---

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

**FORM 20-F**

** ̈******REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
  EXCHANGE ACT OF 1934

**x**
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934.

For the Fiscal Year Ended December 31, 2005

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

For transition period from ____________ to ____________

Commission File Number: **0-503111**

REGALITO COPPER
CORP.(Exact name of Registrant as specified in its
charter)

Not Applicable(Translation of Registrants
name into English)

Canada(Jurisdiction of Incorporation or
Organization)

Suite 1550  625 Howe Street, Vancouver, British Columbia
V6C 2T6(Address of Principal executive office)

Securities registered or to be registered pursuant to Section
12(b) of the Act:Not Applicable

Securities registered or to be registered pursuant to Section
12(g) of the Act: Common Shares, Without Par Value

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

Number of outstanding shares of each of the Companys classes
  of capital or common stock as of February 28, 2006: 21,922,442 Common Shares, Without Par Value

Indicate by check mark if the registrant is a well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act. Yes: ** ̈**
  No: **x******

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

Indicate by check mark whether the Registrant (1) has filed all
  reports required to be filed by Section 13 or 15(d) of the 
  Securities Exchange Act of 1934 during the preceding 12 months (or for such
  shorter period that the Registrant was
  required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days: Yes: **x**
  No: ** ̈**

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

** ̈**
  Large accelerated filer     ** ̈**
  Accelerated filer     **x**
  Non-accelerated filer

Indicate by check mark which financial statement item the Registrant
  has elected to follow:
  Item 17 **x** Item
  18 ** ̈**

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

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

Indicate by check mark whether the Registrant has filed all documents
  and reports required to be filed by Section 12, 
  14 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution
  of securities under a plan confirmed 
  by court.
  Yes: **x** No: ** ̈**

---



INFORMATION TO BE INCLUDED IN THE REPORT

Convention

In this Annual Report all references to the Company refer to
Regalito Copper Corp. (formerly Lumina Copper Corp.) and its subsidiary. All
references to Canada are references to The Dominion of Canada. All references
to the Government are references to the government of Canada. Unless otherwise
noted all references to common shares, shares or common stock are
references to the common shares of Regalito Copper Corp.

In this document, all references to SEC refer to the United
States Securities and Exchange Commission. The Companys reporting currency is
the Canadian dollar. References to $, Cdn Dollars, or Cdn$ are to the
currency of Canada and all references to US Dollars or US$ are to the
currency of the United States of America. Solely for the convenience of the
reader, this Annual Report contains conversions of certain Cdn Dollar amounts
into US Dollar amounts at specified rates.

Measurement Conversion Information

In this Annual Report, metric measures are used with respect to
mineral property described herein. For ease of reference, the following
conversion factors are provided:

Imperial Measure
    Metric Unit
    Imperial Measure
    Metric Unit1 mile
    1.609 kilometres
    2,204 pounds
    1 tonne1 yard
    0.9144 metre
    2,000 pounds/1 short ton
    0.907 tonnes1 acre
    0.405 hectare
    1 troy ounce
    31.104 grams1 US gallon
    3.785 litres
    1 imperial gallon
    4.546 litres


Forward Looking Statements

This Annual Report includes forward-looking statements. A
shareholder or prospective shareholder should bear this in mind when assessing
the Companys business. All statements, other than statements of historical
facts, included in this registration statement, including, without limitation,
the statements under and located elsewhere herein regarding industry prospects
and the Companys financial position are forward-looking statements. Although
the Company believes that the expectations reflected in such forward looking
statements are reasonable, it can give no assurance that such expectation will
prove to have been correct. There is significant risk that actual results will
vary, perhaps materially from results projected depending on such factors as
changes in general economic conditions, financial markets, copper prices and
other metals, technology and exploration hazards.

GLOSSARY OF MINING TERMS

The following are abbreviations and definitions of terms
commonly used in the mining industry and this Annual Report:

|Au                         | scientific symbol and abbreviation for gold                                                                                                                                                                                                                                                                                                                                                                    
|---------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                
|Advanced Stage             | means a mineral property that has, determined through the
      results of exploration, substantial geological merit but is not advanced
      to the point where sufficient engineering and economic data exist to
      permit an acceptable valuation opinion                                                                                                                                               
|
|
|
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                
|Cu                         | scientific symbol and abbreviation for copper                                                                                                                                                                                                                                                                                                                                                                  
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                
|Indicated Mineral Resource | is 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
|
|
|
|

- 2 -

---

|                            | 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                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Inferred Mineral Resource | is that part of a Mineral Resource for which quantity and
      grade or quality can be estimated on the basis of geological evidence and
      limited sampling and reasonably assumed, but not verified, geological and
      grade continuity. The estimate is based on limited information and
      sampling gathered through appropriate techniques from locations such as
      outcrops, trenches, pits, workings and drill holes                                                                                                                                                                                                                                                                               
|
|
|
|
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mineral Resource          | is a concentration or occurrence of natural, solid,
      inorganic or fossilized organic material in or on the Earth's crust in
      such form and quantity and of such a grade or quality that it has
      reasonable prospects for economic extraction. The location, quantity,
      grade, geological characteristics and continuity of a Mineral Resource are
      known, estimated or interpreted from specific geological evidence and
      knowledge                                                                                                                                                                                                                                                       
|
|
|
|
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Measured Mineral Resource | is 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
|
|
|
|
|
|
|
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Metallurgy                | the science and art of extraction of metals from their
      ores and preparing them for use                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mineralization            | the process by which minerals are introduced and
      concentrated within a host rock, and the product of this process                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|NSR                       | means a percentage of the gross dollar proceeds obtained
      from the sale of minerals with only minor cost deductions for shipping,
      insurance and smelter penalties allowed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
|

GLOSSARY OF NON-MINING TERMS

In this Annual Report, unless there is something in the subject
matter or context inconsistent therewith, the following capitalized words and
terms have the following meanings:

|Act                        | means the Securities Exchange Act of 1934                                                                                         
|---------------------------- | ----------------------------------------------------------------------------------------------------------------------------------
|                             |                                                                                                                                   
|Affiliate                  | has the meaning ascribed thereto in the Securities Act(British Columbia), as amended                                              
|
|                             |                                                                                                                                   
|AMEX                       | means the American Stock Exchange                                                                                                 
|                             |                                                                                                                                   
|BCBCA                      | means the Business Corporations Act(British
      Columbia), as amended                                                           
|                             |                                                                                                                                   
|Common Shares              | means the common shares in the capital of the Company as
      presently constituted                                              
|
|                             |                                                                                                                                   
|National Instrument 43-101 | is an instrument made under the
        Securities Act(British Columbia) for standards of disclosure for
        mineral projects.

