadian corporation the value of which assets or shares exceeds $5 million
(Canadian). Also, certain transactions are specifically exempted from review.

E.           TAXATION.

Withholding

Generally, cash dividends paid by Canadian corporations to
nonresident shareholders are subject to a withholding tax of 25 percent.
However, pursuant to Article X[2 of the Canada-United States tax treaty,
dividends paid to a resident if a company of the United States are only subject
to a 15 percent withholding tax. Further, if the United states resident owns 10
percent or more of the voting shares of the Canadian company paying the
dividends, the withholding tax is reduced to 10 percent. In addition to dividend
withholding, interest paid to United States residents is subject to a 15 percent
withholding tax pursuant to Article XI[2 of the Canada-United States tax treaty.

Capital Gains

A nonresident purchaser who holds shares of the Company as
capital property will not be subject to tax on capital gains realized on the
disposition of such shares unless such shares are "taxable Canadian property"
within the meaning of the Income Tax Act (Canada) and no relief is afforded
under any applicable tax treaty. The shares of the Company would be taxable
Canadian property of a nonresident purchaser if the nonresident purchaser used
the shares in carrying on a business in Canada or if at any time during the
five-year period immediately preceding the disposition not less than 25 percent
of the issued shares of any class of the Company belonged to the particular
purchaser, persons with whom the purchaser did not deal at arm's length or any
combination thereof.

Holders of Common Shares of the Company should seek independent
advice from their own professional tax advisors with respect to the Canadian
Income Tax consequences arising from the holding of Common Shares of the
Company.

F.           DIVIDENDS
AND PAYING AGENTS

Not applicable.

G.           STATEMENT
BY EXPERTS.

Not applicable.

39

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H.           DOCUMENTS
ON DISPLAY.

We filed a registration statement on Form 20-F filed the
Securities and Exchange Commission in Washington, D.C. (Registration No.
000-30084) on June 4, 1999, which became effective August 3, 1999. The
Registration Statement contains exhibits and schedules. Any statement in this
annual report about any of our contracts or other documents is not necessarily
complete. If the contract or document is filed as an exhibit to the Registration
Statement, the contract or document is deemed to modify the description
contained in this annual report. You must review the exhibits themselves for a
complete description of the contract or documents.

You may inspect and copy our registration statements, including
their exhibits and schedules, and the reports and other information we file with
the Securities and Exchange Commission in accordance with the Exchange Act at
the public reference facilities maintained by the Securities and Exchange
Commission at Judiciary Plaza, 450 Fifth Street, Room 1024, N.W., Washington,
D.C. 20549 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may also inspect the registration statements, including
their exhibits and schedules, at the office of the New York Stock Exchange, Wall
Street, New York, New York 10005. Copies of such material may also be obtained
from the Public Reference Section of the Securities and Exchange Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may
obtain information regarding the Washington D.C. Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330 or by
contacting the Securities and Exchange Commission over the Internet at its
website at http://www.sec.gov.

I.           SUBSIDIARY
INFORMATION.

We hold a 100% interest in LinuxWizardry, Inc., a private
Florida corporation which is currently inactive.

ITEM
11.           QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133. "Accounting For Derivative Instruments and Hedging Activities."
This statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 was effective for our fiscal
year beginning March 1, 2004. The Company believes that it does not have any
material exposure to interest or commodity risks. The Company does not own any
derivative instruments, does not engage in any hedging transactions and does not
have any outstanding long-term debt. Because we are not involved in any
activities covered by SFAS No. 133, the adoption of SFAS No. 133 is not expected
to have a material effect on our financial position or results of operations.

ITEM
12.           DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM
13.           DEFAULTS,
DIVIDEND ARREARAGES AND DELIQUENCIES

None.

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

A.           MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

None.

B.          
USE OF PROCEEDS.

Not applicable

ITEM
15.           CONTROLS
AND PROCEDURES

40

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We carried out an evaluation, under the supervision and with
the participation of our management, including the President, and the Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures [as defined in the Exchange Act Rule
13a-15(e)] as of the end of the period covered by this report. Based upon the
evaluation of the effectiveness of the disclosure controls and procedures as of
the end of the period covered by this annual report, our Chief Executive Officer
and Chief Financial Officer have concluded that, as of such date, the disclosure
controls and procedures were effective at the reasonable assurance level with
respect to such disclosure controls and procedures being designed to ensure that
information relating to the Registrant required to be disclosed by the Company
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC.

There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable , and not absolute assurance, of achieving the desired control
objectives, and management necessarily was required to apply its judgement in
evaluating the cost-benefit relationship of possible controls and procedures.

There was no significant change in our internal control over
financial reporting that occurred during our most recently completed fiscal year
ended February 28, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Nor were there
any significant deficiencies or material weaknesses in our internal controls
requiring corrective actions.

ITEM
16.           [Reserved]

ITEM
16A.         Audit Committee
Financial Expert

We do not currently have a financial expert in our audit
committee due to our relatively small size. In 2006, we had no employees and we
relied upon the services of a chartered accounting firm in Vancouver, BC,
Canada, to prepare our interim unaudited quarterly consolidated financial
statements. Also, we retained the audit services of Smythe Ratcliffe Chartered
Accountants to perform the audit on our year-end consolidated financial
statements.

Moreover, the audit committee is comprised of seasoned business
professionals, whereby two members have over 25 years of experience in the
investment business and are board members of several corporations.

On these bases, we believe that the audit committee has
adequate resources available to it when financial expertise and advice are
necessary.

ITEM
16B.          Code of Ethics

We have not adopted a formal written code of ethics given our
relatively small size, whereby we had no employees in 2006.

Directors are subject to the laws of the Province of British
Columbia, Canada, whereby they are required to act honestly, in good faith and
in the best interests of the Company.

ITEM
16C.         Principal Accountant
Fees and Services

The following table discloses accounting fees and services of
the Registrant:

(Stated in terms of Canadian dollars)

41

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2006
      2005Type of Services Rendered
      Fiscal Year
      Fiscal Year


(a) Audit Fees
    US$16,900
    US$16,500(b) Audit-Related Fees
    $1,200
    $nil(c) Tax Fees
    $870
    $500(d) All Other Fees
    $nil
    $nil


PART III

ITEM
17.           FINANCIAL
STATEMENTS

The Company has elected to provide financial statements
pursuant to Item 18.

ITEM
18.           FINANCIAL
STATEMENTS

Reference is made to Item 19 for a list of all financial
statements filed as part of this annual report.

Our consolidated financial statements are stated in Canadian
Dollars (CDN$) and are prepared in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). The consolidated financial statements as required
under Item 18 are included immediately following the text of this Report.