- 3 -

---

|Plan of Arrangement | means the statutory
        arrangement involving the Company, its securityholders, and three newly
        incorporated subsidiaries under the provisions of sections 288 to 299
        of the BCBCA
|------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|                    |                                                                                                                                                                                                       
|TSX               | means the Toronto Stock Exchange,
        of Toronto, Ontario, Canada                                                                                                                                 
|                    |                                                                                                                                                                                                       
|TSX.V             | means the TSX Venture Exchange,
        of Vancouver, British Columbia, Canada                                                                                                                        
|                    |                                                                                                                                                                                                       
|TSX Policies      | means the policies of the TSX
        as set forth in its TSX Company Manual                                                                                                                          
|                    |                                                                                                                                                                                                       
|TSX.V Policies    | means the policies of the TSX.V
        as set forth in its Corporate Finance Manual                                                                                                                  

PART I

ITEM 1.      IDENTITY OF DIRECTORS
SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2.      OFFER STATISTICS AND
EXPECTED TIMETABLE

Not Applicable.

ITEM 3.      KEY
INFORMATION

A.      Selected Financial
Data

Currency Exchange Rate Information:

The rate of exchange means that noon buying rate in New York
City for cable transfer in Canadian dollars as certified for customs proposed by
the Federal Reserve Bank of New York. The average rate means the average of the
exchange rates on the last date of each month during a year.

2005
    2004
    2003
    2002
    2001High
    $1.2562
    $1.3970
    $1.5747
    $1.6003
    $1.6034Low
    $1.1507
    $1.1775
    $1.3484
    $1.5593
    $1.4935Average for Period
    $1.2083
    $1.3015
    $1.4615
    $1.5597
    $1.5494End of Period
    $1.1656
    $1.2034
    $1.3484
    $1.5593
    $1.5928


The exchange rate on February 28, 2006 was $1.1379.

The high and low exchange rates for the most recent six months
are as follows:

Sept
    Oct
    Nov
    Dec
    Jan
    Feb2005
    2005
    2005
    2005
    2006
    2006High
    1.1880
    1.1887
    1.1960
    1.1736
    1.1726
    1.1577Low
    1.1607
    1.1657
    1.1656
    1.1507
    1.1436
    1.1379


Financial Information

On January 27, 2003, the Company entered into a securities
exchange agreement (SEA) with CRS Copper Resources Corp. (CRS) and the
shareholders of CRS to acquire all of the issued and outstanding shares and
warrants of CRS. CRS was engaged in the acquisition, exploration and development
of mineral resources, specifically advanced stage copper properties.

- 4 -

---

On May 23, 2003, pursuant to the SEA, the Company consolidated
  its common shares on a one for ten basis and issued to the security holders
  of CRS an aggregate of 8,187,501 post-consolidated common shares and warrants
  to purchase 5,657,500 of the Companys post-consolidated common shares,
  exercisable at a price of $1.50 per share to May 23, 2005, to acquire a 100%
  interest in CRS. All of these warrants have been exercised or expired on May
  23, 2005.

The acquisition was accounted for by the purchase method, with
CRS deemed to be the acquirer, and reported as a reverse take-over as the
shareholders of CRS obtained control of the Company. Consequently, the Companys
financial statements and financial information provided in this Annual Report
for the year ending December 31, 2001, 2002 and 2003 are presented from the
perspective of CRS, the accounting acquirer in the May 23, 2003 transaction.

The following table sets forth for the periods indicated
consolidated selected financial and operating data for the Company. This
selected financial data is derived from the Companys Consolidated Audited
Financial Statements and Notes thereto as at December 31, 2005, 2004, 2003, 2002
and 2001. This selected financial data has been prepared in accordance with
Canadian generally accepted accounting principles (Canadian GAAP) which
differs in many respects from generally accepted accounting principles in the
United States (U.S. GAAP). A discussion of the differences between Canadian
GAAP and U.S. GAAP is contained in Note 14 to the Companys audited Consolidated
Financial Statements. The selected financial data provided below is not
necessarily indicative of the future results of operations or financial
performance of the Company. The Company has not paid any dividends on its common
shares and it does not expect to pay dividends in the foreseeable future.

Year Ended December 312005
    2004
    2003
    2002
      (restated)2
    20011Amounts in Accordance with
      Canadian GAAP (presented in Canadian dollars): 
           Interest Income 
           Total assets 
           Net working capital 
           Share capital 
           Shareholders equity (deficiency) 
           Loss from operations 
           Net Loss 
           Loss per share (basic and diluted) 
           Weighted average number of 
           common shares outstanding 
           (basic and diluted)
    $80,235 $18,316,879
      $864,227 $24,263,820 $17,668,176 ($1,682,236)
      ($1,546,448) ($0.08) 20,519,129
    $80,226 $20,670,379
      $2,782,864 $24,476,047 $20,166,276 ($1,955,287)
      ($1,975,903) ($0.16) 12,122,890
    $46,141 $9,162,594
      $3,010,783 $11,742,794 $8,648,187 ($1,287,848)
      ($1,256,574) ($0.21) 6,057,876
    - $3,960,836
      $2,423,200 $6,370,469 $3,013,634 ($3,358,657)
      ($3,356,101) ($0.41) 8,187,501
    - - - $1
      ($733) ($734) ($734) ($0.00) 8,187,501Amounts in Accordance with U.S.
      GAAP (presented in Canadian dollars): 
           Interest Income 
           Total assets 
           Net working capital 
           Share capital 
           Shareholders equity (deficiency) 
           Loss from operations 
           Net Loss 
           Loss per share (basic and diluted) 
           Weighted average number of 
           common shares outstanding 
           (basic and diluted)
    $80,235 $6,688,925
      $864,227 $24,263,820 $6,040,222 (5,693,415)
      ($3,992,030) ($0.19) 20,519,129
    $80,226 $11,215,557
      $2,782,864 $24,476,047 $10,439,004 ($10,702,591)
      ($10,723,207) ($0.88) 12,122,890
    $46,141 $8,455,076
      $3,010,783 $11,742,794 $7,940,669 ($1,957,491)
      ($1,926,217) ($0.32) 6,057,876
    - $3,922,961
      $2,423,200 $6,370,469 $2,975,759 ($3,396,532)
      ($3,393,976 ($0.42) 8,187,501
    - - - $1
      ($733) ($734) ($734) ($0.00) 8,187,501


Note:

| | (1) | From inception on October 3,
2001.
| | --- | ----------------------------------

- 5 -

---

| | (2) | The Companys 2002 financial statements have been
      restated to record 5,060,000 units issued in 2002 at an estimate of their
      fair value using U.S. GAAP on the date of their issuance ($0.75). This
      restatement is consistent with CICA 3870 and SFAS 123. This restatement
      has resulted in an increase in share capital, deficit, stock based
      compensation and net loss for the year ended December 31, 2002 of
      $3,325,067 and an increase in net loss per share of
  $0.40.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

B.      Capitalization and
Indebtedness

Not Applicable.

C.      Reasons for Offer

Not Applicable.

D.      Risk Factors

The following risks relate specifically to the Company's
business and should be considered carefully. The Company's business, financial
condition and results of operations could be materially and adversely affected
by any of the following risks.

*(1)******The Company's limited operating history makes it difficult to
evaluate the Companys current business and forecast future results.*

The Company has only a limited operating history on which to
base an evaluation of the Companys current business and prospects, each of
which should be considered in light of the risks, expenses and problems
frequently encountered in the early stages of development of all companies. This
limited operating history leads the Company to believe that period-to-period
comparisons of its operating results may not be meaningful and that the results
for any particular period should not be relied upon as an indication of future
performance.

*(2)******The sole mineral property of the Company is in the exploration and
development stage only and consequently continued exploration of the Companys
mineral property may not result in any discoveries of commercial bodies of
mineralization.*

The Companys Regalito property in which the Company has an
option to earn an interest is in the exploration and development stage only, is
without a known body of commercial mineralization and has no ongoing mining
operations. Mineral exploration involves a high degree of risk and few
properties which are explored are ultimately developed into producing mines.
Continued exploration of the Companys mineral property may not result in a
discovery of a commercial body of mineralization. If the Companys efforts do
not result in any discovery of commercial mineralization, the Company will be
forced to look for other exploration projects or cease operations.

*(3)******The current prices of copper must be maintained for a sustained
period of time in order to render the Companys current mineral property
economically viable.*

The cornerstone of the Companys original strategy was to
acquire and hold non-economic properties containing ore and await higher metal
prices to render those properties of higher value. The recent rise in the price
of copper has potentially made the Companys Regalito property economically
viable. However, the current price of copper must be maintained for a sustained
period of time in order to render the Companys Regalito property economically
viable. In the event lower mineral prices occur or the current copper prices do
not occur for a sustained period of time the Companys economic prospects will
significantly suffer and the Company will be forced to look for other
exploration projects or cease operations.

*(4)******The Company has no significant source of operating cash flow and
failure to generate revenues in the future could cause the Company to go out of
business*.

- 6 -

---

As the Companys Regalito property currently does not have
mineralization reserves the Company has no revenues from operations. The Company
has limited financial resources. The Companys ability to achieve and maintain
profitability and positive cash flow is dependent upon the Companys:

- ability to locate a profitable mineral property;
- ability to generate revenues; and
- ability to reduce exploration costs.

Based upon current plans, the Company expects to incur
operating losses in future periods. This will happen because there are
continuing expenses associated with the holding and exploration of the Companys
Regalito property. The Company may not be successful in generating revenues in
the future. Failure to generate revenues could cause the Company to go out of
business.

Additional funds raised by the Company through the issuance of
equity or convertible debt securities will cause the Companys current
stockholders to experience dilution. Such securities may grant rights,
preferences or privileges senior to those of the Companys common
stockholders.

The Company does not have any contractual restrictions on its
ability to incur debt and, accordingly, the Company could incur significant
amounts of indebtedness to finance its operations. Any such indebtedness could
contain covenants, which would restrict the Companys operations. The Company
does not plan on entering into any debt obligations in the next twelve
months.

*(5)******The possibility of the Companys Regalito property ever having ore
reserves is extremely remote.*

The Company has no known ore reserves. The possibility of the
Companys Regalito property ever having ore reserves is extremely remote and any
funds spent on exploration and development will probably be lost. The Companys
success depends upon finding and developing an ore reserve. If the Company does
not find an ore reserve containing copper, precious or non-precious metals,
either because it does not have the money to do so or because it is not
economically feasible to do it, the Company will cease operations.

*(6)******Government expropriation or regulation may prevent or restrict
mining of the Companys mineral deposit.*

Even if the Companys Regalito property is proven to host
economic reserves of copper or other precious or non-precious metals, factors
such as governmental expropriation or regulation may prevent or restrict mining
of any such deposits. Exploration and mining activities may be affected in
varying degrees by government policies and regulations relating to the mining
industry. Any changes in regulations or shifts in political conditions are
beyond the control of the Company and may adversely affect its business.
Operations may be affected in varying degrees by government regulations with
respect to restrictions on production, price controls, export controls, income
taxes, expropriation of property, environmental legislation and mine safety.

*(7)******The Company has no history of generating revenues and the
continuing failure to generate revenues could cause the Company to cease
operations.*

The Company has no history of pre-tax profit. The Companys
Regalito property does not have ore reserves. The Company sustained operating
losses for each of the fiscal years ended December 31, 2005, 2004, 2003, 2002
and 2001 of $1,546,448, $1,975,903, $1,256,574, $3,356,101 and $734
respectively. The continued operation of the Company will be dependent upon its
ability to generate operating revenues and to procure additional financing. The
Company may not be successful in generating revenues or raising capital in the
future. Failure to generate revenues or raise capital could cause the Company to
cease operations.