ITEM
19.           EXHIBITS

The following consolidated financial statements, together with
the report of Smythe Ratcliffe Chartered Accountants on the annual financial
statements referred to below, are filed as part of this annual report, and are
included immediately following the text of this 20-F:

|Report of Registered Public Accounting Firm   
|----------------------------------------------
|Consolidated Balance Sheets                   
|Consolidated Statements of Loss and Deficit   
|Consolidated Statements of Cash Flows         
|Notes to the Consolidated Financial Statements

Documents filed as exhibits to this annual report:

Number
    Description1.1
    Memorandum and articles of incorporation with bylaws
      dated February 27, 1979
    (1)1.2
    Altered memorandum and special resolution dated September
      20, 1993 increasing the authorized capital to 100,000,000 common shares
      from 90,000,000 and redesignating Class A Common voting shares without
      par value as common shares without par value and redesignating Class B
      Common non-voting shares as common shares without par value
    (1)1.3
    Altered memorandum and special resolution dated March 15,
      2000 changing the name of the Company from Flame Petro-Minerals Corp. to
      LinuxWizardry Systems, Inc.1.4
    Altered memorandum and special resolution dated February
      20, 2003 changing the name of the Company from LinuxWizardry Systems, Inc.
      to Linux Gold Corp.
    (5)1.5
    Memorandum and articles of incorporation amended
      effective September 15, 2004
    (7)


42

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2.1
      Specimen copy of Registrants
          common share certificate
      (2)4.1
      Commitment by John G. Robertson
          dated July 16, 1999 to provide financing to the Registrant as required
          for ongoing operations
      (2)4.2
      Share Purchase Agreement dated
          January 7, 2000 between Flame Petro-Minerals Corp. and Mike Carpenter
          and LinuxWizardry, Inc.
      (3)4.3
      Purchase order dated May 22,
          2000 between LinuxWizardry, Inc. and Motorola, Inc., Personal Communications
          Sector
      (4)4.4
      License Agreement dated June
          30, 2000 between LinuxWizardry Systems, Inc. and LinuxWizardry, Inc.
          and Lineo, Inc
      (4)4.5
      Vendor Agreement dated January
          5, 2001 between Merrimack Services Corporation d/b/a PC Connection and
          LinuxWizardry Systems, Inc.
      (4)4.6
      Joint Venture Agreement between
          Linux Gold Corp. and Teryl Resources Corp. dated March 5, 2002
      (5)4.7
      Amendment to Joint Venture
          Agreement between Linux Gold Corp. and Teryl Resources Corp. dated November
          4, 2002
      (5)4.8
      Edward Skoda Purchase Agreement
           TY Gold Property
      (6)4.9
      Edward Skoda Purchase Agreement
           ORO Mineral Claims
      (6)4.10
      Property Option Agreement
           Peter Tse
      (6)12.1
      Certification
          pursuant to Title 18, United States Code, Section 1350 as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 
          (John G. Robertson)
      (8)12.2
      Certification
          pursuant to Title 18, United States Code, Section 1350 as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 
          (Monique van Oord)
      (8)13.1
      Certification
          pursuant to Title 18, United States Code, Section 1350 as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002 
          (John G. Robertson)
      (8)13.2
      Certification
          pursuant to Title 18, United States Code, Section 1350 as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002 
          (Monique van Oord)
      (8)14.1
      Consent
          of Independent Auditors
      (8)14.2
      Consent of Independent Auditors
      (8)


|(1) | incorporated by reference to the Registrants
      Registration Statement on Form 20-F filed on June 4, 1999 with the US
      Securities and Exchange Commission
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | incorporated by reference to the Registrants Amendment
      No. 1 to the Registration Statement dated July 22, 1999                                             
|(3) | incorporated by reference to the Registrants Annual
      Report on Form 20-F filed on September 14, 2000                                                        
|(4) | incorporated by reference to the Registrants Annual
      Report on Form 20-F filed on July 14, 2001                                                             
|(5) | incorporated by reference to the Registrants Annual
      Report on Form 20-F filed on August 25, 2003                                                           
|(6) | incorporated by reference to the Registrants Annual
      Report on Form 20-F filed on July 19, 2004                                                             
|(7) | incorporated by reference to the Registrants Annual
      Report on Form 20-F filed on July 19, 2005                                                             
|(8) | attached hereto.                                                                                                                                                  

43

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SIGNATURE PAGE

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 transitional report on its behalf.

LINUX GOLD CORP. REGISTRANT

|Dated: March 28, 2007 | By: | /s/ John G. Robertson         
|--------------------- | --- | ------------------------------
|                      |     | John G. Robertson             
|                      |     | Chairman of the Board/Director

44

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|LINUX GOLD CORP.                 
|---------------------------------
|(An Exploration Stage Company)   
|                                 
|CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)  
|                                 
|                                 
|                                 
|February 28, 2006 and 2005       

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE DIRECTORS AND STOCKHOLDERS OF LINUX GOLD CORP.(An Exploration Stage Company)

We have audited the accompanying consolidated balance sheet of
  Linux Gold Corp. (An Exploration Stage Company) as of February 28, 2006 and
  the related consolidated statements of loss, stockholders' deficiency 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 also have audited the adjustments described in Note 13 that
  were applied to restate the 2005 and 2004 financial statements to correct an
  error. In our opinion, such adjustments are appropriate and have been properly
  applied. We were not engaged to audit, review, or apply any procedures to the
  2005 and 2004 financial statements of the Company other than with respect to
  the adjustments and, accordingly, we do not express an opinion or any other
  form of assurance on the 2005 and 2004 financial statements taken as a whole.

We conducted our audit in accordance with auditing standards
  of the Public Company Accounting Oversight Board (United States of America).
  Those standards require that we plan and perform an audit to obtain reasonable
  assurance whether the financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements. An audit also includes assessing
  the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation. We believe
  that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements
  referred to above present fairly, in all material respects, the consolidated
  financial position of the Company as at February 28, 2006 and the consolidated
  results of its operations and its cash flows for the year then ended in conformity
  with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going-concern. As discussed in note 2 to
  the financial statements, the Company has no revenues and limited capital, which
  together raise substantial doubt about its ability to continue as a going-concern.
  Management plans in regard to these matters are also described in note 2. These
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.

Smythe Ratcliffe (signed)

Chartered Accountants

Vancouver, Canada
  June 12, 2006



---



Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of 
  Linux Gold Corp.

We have audited, before the effects of the adjustments to retrospectively
  apply the change in accounting described in Note 13, the consolidated balance
  sheets of Linux Gold Corp. (An Exploration Stage Company) as at February 28,
  2005 and the consolidated statements of operations and deficit, cash flows and
  stockholders equity for the years ended February 28, 2005 and February
  29, 2004 (these consolidated financial statements before the effects of the
  adjustments discussed in Note 13 are not presented herein). These consolidated
  financial statements are the responsibility of the Companys management.
  Our responsibility is to express an opinion on these consolidated financial
  statements based on our audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform an audit to obtain reasonable assurance whether the
  financial statements are free of material misstatement. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion.

In our opinion, the financial statements referred to above, before
  the effects of the adjustments to retrospectively apply the change in accounting
  described in Note 13, present fairly, in all material respects, the financial
  position of the Company as at February 28, 2005 and the results of its operations
  and its cash flows for the years ended February 28, 2005 and February 29, 2004
  in accordance with generally accepted accounting principles used in the United
  States.

The accompanying consolidated financial statements have been
  prepared assuming the Company will continue as a going concern. As discussed
  in Note 1 to the consolidated financial statements, the Company has not generated
  profitable operations since inception. These factors raise substantial doubt
  about the Companys ability to continue as a going concern. Managements
  plans in regard to these matters are also discussed in Note 1. These consolidated
  financial statements do not include any adjustments, which might result from
  the outcome of these uncertainties.