*(8)******The Companys Regalito property is located in a foreign country and
as such the Companys business may be exposed to various levels of political,
economic and other risks and uncertainties.*

The Companys Regalito property is located in Chile. As the
Companys business is carried on in a foreign country it is exposed to various
levels of political, economic and other risks and uncertainties. These risks and
uncertainties include, but not limited to, terrorism, hostage taking, military
repression, expropriation, changing tax laws, extreme

- 7 -

---

fluctuations in currency exchange rates, high rates of
inflation and labour unrest. Chiles status as developing country may make it
more difficult for the Company to obtain any required exploration financing for
its Chilean projects.

Changes, if any, in mining or investment policies or shifts in
political attitude in Chile may adversely affect the Companys operations in
that country. Operations may be effected in varying degrees by government
regulations with respect to, but not limited to restrictions on expropriation of
property, foreign investment, maintenance of claims, environmental legalisation,
land use and land claims of local people.

Failure to comply strictly with applicable laws, regulations
and local practices relating to mineral right applications and tenure could
result in loss, reduction or expropriation of entitlements, or the imposition of
additional local or foreign parties as joint venture partners with carried or
other interests.

The occurrence of these various factors and uncertainties
cannot be accurately predicted and could have an adverse effect on the Companys
operations.

*(9)******As the Company is a Canadian company it may be difficult for U.S.
shareholders of the Company to effect service on the Company or to realize on
judgements obtained against the Company in the United States.*

The Company is a Canadian corporation. All of its directors and
officers are residents of Canada and a significant part of its assets are, or
will be, located outside of the United States. As a result, it may be difficult
for shareholders resident in the United States to effect service within the
United States upon the Company, directors, officers or experts who are not
residents of the United States, or to realize in the United States judgments of
courts of the United States predicated upon civil liability of any of the
Company, directors or officers under the United States federal securities laws.
If a judgment is obtained in the U.S. courts based on civil liability provisions
of the U.S. federal securities laws against the Company or its directors or
officers, it will be difficult to enforce the judgment in the Canadian courts
against the Company and any of the Companys non-U.S. resident executive
officers or directors. Accordingly, United States shareholders may be forced to
bring actions against the Company and its respective directors and officers
under Canadian law and in Canadian courts in order to enforce any claims that
they may have against the Company or its directors and officers. Nevertheless,
it may be difficult for United States shareholders to bring an original action
in the Canadian courts to enforce liabilities based on the U.S. federal
securities laws against the Company and any of the Companys non-U.S. resident
executive officers or directors.

*(10)******The
mineral exploitation industry is intensely competitive in all its phases and the
Company competes with many companies possessing greater financial resources and
technical facilities than itself.*

The mineral exploitation industry is intensely competitive in
all its phases. The Company competes with many companies possessing greater
financial resources and technical facilities than itself for the acquisition of
mineral concessions, claims, leases and other mineral interests as well as for
the recruitment and retention of qualified employees. In addition, there is no
assurance that even if commercial quantities of minerals are discovered, a ready
market will exist for their sale. Factors beyond the control of the Company may
affect the marketability of any minerals discovered. These factors include
market fluctuations, the proximity and capacity of natural resource markets and
processing equipment, international economic and political trends, expectations
of inflation, currency exchange fluctuations (specifically, the U.S. dollar
relative to other currencies), interest rates and global or regional consumption
patterns, speculative activities, government regulations, including regulations
relating to prices, taxes, royalties, land tenure, land use, importing and
exporting of minerals and environmental protection. The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may
result in the Company not receiving an adequate return on invested capital or
losing its invested capital. As the Company is in the exploration and
development stage, the above factors have had no material impact on operations
or income.

*(11)******Substantial expenditures are required to be made by the Company to
establish ore reserves.*

Substantial expenditures are required to establish ore
reserves. These expenditures include the costs of drilling, sampling, bulk
sampling, metallurgical testing, cost estimating, economic evaluations, market
and environmental studies, cost estimating, economic evaluation, and market and
environmental studies which have to be completed before an ore reserve can be
designated.

- 8 -

---

*(12)******The
Company does not presently have insurance covering its Regalito property and as
a consequence could incur considerable costs.*

Mineral exploration involves risks, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest may be subject
to all the hazards and risks normally incidental to exploration of precious and
non-precious metals, any of which could result in work stoppages, damage to
property, and possible environmental damage. The Company does not presently have
insurance covering its Regalito property and does not presently intend to obtain
liability insurance. As a result of not having insurance, the Company could
incur significant costs that could have a materially adverse effect upon its
financial condition and even cause the Company to cease operations.

To date, the Company has not experienced any material losses
due to hazards arising from its operations.

*(13)******The
Companys Regalito property may be subject to prior unregistered agreements or
transfers or native land claims and as such title to*the Regalito
property may be affected.

Although the Company has sought and received such
representations as it has been able to achieve from the vendor in connection
with the acquisition of or option to acquire the Regalito property and has
conducted its own investigation of legal title to such property, the Regalito
property may be subject to prior unregistered agreements or transfers or native
land claims and title may be affected by undetected defects.

*(14)******All
phases of the Companys operations in Chile are subject to environmental
regulations which may cause the Company to invoke stricter standards.*

All phases of the Companys operations in Chile are subject to
environmental regulations. The Degree Law Number 1,349 of Chile is the primary
body of law with regard to environmental regulation, where the Companys
Regalito property is located.

Although compliance with such law is not presently a
significant factor in the Companys operations, compliance with future changes
in environmental regulation, if any, may adversely affect the Companys
operations.

*(15)******The
price of copper, base and precious metals has fluctuated widely in recent years
and may adversely affect the economic viability of the Companys Regalito
property.*

The Companys revenues, if any, are expected to be in large
part derived from the mining and sale of copper and other precious and
non-precious metals. The price of those commodities has fluctuated widely,
particularly in recent years, and is affected by numerous factors beyond the
Companys control including international economic and political trends,
expectations of inflation, currency exchange fluctuations, interest rates,
consumption patterns, speculative activities and increased production due to new
mine developments and improved mining and production methods. The effect of
these factors on the price of copper, base and precious metals and therefore the
economic viability of the Companys Regalito property, cannot be accurately
predicted but may adversely affect the Companys operation and its ability to
raise capital

*(16)******The
Companys future performance is dependent on key personnel. The loss of the
services of any of the Companys executives or Board of Directors could have a
material adverse effect on the Company business.*

The Companys performance is substantially dependent on the
performance and continued efforts of the Companys executives and its Board of
Directors. The loss of the services of any of the Companys executives or Board
of Directors could have a material adverse effect on the Company business,
results of operations and financial condition. The Company currently does not
carry any key person insurance on any of the board of directors.