We were not engaged to audit, review, or apply any procedures
  to the adjustments to retrospectively apply the change in accounting described
  in Note 13 and, accordingly, we do not express an opinion or any other form
  of assurance about whether such adjustments are appropriate and have been properly
  applied. Those adjustments were audited by Smythe Ratcliffe, Chartered Accountants.

/s/ Manning Elliott LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

July 15, 2005

---

|LINUX GOLD CORP.               
|-------------------------------
|(An Exploration Stage Company) 
|CONSOLIDATED BALANCE SHEETS    
|(Expressed in Canadian Dollars)

|                                                           |   | February 28 |  
|---------------------------------------------------------- | - | ----------- | -
|                                                           |   | 2006        |  
|                                                           |   |             |  
|ASSETS                                                     |   |             |  
|Current                                                    |   |             |  
|Cash and cash equivalents                                  | $ | 396,049     |  
|Amounts receivable                                         |   | 53,417      |  
|Marketable securities                                      |   | 72,000      |  
|Prepaid expenses and deposits                              |   | 10,999      |  
|Total Current Assets                                       |   | 532,465     |  
|Property and Equipment (Note 4)                            |   | 10,175      |  
|                                                           |   |             |  
|Total Assets                                               | $ | 542,640     |  
|                                                           |   |             |  
|LIABILITIES                                                |   |             |  
|Current                                                    |   |             |  
|Accounts payable                                           | $ | 142,943     |  
|Accrued liabilities                                        |   | 26,643      |  
|Accrued liabilities to related parties
      (Note 6(a))   |   | 88,815      |  
|Due to related parties
      (Note 6(b))                   |   | 204,394     |  
|Total Liabilities                                          |   | 462,795     |  
|                                                           |   |             |  
|Commitments (Note 10)                                      |   |             |  
|                                                           |   |             |  
|STOCKHOLDERS EQUITY                                       |   |             |  
|                                                           |   |             |  
|Common Stock and Paid-in Capital (Note 7)                  |   |             |  
|200,000,000 Shares
      authorized with no par value      |   |             |  
|68,287,773
      Issued and outstanding (2005 64,951,523) |   | 9,005,424   |  
|                                                           |   |             |  
|Donated Capital                                            |   | 295,195     |  
|                                                           |   |             |  
|Accumulated Other Comprehensive Loss                       |   | (8,000      | )
|                                                           |   |             |  
|Deficit Accumulated from Prior Operations                  |   | (7,524,145  | )
|                                                           |   |             |  
|Deficit Accumulated During the Exploration Stage           |   | (1,688,629  | )
|Total Stockholders Equity                                 |   | 79,845      |  
|                                                           |   |             |  
|Total Liabilities and Stockholders Equity                 | $ | 542,640     |  

|Approved by the Directors:
|--------------------------

|J.
      Robertson    |  | J. Lorette         
|----------------------- |  | ---------------------
|J. Robertson  Director |  | J. Lorette  Director

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

F-3

---

|LINUX GOLD CORP.                           
|-------------------------------------------
|(An Exploration Stage Company)             
|CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
|(Expressed in Canadian Dollars)            

|                                                  |   |              |   |   |              |   |   |              |   |   | Cumulative     |  
|------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | - | - | -------------- | -
|                                                  |   |              |   |   |              |   |   |              |   |   | From Inception |  
|                                                  |   | Years Ended  |   |   | May 1, 2003  |  
|                                                  |   |              |   |   |              |   |   |              |   |   | Through        |  
|                                                  |   | February 28, |   |   | February 28, |   |   | February 29, |   |   | February 28,   |  
|                                                  |   | 2006         |   |   | 2005         |   |   | 2004         |   |   | 2006           |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|General and Administrative Expenses               |   |              |   |   |              |   |   |              |   |   |                |  
|Amortization of property                          |   |              |   |   |              |   |   |              |   |   |                |  
|and equipment                                     | $ | 10,686       |   | $ | 5,346        |   | $ |             |   | $ | 16,032         |  
|Consulting and subcontract                        |   | 133,953      |   |   | 233,789      |   |   | 173,555      |   |   | 541,297        |  
|Filing and regulatory fees                        |   | 14,632       |   |   | 26,103       |   |   | 26,113       |   |   | 66,848         |  
|Foreign exchange (recovery)                       |   | 6,407        |   |   | 6,877        |   |   | (38,254      | ) |   | (24,970        | )
|Imputed interest (Note 6(b))                      |   | 31,722       |   |   | 35,013       |   |   | 22,960       |   |   | 89,695         |  
|Management and directors                         |   |              |   |   |              |   |   |              |   |   |                |  
|fees (Note 6(a))                                  |   | 30,000       |   |   | 30,250       |   |   | 34,500       |   |   | 94,750         |  
|Office, rent and telephone                        |   |              |   |   |              |   |   |              |   |   |                |  
|(Note 6(a))                                       |   | 198,856      |   |   | 193,522      |   |   | 61,839       |   |   | 454,217        |  
|Professional fees                                 |   | 54,909       |   |   | 42,235       |   |   | 27,662       |   |   | 124,806        |  
|Travel                                            |   | 23,902       |   |   | 39,750       |   |   | 3,902        |   |   | 67,554         |  
|Less: Interest income                             |   | (4,053       | ) |   | (1,858       | ) |   | (624         | ) |   | (6,535         | )
|                                                  |   | 501,014      |   |   | 611,027      |   |   | 311,653      |   |   | 1,423,694      |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Natural Resources                                 |   |              |   |   |              |   |   |              |   |   |                |  
|Exploration costs                                 |   | 309,091      |   |   | 137,342      |   |   | 61,298       |   |   | 507,730        |  
|Mineral acquisition
      costs                   |   | 20,500       |   |   | 45,571       |   |   | 60,346       |   |   | 126,418        |  
|                                                  |   | 329,591      |   |   | 182,913      |   |   | 121,644      |   |   | 634,148        |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Loss from Continuing Operations                   |   | (830,605     | ) |   | (793,940     | ) |   | (433,297     | ) |   | (2,057,842     | )
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Income from Discontinued Operations (Note 14)     |   |             |   |   |             |   |   | 369,213      |   |   | 369,213        |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Net Loss for the
      Period                     | $ | (830,605     | ) | $ | (793,940     | ) | $ | (64,084      | ) | $ | (1,688,629     | )
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Net Loss Per Share                                |   |              |   |   |              |   |   |              |   |   |                |  
|Continuing operations – basic and
      diluted   | $ | (0.01        | ) | $ | (0.01        | ) | $ | (0.01        | ) |   |                |  
|Discontinued operations – basic and
      diluted |   | –            |   |   | –            |   |   | 0.01         |   |   |                |  
|Net loss per share – basic and diluted            | $ | (0.01        | ) | $ | (0.01        | ) | $ | –            |   |   |                |  
|                                                  |   |              |   |   |              |   |   |              |   |   |                |  
|Weighted Average Number of Common                 |   |              |   |   |              |   |   |              |   |   |                |  
|Shares
      Outstanding                          |   | 64,981,000   |   |   | 61,345,000   |   |   | 58,664,000   |   |   |                |  