*(17)******The
Company has not declared any dividends since its inception in 2001, and has no
present intention of paying any cash dividends on its common stock in the
foreseeable future.*

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The Company has not declared any dividends since its inception
in 2001, and has no present intention of paying any cash dividends on its common
stock in the foreseeable future. The payment by the Company of dividends, if
any, in the future, rests in the discretion of the Companys Board of Directors
and will depend, among other things, upon the Company's earnings, its capital
requirements and financial condition, as well as other relevant factors.

*(18)******The
possible issuance of additional shares may impact the value of the Company
stock.*

The Company is authorized to issue an unlimited number of
common shares without par value. It is the Company's intention to issue more
shares. Sales of substantial amounts of common stock (including shares issuable
upon the exercise of stock options, the conversion of notes and the exercise of
warrants), or the perception that such sales could occur, could materially
adversely affect prevailing market prices for the common stock and the ability
of the Company to raise equity capital in the future.

*(19)******Certain
of the Companys directors are also directors, officers or shareholders of other
companies that are engaged in the business of acquiring, developing and
exploiting natural resource property and accordingly conflicts of interest may
arise.*

Certain of the Companys directors are also directors, officers
or shareholders of other companies that are engaged in the business of
acquiring, developing and exploiting natural resource properties. Such
associations may give rise to conflicts of interest from time to time. Such a
conflict poses the risk that the Company may enter into a transaction on terms
which place the Company in a worse position than if no conflict existed.

*(20)******Management
of the Company can through their stock ownership in the Company influence all
matters requiring approval by the Companys stockholders.*

Management of the Company own collectively as of February 28,
2006, 6,540,234 shares being 29.83% of the Company's issued and outstanding
shares of common stock. These stockholders, if acting together, will be able to
significantly influence all matters requiring approval by the Companys
stockholders, including the election of directors and the approval of mergers or
other business combination transactions.

*(21)******Foreign
Subsidiaries*

The Company conducts operations through its Chilean subsidiary
and substantially all of its assets are held in such entity. Accordingly, any
limitation on the transfer of cash or other assets between the parent
corporation and the entity could restrict the Companys ability to fund its
operations efficiently. Any such limitations, or the perception that such
limitations may exist now or in the future, could have an adverse impact on the
Companys valuation and stock price.

*(22)******Acquisition
Strategy*

As part of the Companys business strategy, it will continue to
seek new mining and development opportunities in the mining industry. In pursuit
of such opportunities, the Company may fail to select appropriate acquisition
candidates or negotiate acceptable arrangements, including arrangements to
finance acquisitions or integrate the acquired businesses and their personnel
into the Company. The Company cannot assure that it can complete any acquisition
or business arrangement that it pursues, or is pursuing, on favourable terms, or
that any acquisitions or business arrangements completed will ultimately benefit
the Companys business.

ITEM 4.      INFORMATION ON THE
COMPANY

A.      History and Development of
the Company

The head office of the Company is located at Suite 1550, 625
  Howe Street, Vancouver, British Columbia, Canada, V6C 2T6. The Companys
  telephone number is (604) 687-0407. The registered office of the Company is
  located at Suite 700, 625 Howe Street, Vancouver, British Columbia, Canada,
  V6C 2T6. The Company has one wholly-owned Chilean subsidiary, Minera Lumina
  Copper Chile SA, (Lumina Chile) a private company incorporated on
  August 20, 2003. The Company has an administration office in Chile. The Companys
  common stock is listed for trading on the TSX and the AMEX. See Item 9(A)
   Listing Details and Markets.

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2003

The Company was incorporated by registration of its Memorandum
and Articles under the BCBCA on October 3, 2001 under the name First Trimark
Ventures Inc. On May 23, 2003 the Company changed its name to Lumina Copper
Corp..

The Company was originally a Capital Pool Company (CPC) in
accordance with TSX.V Policies. As a CPC the principal business of the Company
was to identify and evaluate business opportunities for the acquisition of an
interest in assets or business (Qualifying Transaction), and once identified
and evaluated, to negotiate an acquisition or participation, subject to receipt
of shareholder and TSX.V approval in accordance with TSX.V Policies. On January
27, 2003 the Company purchased all of the 8,187,501 issued and outstanding
shares and 5,657,500 outstanding warrants of CRS Copper Resources Corp. (CRS)
which owned or had the right to acquire a 100% interest in three advanced stage
copper exploration properties located in British Columbia, the Yukon Territory,
the Northwest Territories, Canada and Argentina (the Acquisition). The
Acquisition constituted the Company's Qualifying Transaction, which was approved
by the TSX.V on May 23, 2003. Effective on that date, the Company consolidated
its share capital on a 10:1 basis and closed the Acquisition by issuing to the
shareholders of CRS an aggregate of 8,187,501 Common Shares and 5,657,500 share
purchase warrants in the Companys capital stock, at which time CRS became a
wholly-owned subsidiary of the Company and the Company became involved in the
mining industry through CRS.

During 2003 the following important events occurred in the
development of the Companys mineral exploration business:

- On April 23rdthe Company entered into an option agreement with
  Las Asuncion Negociacion Minera S.A.C. to earn a 100% interest in four mining
  concessions (1,347.5 hectares) (the Galeno Property) located in Northern
  Peru.
- In July the Company staked eight mining concessions (6,240 hectares) (the
  Pashpap Property located in Northern Peru.
- On October 16ththe Company entered into an agreement with La
  Compañia Minera Caserones and Sociedad Minera California Una de la Sierra de
  Peña Negra both of Santiago, Chile wherein the Company was granted the
  exclusive option to acquire 100% of the Regalito property, located in Chile.
- On September 3rdthe Company acquired a 100% interest in two
  mining concessions (444.6 hectares) (the San Jorge Property) located in
  Argentina.
- On October 28ththe Company completed an agreement with General
  Minerals Corporation (GMC) of Vancouver British Columbia to purchase 100% of
  GMCs 51% indirect interest in the Vizcachitas Property and 100% indirect
  interest in additional exploration concessions that surround and are
  peripheral to the porphyry copper system. The collective group of concessions
  cover approximately 4,400 hectares and are located in central Chile.
- On December 10ththe Company concluded an agreement with Andes
  Pacific Development S.A of Santiago Chile to acquire 100% of 19,516 hectares
  located north of Santiago, Chile (the Relincho Property).

In addition to the acquisition of the aforementioned mineral
properties, the following events occurred in 2003 in the development of the
Companys business:

- On June 6ththe Company granted options under its stock option
  plan to five directors and officers to purchase a total of 550,000 common
  shares of the Company at a price of $1.65 per share until June 6, 2008.

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- On August 8ththe Company granted options under its stock option
  plan to two employees to purchase a total of 25,000 common shares of the
  Company at a price of $1.60 per share until August 8, 2008.
- On October 17ththe Company appointed David Strang as Vice
  President of Corporate Development and granted him stock options to purchase
  150,000 common shares of the Company at a price of $3.20 per share until
  October 17, 2008.
- On December 15ththe Company appointed John Wright as a director
  of the Company to replace Aly Alibhai. Mr. Wright was granted options to
  purchase 50,000 common shares of the Company at a price of $4.00 per share
  until December 17, 2008.

2004

- On February 24ththe Company completed the purchase of the
  Molino mining concession that lies contiguous to the Companys Galeno property
  in the Yanacocha district of Peru.
- On February 5ththe Company commenced a US$300,000 drilling
  program consisting of 2,500 metres of reverse circulation and diamond drilling
  program on its Regalito property.
- On April 13ththe Company announced the discovery of significant
  new mineralization in its drilling program at its Regalito property and
  extended the drilling program.
- On May 31stthe Company announced the discovery of significant
  additional mineralization in its drilling program at its Regalito property.
- On October 20ththe Company announced that it had received
  excellent drill results that continue to significantly expand the zone of
  copper mineralization at its Regalito property.
- On December 8ththe Company announced that its 2004 drilling
  program at its Regalito property was complete, with 32,189 meters in 114
  reverse circulation and diamond drill holes having been drilled and the
  Company had retained AMEC (Peru) to prepare a new mineral resource estimate.

In addition to the acquisition of the aforementioned mineral
properties and the progression of exploration on its Regalito Property, the
following events occurred in 2004 in the development of the Companys
business:

- On January 8ththe Company completed a private placement with a
  syndicate of underwriters led by Haywood Securities Inc. and including
  McFarlane Gordon Inc. and Northern Securities Inc., pursuant to which the
  underwriters purchased 1.9 million units of the Company on a bought deal
  basis, at a price of $4.25 per unit for aggregate proceeds of $8.075 million.
  Each unit consisted of one common share and one half of one share purchase
  warrant, with each whole share exercisable by the holder to acquire one common
  share of the Company at a price of $5.50 for two years subject to the right of
  the Company to accelerate the expiry date of the warrants to 21 days if its
  common shares traded above $7.00 for 10 consecutive trading days. The
  underwriters also exercised part of the greenshoe option and increased the
  size of the financing by 130,200 units for an additional $553,350 on the same
  terms and conditions. The Company received net proceeds of $8,152,153.

- On May 10ththe Companys common shares commenced trading on
  AMEX.
- On June 15ththe Company appointed Leo Hathaway as Vice
  President, Exploration and Sandra Lim as Chief Financial Officer. The Company
  also retained the services of Otis/Mandy Inc., a New York based investor
  relations firm, for an initial term of 7 months at US$5,000 a month and the
  granting of 15,000 stock options under the Companys stock option plan.

- On July 14ththe Companys common shares commenced trading on
  the TSX.

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- On December 2ndthe Company completed a private placement and
  issued 350,000 flow-through common shares at a price of $6.10 per share,
  realizing $2,135,000. Raymond James Ltd. received a cash commission and fees
  in the aggregate of $143,100 for arranging the purchase and sale of the
  shares.

2005

- On January 4ththe Company received the mineral resource report
      from AMEC (Peru) on its Regalito property which report indicated estimated
      Measured and Indicated Resources of 628 million tonnes grading 0.43% copper
      and inferred resources of 131 million tonnes grading 0.41% copper, at a
      cutoff grade of 0.25% copper. Further Measured and Indicated Resources of
      215 million tonnes grading 0.21% copper and Inferred Resources of 60 million
      tonnes grading 0.20% copper at a cutoff grade of 0.15% were also delineated
      and may be considered suitable for dump leaching.Cautionary Note to U.S. Investors concerning estimates of Measured and
      Indicated Mineral Resources
      The Company advises U.S. investors that while those terms are recognized
      and required by Canadian regulations, the U.S. Securities and Exchange Commission
      does not recognize them. U.S. investors are cautioned not to assume that
      any part or all of the mineral deposits in these categories will
      ever be converted into reserves.Cautionary Note to U.S. Investors concerning estimates of Inferred Resources
      The Company advises U.S. investors that while this term is recognized and
      required by Canadian regulations, the U.S. Securities and Exchange Commission
      does not recognize it. Inferred Mineral Resources have a great
      amount of uncertainty as to their existence, and great uncertainty as to
      their economic and legal feasibility. U.S. investors are cautioned
      not to assume that any part or all of an inferred resource exists, or is
      economically or legally mineable.
- On February 7ththe Company signed an agreement with Electra
      Gold Ltd. to earn a 100% interest in 14,600 hectares which surrounded the
      Companys Hushamu Property.
- On March 24ththe Company entered into an agreement with Corriente
      Resources Inc. to exercise its option to acquire a 100% interest in the
      Taca Taca Property by issuing 200,000 shares to the optionor in lieu of
      issuing shares and making a cash payment.
- On July 5ththe Company received excellent interim results from
      its ongoing Regalito metallurgical program.
- On July 22ndthe Company was granted an option to purchase 90
      mining exploitation concessions located 14 kilometres from the Regalito
      property for US $2,400,000 payable in stages to January 30, 2010. The optionors
      retained a 1.5% net smelter royalty payable upon commencement of commercial
      production, which may be purchased for US $2,500,000.
- On October 13ththe Company secured the right to acquire 16,700
      hectares of surface rights with corresponding water rights located on the
      Regalito property for US $2,095,000 payable in unequal annual instalments
      to May 31, 2010, plus interest at the rate of 5% per annum on the unpaid
      balance.
- On October 18ththe Company secured the right to acquire certain
      water and surface rights located 38 kilometres from the Regalito property
      for US $12,300,000 payable in unequal annual instalments to October 18,
      2008. The Company must also pay 50% of the capital gains taxes applicable
      to each payment corresponding to the water rights (the rate of tax currently
      being 17%). The Company is responsible for installing the systems necessary
      for the extraction of water.
- On October 18ththe Company entered into an agreement to lease
      a portion of the surface rights to be acquired by the Company as noted above
      for lease payments of US $4,000 per annum receivable in arrears. The Company
      has also granted an option to the lessee to purchase the leased surface
      rights for US $100,000 less any lease payments already received by the Company.