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

F-4

---

|LINUX GOLD CORP.                                      
|------------------------------------------------------
|(An Exploration Stage Company)                        
|Consolidated Statements of Stockholders Deficiency   
|Period from Inception May 1, 2004 to February 28, 2006
|(Expressed in Canadian Dollars)                       

|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   | Deficit     |   |   |               |   |   |               |  
|---------------------------------------- |  | ------------ |  | - | --------- |  | - | --------------- |  | - | ----------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                         |  |              |  |   | Common    |  |   |                 |  |   | Deficit     |   |   | Accumulated |   |   |               |   |   |               |  
|                                         |  | Shares of    |  |   | Stock and |  |   |                 |  |   | Accumulated |   |   | During the  |   |   | Other         |   |   | Total         |  
|                                         |  | Common Stock |  |   | Paid-in   |  |   |                 |  |   | from Prior  |   |   | Exploration |   |   | Comprehensive |   |   | Stockholders |  
|                                         |  | Issued       |  |   | Capital   |  |   | Donated Capital |  |   | Operations  |   |   | Stage       |   |   | Income (Loss) |   |   | Deficiency    |  
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance from prior operations,           |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|March 1, 2003                            |  | 57,458,413   |  | $ | 6,804,412 |  | $ | 205,500         |  | $ | (7,524,145  | ) | $ |            |   | $ |              |   | $ | (514,233      | )
|Common stock issued for mineral property |  | 175,000      |  |   | 17,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 17,500        |  
|Common stock issued for services         |  | 1,000,000    |  |   | 100,000   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 100,000       |  
|Common stock issued for settlement of    |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|rent obligation                          |  | 200,000      |  |   | 19,200    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 19,200        |  
|Options exercised                        |  | 150,000      |  |   | 19,812    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 19,812        |  
|Warrants exercised                       |  | 1,300,000    |  |   | 280,922   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 280,922       |  
|Imputed interest                         |  |             |  |   |          |  |   | 22,960          |  |   |            |   |   |            |   |   |              |   |   | 22,960        |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | 44,000        |   |   | 44,000        |  
|Net loss for period                      |  |             |  |   |          |  |   |                |  |   |            |   |   | (64,084     | ) |   |              |   |   | (64,084       | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 29, 2004               |  | 60,283,413   |  |   | 7,241,846 |  |   | 228,460         |  |   | (7,524,145  | ) |   | (64,084     | ) |   | 44,000        |   |   | (73,923       | )
|Common stock issued for mineral property |  | 125,000      |  |   | 45,384    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 45,384        |  
|Common stock issued for cash             |  | 4,205,610    |  |   | 860,089   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 860,089       |  
|Options exercised                        |  | 87,500       |  |   | 10,606    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 10,606        |  
|Warrants exercised                       |  | 250,000      |  |   | 37,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 37,500        |  
|Imputed interest                         |  |             |  |   |          |  |   | 35,013          |  |   |            |   |   |            |   |   |              |   |   | 35,013        |  
|Stock based-compensation                 |  |             |  |   | 82,000    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 82,000        |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | (54,000       | ) |   | (54,000       | )
|Net loss for year                        |  |             |  |   |          |  |   |                |  |   |            |   |   | (793,940    | ) |   |              |   |   | (793,940      | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February
      28, 2005         |  | 64,951,523   |  | $ | 8,277,425 |  | $ | 263,473         |  | $ | (7,524,145  | ) | $ | (858,024    | ) | $ | (10,000       | ) | $ | 148,729       |  

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

F-5

---

|LINUX GOLD CORP.                                                     
|---------------------------------------------------------------------
|(An Exploration Stage Company)                                       
|Consolidated Statements of Stockholders Deficiency
      (Continued)
|Period from Inception May 1, 2004 to February 28, 2006               
|(Expressed in Canadian Dollars)                                      

|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   | Deficit     |   |   |               |   |   |               |  
|---------------------------------------- |  | ------------ |  | - | --------- |  | - | --------------- |  | - | ----------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                         |  |              |  |   | Common    |  |   |                 |  |   | Deficit     |   |   | Accumulated |   |   |               |   |   |               |  
|                                         |  | Shares of    |  |   | Stock and |  |   |                 |  |   | Accumulated |   |   | During the  |   |   | Other         |   |   | Total         |  
|                                         |  | Common Stock |  |   | Paid-in   |  |   |                 |  |   | from Prior  |   |   | Exploration |   |   | Comprehensive |   |   | Stockholders |  
|                                         |  | Issued       |  |   | Capital   |  |   | Donated Capital |  |   | Operations  |   |   | Stage       |   |   | Income (Loss) |   |   | Deficiency    |  
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 28, 2005               |  | 64,951,523   |  | $ | 8,277,425 |  | $ | 263,473         |  | $ | (7,524,145  | ) | $ | (858,024    | ) | $ | (10,000       | ) | $ | 148,729       |  
|Common stock issued for mineral property |  | 50,000       |  |   | 20,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 20,500        |  
|Common stock issued for cash             |  | 3,100,000    |  |   | 672,556   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 672,556       |  
|Options exercised                        |  | 93,750       |  |   | 10,838    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 10,838        |  
|Warrants exercised                       |  | 92,500       |  |   | 21,825    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 21,825        |  
|Imputed interest                         |  |             |  |   |          |  |   | 31,722          |  |   |            |   |   |            |   |   |              |   |   | 31,722        |  
|Stock based-compensation                 |  |             |  |   | 2,280     |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 2,280         |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | 2,000         |   |   | 2,000         |  
|Net loss for year                        |  |             |  |   |          |  |   |                |  |   |            |   |   | (830,605    | ) |   |              |   |   | (830,605      | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 28, 2006               |  | 68,287,773   |  | $ | 9,005,424 |  | $ | 295,195         |  | $ | (7,524,145  | ) | $ | (1,688,629  | ) | $ | (8,000        | ) | $ | 79,845        |  

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

F-6

---

|LINUX GOLD CORP.                     
|-------------------------------------
|(An Exploration Stage Company)       
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in Canadian Dollars)      