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- On October 26ththe Company entered into two agreements to
  acquire certain surface rights located on the Regalito property for US
  $1,913,700 payable in unequal annual instalments to October 31, 2008.
- On November 14ththe Company secured the right to acquire water
  rights from two wells located approximately 70 kilometres from the Regalito
  property for US $5,675,000 payable in unequal annual instalments to November
  14, 2007. The agreement shall terminate should the Company not be able to
  obtain regulatory authorization to establish a system to allow for the capture
  of water in accordance with certain restrictions already existing on the water
  rights.

In addition to the foregoing events concerning the Companys
Regalito property, the following occurred in 2005 in the development of the
Companys business:

- On February 2ndthe directors of the Company approved a corporate
      reorganization whereby the Company would be split into four separate entities.
      The structure of the four companies would be as follows: the Company would
      change its name from Lumina Copper Corp. to Regalito Copper Corp. and would
      hold the Regalito property. Northern Peru Copper Corp. (Norco)
      would hold the Galeno and Pashpap properties in Peru. Continental Copper
      Corp. (Continental) would hold the Vizcachitas and Relincho
      properties in Chile. Lumina Resources Corp. (Lumco) would hold
      the San Jorge and Taca Taca properties in Argentina, and the Redstone, Hushamu
      and Casino properties in Canada. This reorganization was to be accomplished
      by way of the Plan of Arrangement. Once the Companys shareholders
      approved the Plan of Arrangement the Supreme Court of the Province of British
      Columbia would be requested to rule on the fairness of the plan and grant
      its final approval.
- On February 17ththe Company announced that it had reduced the
      exercise period applicable to certain warrants issued on January 8, 2004
      from January 8, 2006 to March 17, 2005.
- On March 23rdthe Company announced that it had changed the
      name of Continental to Global Copper Corp. (Global) and the
      Plan of Arrangement was modified to reflect that the Taca Taca and San Jorge
      Properties would now be transferred to Global and not Lumco.
- On May 19ththe Company completed the Plan of Arrangement, which
      resulted in the division of its mineral resource assets and cash among the
      Company, Norco, Global and Lumco. The Company changed its name to Regalito
      Copper Corp. As a result of the reorganization, Norco holds the Galeno and
      Pashpap properties, Global the Relincho, Vizcachitas, Taca Taca and San
      Jorge properties and Lumco the Casino, Redstone and Hushamu properties (the
      Transferred Properties). Norco, Global and Lumco undertook and
      assumed all of the obligations of the Company in connection with their respective
      Transferred Properties. The Company retained the Regalito Property in Chile.
      Under the reorganization, shareholders of record at the close of trading
      on May 18, 2005 received one new share of Norco, Global and Lumco for each
      share held in the Company, in addition to their existing shareholdings in
      the Company.
- On September 6ththe Company announced that it had retained
      Bear, Stearns & Co. Inc. as lead financial advisor and AssetChile as
      co-financial advisor to explore various strategic alternatives the Company
      was considering.
- On September 17ththe Company completed a private placement
      and issued 1,000,000 common shares for net proceeds of $5,459,371 to purchase
      certain water and surface rights in connection with development of its Regalito
      project.

2006

- On February 14th, the Company arranged for the cancellation of
    100,000 outstanding warrants and their replacement with warrants for the purchase
    of 100,000 common shares of each of the Company, Lumco, Norco and Global,
    exercisable as at $8.78 to the Company. $0.07 to Lumco, $0.06 to Norco and
    $0.31 to Global. Should the shares of the Company be purchased by a third
    party pursuant to a takeover bid or similar acquisition for an

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- On March 14th the Company announced that it had entered into
      an agreement (the Offer) with Pan Pacific Copper Co., Ltd. (PPC)
      pursuant to which PPC has agreed to make a take-over bid for all of the
      Companys outstanding common shares for consideration of US $6 per
      share payable in cash. The Offer is subject to certain terms and conditions
      being met including, but not limited to, a minimum of 66 2/3% of the outstanding
      shares, on a fully diluted basis, being tendered under the Offer and obtaining
      regulatory approvals.
    The Offer is expected to be open for acceptance for 45 calendar days from
      the delivery date of the offering documents to the Companys shareholders,
      which time period may be extended by PPC, subject to certain terms and conditions.
      The take-over bid circular is expected to be mailed out no later than mid-April,
      2006, and subject to the terms and conditions being met, the transaction
      is expected to close in May, 2006.
    In the event the Offer is not completed due to certain events or actions
      described under the terms of the agreement, the Company must pay a non-completion
      fee of 3% of the maximum cash value of the Offer in cash and in certain
      circumstances, is required to pay US $2,000,000 as reimbursement of expenses,
      payable in cash or shares of the Company, depending on the reasons for the
      non-completion.
    The board of directors of Regalito has unanimously approved the transaction
      and will, in a directors circular expected to be mailed concurrently
      with the take-over bid circular, recommend that shareholders tender their
      shares in acceptance of the bid.

B.      Business Overview

The present business of the Company is the acquisition,
development and/or sale of an advanced stage copper exploration property and
other exploration mineral properties. The Company currently owns or has the
right to acquire, directly or indirectly, all of the right, title and interest
in the Regalito property located in Chile. The Companys original strategy was
to acquire and hold non-economic properties containing ore and await higher
mineral prices to render those properties of higher value. As copper prices have
risen over the past 30 months the Companys focus has changed from an
acquisition and hold strategy to one of advancement and development of the
Regalito property which the Company believes has the potential to be economical.
In the event current mineral prices are not sustained the Companys economic
prospects will significantly suffer. The Companys secondary objective is to
locate, evaluate and acquire other mineral properties and to finance their
exploration either through equity financing, by way of joint venture, option
agreements or through a combination of both.