|                                            |   |              |   |   |              |   |   |              |   |  | Cumulative     |  
|------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | - |  | -------------- | -
|                                            |   |              |   |   |              |   |   |              |   |  | From Inception |  
|                                            |   | Years Ended  |   |   | May 1, 2003  |  
|                                            |   |              |   |   |              |   |   |              |   |  | Through        |  
|                                            |   | February 28, |   |   | February 28, |   |   | February 29, |   |  | February 28,   |  
|                                            |   | 2006         |   |   | 2005         |   |   | 2004         |   |  | 2006           |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Used In Operating Activities     |   |              |   |   |              |   |   |              |   | 
|Net loss
      for the period               | $ | (830,605     | ) | $ | (793,940     | ) | $ | (64,084      | ) |  | (1,688,629     | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Items not involving cash                    |   |              |   |   |              |   |   |              |   |  |                |  
|Amortization of property                    |   |              |   |   |              |   |   |              |   |  |                |  
|and
      equipment                         |   | 10,686       |   |   | 5,346        |   |   |             |   |  | 16,032         |  
|Imputed interest                            |   | 31,722       |   |   | 35,013       |   |   | 22,960       |   |  | 89,695         |  
|Stock-based
      compensation              |   | 2,280        |   |   | 82,000       |   |   |             |   |  | 84,280         |  
|Shares issued for services                  |   | 20,000       |   |   |             |   |   | 100,000      |   |  | 120,000        |  
|Shares issued
      for mineral             |   |              |   |   |              |   |   |              |   |  |                |  
|properties                                  |   | 20,500       |   |   | 22,000       |   |   | 17,500       |   |  | 60,000         |  
|Shares issued
      for settlement of       |   |              |   |   |              |   |   |              |   |  |                |  
|rent obligation                             |   |             |   |   |             |   |   | 19,200       |   |  | 19,200         |  
|Write-off
      of subsidiarys             |   |              |   |   |              |   |   |              |   |  |                |  
|accounts payable                            |   |             |   |   |             |   |   | (369,213     | ) |  | (369,213       | )
|                                            |   | (745,416     | ) |   | (649,581     | ) |   | (273,637     | ) |  | (1,668,634     | )
|Changes in non-cash working capital         |   |              |   |   |              |   |   |              |   |  |                |  
|Accounts
      receivable                   |   | (3,867       | ) |   | (41,981      | ) |   | (5,986       | ) |  | (51,834        | )
|Prepaid expenses                            |   | (4,799       | ) |   | 27,009       |   |   | (33,209      | ) |  | (10,999        | )
|Accounts
      payable and                  |   |              |   |   |              |   |   |              |   |  |                |  
|accrued liabilities                         |   | 36,323       |   |   | 3,359        |   |   | (55,777      | ) |  | (16,095        | )
|Accrued liabilities
      to related        |   |              |   |   |              |   |   |              |   |  |                |  
|parties                                     |   | 14,255       |   |   | 38,560       |   |   | 36,000       |   |  | 88,815         |  
|Advances
      from (repayments             |   |              |   |   |              |   |   |              |   |  |                |  
|to) related parties                         |   |             |   |   | (42,474      | ) |   | 178,574      |   |  | 136,100        |  
|                                            |   | 41,912       |   |   | (15,527      | ) |   | 119,602      |   |  | 145,987        |  
|Cash Used in Operating Activities           |   | (703,504     | ) |   | (665,108     | ) |   | (154,035     | ) |  | (1,522,647     | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Used In Investing Activities     |   |              |   |   |              |   |   |              |   | 
|Purchase
      of property and              |   |              |   |   |              |   |   |              |   |  |                |  
|equipment                                   |   | (337         | ) |   | (19,871      | ) |   | (6,000       | ) |  | (26,208        | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Provided By Financing Activities |   |              |   |   |              |   |   |              |   | 
|Advances
      from related parties         |   | 16,238       |   |   |             |   |   |             |   |  | 16,238         |  
|Private placement costs                     |   | (42,571      | ) |   |             |   |   |             |   |  | (42,571        | )
|Proceeds
      from sale of                 |   |              |   |   |              |   |   |              |   |  |                |  
|common stock                                |   | 727,790      |   |   | 931,580      |   |   | 300,733      |   |  | 1,960,103      |  
|                                            |   | 701,457      |   |   | 931,580      |   |   | 300,733      |   |  | 1,933,770      |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|(Decrease) Increase in Cash and             |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Equivalents                            |   | (2,384       | ) |   | 246,601      |   |   | 140,698      |   |  | 384,915        |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash and Cash Equivalents,                  |   |              |   |   |              |   |   |              |   |  |                |  
|Beginning of Period                         |   | 398,433      |   |   | 151,832      |   |   | 11,134       |   |  | 11,134         |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash and Cash Equivalents,                  |   |              |   |   |              |   |   |              |   |  |                |  
|End
      of Period                         | $ | 396,049      |   | $ | 398,433      |   | $ | 151,832      |   |  | 396,049        |  

NON-CASH FINANCING AND INVESTING ACTIVITIES (Note 11)

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

F-7

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF
        BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company was incorporated February 27,
        1979 in Canada under the British Columbia Company Act and was extraprovincially
        registered in the province of Alberta on October 12, 1995.                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company voluntarily delisted from the
        Canadian Venture Exchange on December 14, 1999. The Companys stock
        currently trades on the Over the Counter Bulletin Board in the United
        States under the symbol LNXGF.                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On February 20, 2003, the shareholders approved
        a change of name to Linux Gold Corp. and increased the authorized share
        capital to 200,000,000 common shares without par value. The Company had
        been previously pursuing various business opportunities and, elective
        March 1, 2003, the Company changed its principal operations to mineral
        exploration. Accordingly, as of March 1, 2003, the Company is considered
        an exploration stage company.                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | GOING-CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements have
        been prepared by management on the basis of generally accepted accounting
        principles applicable to a going-concern, which assumes the
        Company will continue in operation for the foreseeable future and will
        be able to realize its assets and discharge its liabilities in the normal
        course of operations.                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company has an accumulated deficit during
        the exploration stage of $1,688,629 and total since inception of $9,133,381,
        has not yet commenced revenue-producing operations, and has significant
        expenditure requirements to continue to advance its exploration and development
        activities.                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements do
        not reflect adjustments that would be necessary if the going-concern assumption
        were not appropriate because management believes that the actions already
        taken or planned will mitigate the adverse conditions and events, which
        raise doubts about the validity of the going-concern assumption used in
        preparing these consolidated financial statements. Management intends
        to raise additional capital through share issuances to finance operations
        and invest in other business opportunities.                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | If the going-concern assumption were not appropriate
        for these consolidated financial statements, then adjustments would be
        necessary to the carrying values of the assets and liabilities, the reported
        revenues and expenses, and the balance sheet classifications used.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The continuation of the Company as a going-concern
        is dependent upon the continued financial support from its shareholders,
        the ability of the Company to obtain necessary equity financing to continue
        operations and to determine the existence, discovery and successful exploitation
        of economically recoverable reserves in its resource properties, confirmation
        of the Companys interest in the underlying properties, and the attainment
        of profitable operations. These consolidated financial statements have
        been prepared on a going-concern basis.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-8

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | c)                                        
|   |                                           
|   |                                           
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           

| |                                 |              | Years Ended  |             
| | ------------------------------- | ------------ | ------------ | ------------
| |                                 | February 28, | February 28, | February 29,
| |                                 | 2006         | 2005         | 2004        
| |                                 |              |              |             
| | Risk-free interest rate         | N/A          | 3.38%        | 5.80%       
| | Expected volatility             | N/A          | 154%         | 50%         
| | Expected dividends              | N/A          |             |            
| | Expected option life (in years) | N/A          | 3            | 0.50        

F-9

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           

| |                                                                    |              | Years Ended         |              
| | ------------------------------------------------------------------ | ------------ | ------------------- | -------------
| |                                                                    | February 28, | February 28,        | February 29, 
| |                                                                    | 2006         | 2005
      restated | 2004 restated
| |                                                                    |              |                     |              
| | Net loss  as reported                                             | $ (830,605)  | $ (793,940)         | $ (64,084)   
| | Add: Stock-based compensation expense included in net loss
      - |              |                     |              
| | as reported                                                        | N/A          | 82,000              |             
| | Deduct: Stock-based compensation expense determined                |              |                     |              
| | under fair value method                                            | N/A          | (96,000)            | (9,186)      
| |                                                                    |              |                     |              
| | Net loss  pro forma                                               | $ (830,605)  | $ (807,940)         | $ (73,270)   
| |                                                                    |              |                     |              
| | Net loss per share (basic and diluted) 
      as reported         | $ (0.01)     | $ (0.01)            |             
| | Net loss per share (basic and diluted)  pro forma                 | $ (0.01)     | $ (0.01)            |             

| | g) | Exploration Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Company is in the exploration stage of developing
        its mineral properties and has not yet determined whether these properties
        contain ore reserves that are economically recoverable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Exploration expenses incurred prior to determination
        of the feasibility of a mining operation and administrative expenses are
        expensed as incurred. Mineral property acquisition costs and exploration
        and development expenditures incurred subsequent to the determination
        of the feasibility of a mining operation are deferred until the property
        is placed into production, sold, allowed to lapse or abandoned. Acquisition
        costs include cash and the fair market value of common shares. These capitalized
        costs will be amortized over the estimated life of the property following
        commencement of commercial production or written off if the property is
        sold, allowed to lapse or abandoned, or when an impairment of value has
        occurred.                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Ownership in mineral interests involves certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as well as the potential for problems arising from the frequent, ambiguous
        conveyance history characteristic of mineral interests. The Company has
        investigated ownership of its mineral interests, and to the best of its
        knowledge, ownership of its interests is in good standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | h) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Company considers all highly liquid instruments
        with a maturity of three months or less at the time of issuance to be
        cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | i) | Assets Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The basis of this policy is the recognition of a legal
        liability for obligations related to the retirement of property, plant
        and equipment and obligations arising from the acquisition, construction,
        development or normal operations of those assets. Such asset retirement
        costs must be recognized at fair value when a reasonable estimate of fair
        value can be estimated in the period in which the liability is incurred.
        A corresponding increase to the carrying amount of the related asset,
        when one is identifiable, is recorded and amortized over the life of the
        asset. Where a related future value is not easily identifiable with a
        liability, the change in fair value over the course of the year is expensed.
        The amount of the liability is subject to re- measurement at each reporting
        period. The estimates are based principally on legal and regulatory requirements.

F-10

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | i)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | j)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | k)                                        
|   |                                           
|   |                                           
|   |                                           
|   | l)                                        
|   |                                           
|   |                                           

F-11

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | m)                                        
|   |                                           
|   |                                           
|   |                                           
|   | n)                                        
|   |                                           
|   |                                           

| |                                               |   |              |   |   | Years Ended   |   |   |               |  
| | --------------------------------------------- | - | ------------ | - | - | ------------- | - | - | ------------- | -
| |                                               |   | February 28, |   |   | February 28,  |   |   | February 29,  |  
| |                                               |   | 2006         |   |   | 2005 restated |   |   | 2004 restated |  
| | Net loss for the year                         | $ | (830,605     | ) | $ | (793,940      | ) | $ | (64,084       | )
| |                                               |   |              |   |   |               |   |   |               |  
| | Other comprehensive income (loss)             |   |              |   |   |               |   |   |               |  
| | Unrealized holding gain (loss) on investments |   | 2,000        |   |   | (54,000       | ) |   | 34,000        |  
| | Comprehensive loss for the year               | $ | (828,605     | ) | $ | (847,940      | ) | $ | (30,084       | )

| | o) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Property and equipment consists of office furniture,
        computer equipment and vehicle, which are recorded at cost. Office furniture
        is amortized on a declining-balance basis at 20% per annum, computer equipment
        is amortized on a straight-line basis over three years, and the vehicle
        is amortized on a declining-balance basis at 30% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | p) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | In December 2004, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 153, Exchanges of Non-monetary
        Assets - An Amendment of APB Opinion No. 29. The guidance in
        APB Opinion No. 29, Accounting for Non-monetary Transactions,
        is based on the principle that exchanges of non-monetary assets should
        be measured based on the fair value of the assets exchanged. The guidance
        in that Opinion, however, included certain exceptions to that principle.
        SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for
        non-monetary exchanges of similar productive assets and replaces it with
        a general exception for exchanges of non-monetary assets that do not have
        commercial substance. A non- monetary exchange has commercial substance
        if the future cash flows of the entity are expected to change significantly
        as a result of the exchange. The provisions of SFAS No. 153 are effective
        for non-monetary asset exchanges occurring in fiscal periods beginning
        after June 15, 2005. Early application is permitted and companies must
        apply the standard prospectively. The adoption of this standard is not
        expected to have a material effect on the Companys results of operations
        or financial position.

F-12

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | p)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|4. | PROPERTY AND EQUIPMENT                    

| |                   |          | February 28, 2006 |             
| | ----------------- | -------- | ----------------- | ------------
| |                   |          | Accumulated       | Net Carrying
| |                   | Cost     | Amortization      | Value       
| |                   |          |                   |             
| | Computer hardware | $ 25,358 | $ 25,358          | $          
| | Office furniture  | 1,408    | 898               | 510         
| | Vehicle           | 15,531   | 5,866             | 9,665       
| |                   |          |                   |             
| |                   | $ 42,297 | $ 32,122          | $ 10,175    

F-13

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|4. | PROPERTY AND EQUIPMENT (Continued)
|-- | ----------------------------------

| |                   |          | February 28, 2005 |             
| | ----------------- | -------- | ----------------- | ------------
| |                   |          | Accumulated       | Net Carrying
| |                   | Cost     | Amortization      | Value       
| |                   |          |                   |             
| |                   |          |                   |             
| | Computer hardware | $ 25,021 | $ 18,323          | $ 6,698     
| | Office furniture  | 1,408    | 782               | 626         
| | Vehicle           | 15,531   | 2,330             | 13,201      
| |                   |          |                   |             
| |                   |          |                   |             
| |                   | $ 41,960 | $ 21,435          | $ 20,525    

|5. | MINERAL PROPERTIES
|-- | ------------------

| |                                    |           | February 28, 2006 |      
| | ---------------------------------- | --------- | ----------------- | -----
| |                                    |           | British           |      
| |                                    | Alaska    | Columbia          | China
| |                                    |           |                   |      
| | Acquisition costs:                 | $        | $ 20,500          | $   
| |                                    |           |                   |      
| | Exploration and development costs: |           |                   |      
| | Staking and recording fees         | 33,938    |                   |     
| | Geological consulting              | 229,442   | 3,875             |     
| | Transportation                     | 41,836    |                  |     
| |                                    |           |                   |      
| | Incurred during the year           | $ 305,216 | $ 24,375          | $   

| |                                    |         | February 28, 2005 |          
| | ---------------------------------- | ------- | ----------------- | ---------
| |                                    |         | British           |          
| |                                    | Alaska  | Columbia          | China    
| |                                    |         |                   |          
| | Acquisition costs:                 | $ 1,023 | $ 16,385          | $ 39,000 
| |                                    |         |                   |          
| | Exploration and development costs: |         |                   |          
| | Field supplies and other           | 99      |                  | 5,901    
| | Assaying                           |        | 1,059             | 7,603    
| | Staking and recording fees         | 2,264   | 4,066             | 26,602   
| | Geological consulting              |        | 4,560             | 46,555   
| | Transportation                     |        |                  | 27,796   
| |                                    |         |                   |          
| | Incurred during the year           | $ 3,386 | $ 26,070          | $ 153,457

F-14

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|5. | MINERAL PROPERTIES(Continued)
|-- | -----------------------------
|   |                              
|   | a)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   | b)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   | c)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              

F-15

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|5. | MINERAL PROPERTIES(Continued)
|-- | -----------------------------
|   |                              
|   |                              
|   |                              
|   |                              

|6. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   | b)                        

| |                                   |   | February 28, |   |   | Advances     |   |   | February 28, |  
| | --------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                   |   | 2005         |   |   | (Repayments) |   |   | 2006         |  
| |                                   |   |              |   |   |              |   |   |              |  
| | Access Information Services, Inc. | $ | 48,287       |   | $ |             |   | $ | 48,287       |  
| | IAS Communications Inc.           |   | (3,151       | ) |   |             |   |   | (3,151       | )
| | JGR Petroleum, Inc.               |   | 64,599       |   |   | 1,500        |   |   | 66,099       |  
| | J. Robertson, President and CEO   |   |             |   |   | 3,029        |   |   | 3,029        |  
| | Rainbow Network                   |   | 59,801       |   |   | 8,809        |   |   | 68,610       |  
| | Reg Technologies Inc.             |   |             |   |   |             |   |   |             |  
| | REGI U.S., Inc.                   |   | (38          | ) |   |             |   |   | (38          | )
| | SMR Investments Ltd.              |   | 18,658       |   |   | (37,316      | ) |   | (18,658      | )
| | Teryl Resources Corp.             |   |             |   |   | 40,215       |   |   | 40,216       |  
| |                                   |   |              |   |   |              |   |   |              |  
| |                                   | $ | 188,156      |   | $ | 16,237       |   | $ | 204,394      |  

F-16

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|7. | COMMON STOCK                                                                                 
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              
|   | a)                                                                                           
|   |                                                                                              
|   | b)                                                                                           
|   |                                                                                              
|   | c)                                                                                           
|   |                                                                                              
|   | d)                                                                                           
|   |                                                                                              
|   | e)                                                                                           
|   |                                                                                              
|   | f)                                                                                           
|   |                                                                                              
|8. | WARRANTS                                                                                     
|   |                                                                                              
|   | A summary of the changes in the Companys
        share purchase warrants is presented below:

| |                            | February 28, 2006 |                | February 28, 2005
| | -------------------------- | ----------------- | -------------- | -----------------
| |                            |                   | Weighted       |                  
| |                            |                   | Average        |                  
| |                            | Number            | Exercise Price |                  
| |                            |                   |                |                  
| | Balance, beginning of year | 3,563,527         | US$ 0.21       |                  
| | Granted                    | 1,500,000         | US$ 0.25       |                  
| | Exercised                  | (92,500)          | US$ 0.20       |                  
| | Forfeited / Expired        | (160,000)         | US$
      0.23 |                  
| |                            |                   |                |                  
| | Balance, end of year       | 4,811,027         | US$
      0.20 |                  

As at February 28, 2006, the following
  share purchase warrants were outstanding:

| |                                     | Exercise      | Years Ended
| | ----------------------------------- | ------------- | -----------
| |                                     | Price         | 2006       
| |                                     |               |            
| | October 18, 2005                    | $ 0.20        | 0          
| | July 6, 2006                        | $ 0.07        | 0          
| | November 18, 2005/2006              | $ 0.20/$ 0.25 | 533,250    
| | December 6, 2006                    | $ 0.18        | 2,777,777  
| | February 21, 2007/February 21, 2008 | $ 0.25/$ 0.30 | 1,500,000  
| |                                     |               | 4,811,027  

F-17

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|9. | STOCK OPTIONS
|-- | -------------

The Company has a stock option plan to
  issue up to 10% of the issued common shares to certain directors and employees.
  A summary of the changes in the Companys common share purchase options
  is presented below:

| |                            | February 28, 2006 |                | February 28, 2005
| | -------------------------- | ----------------- | -------------- | -----------------
| |                            |                   | Weighted       |                  
| |                            |                   | Average        |                  
| |                            |                   | Exercise       |                  
| |                            | Number            | Price          |                  
| |                            |                   |                |                  
| | Balance, beginning of year | 3,587,500         | US$ 0.11       |                  
| | Granted                    |                  |               |                  
| | Exercised                  | (93,750)          | US$ 0.10       |                  
| | Forfeited / Expired        | (1,050,000)       | US$
      0.20 |                  
| |                            |                   |                |                  
| | Balance, end of year       | 2,443,750         | US$
      0.13 |                  

Additional information regarding options
  outstanding as at February 28, 2006 is as follows:

| |                   |           | Outstanding        |          |  | Exercisable
| | ----------------- | --------- | ------------------ | -------- |  | -----------
| |                   |           | Weighted           |          |  |            
| |                   |           | average            | Weighted |  |            
| |                   |           | remaining          | average  |  |            
| |                   | Number of | contractual        | exercise |  | Number of  
| | Exercise price    | shares    | life
      (years) | price    |  | shares     
| |                   |           |                    |          |  |            
| | US$ 0.00  $ 0.10 | 1,893,750 | 2.27               | US$ 0.10 |  | 1,893,750  
| | US$ 0.11  $ 0.20 | 325,000   | 2.21               | US$ 0.18 |  | 325,000    
| | US$ 0.21  $ 0.30 | 225,000   | 1.73               | US$ 0.30 |  | 225,000    
| |                   |           |                    |          |  |            
| |                   | 2,443,750 | 2.21               | US$ 0.13 |  | 2,443,750  

During the year ended February 28, 2006,
  the total stock-based compensation recognized under the fair value method was
  $2,280 (2005 - $82,000) using the Black-Scholes option pricing model (Note 3(f)).

The following assumptions were used for
  the Black-Scholes option pricing model valuation of stock options granted:

| |                       | Years Ended February 28,
| | --------------------- | ------------------------
| |                       | 2006                    
| |                       |                         
| | Expected life (years) | 5                       
| | Interest rate         | 3.07%                   
| | Volatility            | 78%                     
| | Dividend yield        |                        

Option pricing models require the input
  of highly subjective assumptions including the expected price volatility. Changes
  in the subjective input assumptions can materially affect the fair value estimate,
  and therefore the existing models do not necessarily provide a reliable single
  measure of the fair value of the Companys stock option.

F-18

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|10. | COMMITMENTS
|--- | -----------

The Company entered into a two-year lease
  agreement to rent 1,018 square feet of office space commencing April 1, 2004.
  Subsequent to year-end, the Company extended the agreement to June 1, 2006.
  Basic annual rent is $30,336. The future commitment is as follows:

| |                                       |   | 2007  | 
| | ------------------------------------- | - | ----- | 
| | Basic rent                            | $ | 3,816 | 
| | Property taxes and operating expenses |   | 3,768 | 
| |                                       | $ | 7,584 | 

|11. | NON-CASH FINANCING AND INVESTING ACTIVITIES                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                         
|    | During the year ended February 28, 2006:                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                         
|    | i)                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                         
|    | ii)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|    | During the year ended February 29, 2005:                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                         
|    | i)                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                         
|    | ii)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|    | iii)                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                         
|    | iv)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|12. | INCOME TAXES                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                         
|    | Potential benefits of income tax losses are
        not recognized in the accounts until realization is more likely than not.
        The Company has adopted SFAS No. 109, Accounting for Income Taxes,
        as of its inception. The Company has incurred Canadian non-capital losses
        as scheduled below:

Year of
      
      
      Year ofLoss
      
      Amount
      Expiration2000
      $
      164,000
      20072001
      
      1,223,000
      20082002
      
      239,000
      20092003
      
      28,000
      20102004
      
      347,000
      20112005
      
      399,000
      20152006
      
      361,000
      2016$
      2,761,000 F-19


---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|12. | INCOME TAXES(Continued)                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | Pursuant to SFAS No. 109, the Company is required to
        compute tax asset benefits for non-capital losses carried forward. Potential
        benefit of non-capital losses have not been recognized in these financial
        statements because the Company cannot be assured it is more likely than
        not it will utilize the losses carried forward in future years.
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | The reconciliation of income tax attributable to continuing
        operations computed at the statutory tax rates to income tax expense is:                                                                                                                                                                                                                                       

| |                                                               |   | 2006     |   |   | 2005     |  
| | ------------------------------------------------------------- | - | -------- | - | - | -------- | -
| |                                                               |   |          |   |   |          |  
| | Income tax benefit computed at Canadian statutory
      rates | $ | 283,569  |   | $ | 271,051  |  
| | Amortization in excess of capital cost allowance              |   | (3,648   | ) |   | (1,825   | )
| | Share issuance and financing costs                            |   | (14,534  | ) |   | 0        |  
| | Non-deductible stock-based compensation                       |   | (778     | ) |   | (27,995  | )
| | Non-deductible write-down of investment                       |   | (683     | ) |   | 18,436   |  
| | Utilized (unrecognized) tax losses                            |   | (263,926 | ) |   | (259,667 | )
| |                                                               |   |          |   |   |          |  
| | Future income tax benefit                                     | $ | 0        |   | $ | 0        |  

Significant components of the Companys
  future tax assets and liabilities, after applying enacted corporate income tax
  rates, are as follows:

| |                                                                       |   | 2006       |   |   | 2005       |  
| | --------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                                       |   |            |   |   |            |  
| | Future income tax assets                                              |   |            |   |   |            |  
| | Excess of book value over market value of marketable
      securities | $ | 2,731      |   |   | 3,414      |  
| | Excess of undepreciated capital cost over net book                    |   |            |   |   |            |  
| | value of fixed assets                                                 | $ | 2,635      |   | $ | 1,825      |  
| | Excess of unused exploration expenditures for Canadian                |   |            |   |   |            |  
| | tax purposes over net book value of resource
      properties         |   | 456,457    |   |   | 343,934    |  
| | Net losses carried forward                                            |   | 942,605    |   |   | 845,306    |  
| |                                                                       |   |            |   |   |            |  
| |                                                                       |   | 1,404,428  |   |   | 1,194,479  |  
| | Valuation allowance for future income tax assets                      |   | (1,404,428 | ) |   | (1,194,479 | )
| |                                                                       |   |            |   |   |            |  
| | Future income tax assets, net                                         | $ | 0          |   | $ | 0          |  

The valuation allowance reflects the
  Companys estimate that the tax assets, more likely than not, will not
  be realized and consequently have not been recorded in these financial statements.

F-20

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|13. | RESTATEMENT                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During 2004, the Company accrued $3,000 of rent and
        $9,000 of directors fees all of which had already been paid. Also,
        during 2005 the Company accrued $6,000 of rent and $12,000 of directors
        fees all of which had also been paid.                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During the years ended 2004 and 2005 the Company expensed
        $30,152 in each of the years. These amounts represent amortization of
        discount on convertible debt, which was settled in 2002. Since the debt
        was settled in 2002, these amounts along with the remaining unamortized
        balance of $19,091 should have been fully expensed when the debt was settled.
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | As a result of the above errors, prior period statements
        have been retroactively restated to reflect the reversal of such errors.
        The effect of this correction on net loss and related per share amounts
        is as follows:                                                                                                                                             

| |                                                  |   | 2005     |   |   | 2004     |  
| | ------------------------------------------------ | - | -------- | - | - | -------- | -
| |                                                  |   |          |   |   |          |  
| | Net loss as previously reported                  | $ | (842,092 | ) | $ | (106,234 | )
| | Over accrued rent                                |   | 6,000    |   |   | 3,000    |  
| | Over accrued directors fees                     |   | 12,000   |   |   | 9,000    |  
| | Amortization of debt discount                    |   | 30,152   |   |   | 30,150   |  
| |                                                  |   |          |   |   |          |  
| | Net loss as restated                             | $ | (793,940 | ) | $ | (64,084  | )
| |                                                  |   |          |   |   |          |  
| | Basic net loss per share, as previously reported | $ | (0.01    | ) | $ | (0.01    | )
| | Prior period adjustments                         |   | 0.00     |   |   | 0.00     |  
| |                                                  |   |          |   |   |          |  
| | Basic net loss per share, as restated            | $ | (0.01    | ) | $ | (0.01    | )

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|14. | DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On February 20, 2003, the shareholders approved
      a change of name to Linux Gold Corp. and increased the authorized share
      capital to 200,000,000 common shares without par value. The Company had
      been previously pursuing various business opportunities and, effective March
      1, 2003, the Company changed its principal operations to mineral exploration.
      Accordingly, discontinued operations consist of the Companys former
      businesses.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The results of discontinued operations are summarized
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                           |  |              |  |  |              |  |  |              |  |  | Cumulative     | 
| | ----------------------------------------- |  | ------------ |  |  | ------------ |  |  | ------------ |  |  | -------------- | 
| |                                           |  |              |  |  |              |  |  |              |  |  | From Inception | 
| |                                           |  |              |  |  |              |  |  |              |  |  | May 1, 2003    | 
| |                                           |  | Year Ended   |  |  | Year Ended   |  |  | Year Ended   |  |  | Through        | 
| |                                           |  | February 28, |  |  | February 28, |  |  | February 29, |  |  | February 28,   | 
| |                                           |  | 2006         |  |  | 2005         |  |  | 2004         |  |  | 2006           | 
| |                                           |  | $            |  |  | $            |  |  | $            |  |  | $              | 
| |                                           |  |              |  |  |              |  |  |              |  |  |                | 
| |                                           |  |              |  |  |              |  |  |              |  |  |                | 
| | Revenue                                   |  |             |  |  |             |  |  |             |  |  |               | 
| | Expenses                                  |  |             |  |  |             |  |  |             |  |  |               | 
| | Net Operating Loss                        |  |             |  |  |             |  |  |             |  |  |               | 
| | Gain on write-off of subsidiary accounts  |  |              |  |  |              |  |  |              |  |  |                | 
| | payable                                   |  |             |  |  |             |  |  | 369,213      |  |  | 369,213        | 
| | Income From Discontinued
      Operations |  |             |  |  |             |  |  | 369,213      |  |  | 369,213        | 

| | Assets and liabilities disposed of comprised the following:
| | -----------------------------------------------------------

| |                         |   | February 28, |  |   | February 28, |  |   | February 29, | 
| | ----------------------- | - | ------------ |  | - | ------------ |  | - | ------------ | 
| |                         |   | 2006         |  |   | 2005         |  |   | 2004         | 
| |                         | $ |              |  | $ |              |  | $ |              | 
| |                         |   |              |  |   |              |  |   |              | 
| | Accounts
      payable  |   |             |  |   |             |  |   | 369,213      | 
| | Total
      Liabilities |   |             |  |   |             |  |   | 369,213      | 

|**15.** | **SUBSEQUENT EVENTS**
|------- | ---------------------
|        |                      
|        | a)                   
|        |                      
|        |                      



F-22

---