The Company is an exploration and development stage company and
the Companys Regalito property does not have known ore reserves. There is no
assurance that a commercially viable mineral deposit exists on the Companys
Regalito property. Further development will be required before a final
evaluation as to the economic and legal feasibility of the Companys Regalito
property. In 2004, the Company initiated a major exploration campaign on its
Regalito property after an initial due diligence drill program discovered
significant new mineralization.

The Companys Regalito property requires further evaluation
that may include one or more of the following work programs: exploration and/or
infill drilling, geotechnical analyses, metallurgical testing, mine and tailings
layout and design and environmental base line work in order that new or updated
pre-feasibility studies may be prepared. If these studies were positive then
full feasibility studies would be required to establish if the Regalito property
is economically viable. Economical viability will be affected by higher copper
prices as well as technological advances, improved infrastructure and lower
sulphuric acid, diesel and power costs.

Between July 2002 and May 2005 the Company acquired 10
properties, nine of which were transferred to three new companies as a result of
the Plan of Arrangement disclosed under History and Development of the Company
above. The only property retained by the Company and the Companys sole asset,
is the Regalito property.

See Property, Plant and Equipment below for details of the
acquisition of the Regalito property by the Company.

See Item 3D- Risk Factors, in particular: (i) the Companys
sole mineral property is located in a foreign country; (ii)

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the Companys sole mineral property may be subject to prior
unregistered agreements or transfers or native land claims and as such title to
some of the property may be affected; and (iii) there are risks relating to an
uncertain or unpredictable political environment in Chile which may affect the
Companys operations in that country.

See Item 4D  Property Plant and Equipment for an overview of
the Companys Regalito property.

See Item 5 for an overview of the Companys financial
position.

Environmental Regulation in Chile

The following summary is based upon Chiles Environmental Law
19.300 and the Regulations regarding environmental impact studies, as posted on
the web site of Chiles Regional Commission for the Environment (CONAMA).

Chiles Environmental Law 19.300, which regulates all
environmental activities in the country, was first published on March 9th, 1994.
Previously, an exploration project or field activity could not be initiated
until its potential impact to the environment was carefully evaluated. This is
documented in Article 8 of the environmental law and is referred to as the
Sistema de Evaluación de Impacto Ambiental (SEIA). However in the new
regulations for SEIA, published on December 7, 2002, an amendment to the law was
passed (Article 3, section i) whereby work described as Exploration for
minerals was exempted from the filing of either a DIA or an EIA. The definition
of exploration in the context of this regulation is, actions or works leading
to the discovery, characterization, delimitation and estimation of the potential
of a concentration of mineral substances which may eventually lead to a mine
development project.

The SEIA is administered and coordinated on both regional and
national levels by the Comisión Regional del Medio Ambiente (COREMA) and the
Comisión Nacional del Medio Ambiente (CONAMA), respectively. The initial
application is generally made to COREMA, in the corresponding region where the
property is located, however in cases where the property might affect various
regions the application is made directly to the CONAMA. Various other Chilean
government organizations are also involved with the review process, however most
documentation is ultimately forwarded to CONAMA, who are the final authority on
the environment and are the organization that issues the final environmental
permits.

There are two types of environmental review; an Environmental
Impact Statement (Declaración de Impacto Ambiental, or DIA), and an
Environmental Impact Assessment (Evaluación de Impacto Ambiental, or EIA). As
defined in the SEIA, one of these must be prepared prior to starting any mining
and/or development project (including coal, building materials, peat or clays)
or processing and disposal of tailings and waste. A DIA is prepared in cases
when the applicant believes that there will be no environmental impact as a
result of the proposed activities. The potential impacts include areas such as
health risks, contamination of soils, air and/or water, relocation of
communities or alteration of their ways of life, proximity to endangered areas
or archaeological sites, alteration of the natural landscape, and/or alteration
of cultural heritage sites. The DIA will include a statement from the applicant
declaring that the project will comply with the current environmental
legislation, and a detailed description of the type of planned activities,
including any voluntary environmental commitments that might be completed during
the project.

An EIA will be required if any one of the above potential
impacts is affected. The EIA report is much more detailed and includes a table
of contents, an executive summary, a detailed description of the upcoming
exploration program or study, a program for compliance with the environmental
legislation, a detailed description of the possible impacts and an assessment of
how they would be dealt with and repaired, a baseline study, a plan for
compensation (if required), details of a follow-up program, a description of the
EIA presentation made to COREMA or CONAMA, and an appendix with all of the
supporting documentation.

Once an application is made, the review process by COREMA or
CONAMA will take a maximum of 120 days. If it is approved, an environmental
permit is awarded and the exploration or development can commence. If however
COREMA or CONAMA comes back with additional questions or deficiencies an equal
period of time is granted to the applicant to make the appropriate corrections
or additions. Once re-submitted and a 60 day period has elapsed, if no further
notification from COREMA or CONAMA is received, the application is assumed to be
approved.

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Mining Title in Chile

Under Chilean law, the right to explore for and exploit
minerals is granted by way of concessions. There are two kinds of mining
concessions: exploration and exploitation. Mining concessions are established by
a resolution pronounced by a judge in an administrative procedure and without
intervention of any other authority or person. Mining concessions are
independent to the ownership of the land and are transferable. Mining
concessions may be privately owned and no State participation is required.

C.      Organizational
Structure

The following diagram shows the Company and its subsidiary, the
laws under which they were incorporated and the dates on which they came into
existence.



D.      Property, Plant and
Equipment

The Company has executive offices at Suite 1550, 625 Howe
Street, Vancouver, British Columbia, V6C 2T6 which consist of 1,648 square feet.
As of May 19, 2005, the Company shares office and some administrative services
on a pro-rata basis with four other companies. The Companys share of the rent
payable is $2,220 per month. There is no formal agreement regarding office and
administrative services. The Company has a verbal arrangement with Pan American
Silver Corp. who leases the 15th Floor of the building and shares the
space with the Company, Norco, Lumco and Global. The Company and the other four
companies have directors and/or officers in common.

The present business of the Company is the acquisition and
development of advanced stage copper properties as well as other mineral
properties. The Company currently beneficially owns or has the right to acquire,
directly or indirectly all of the right, title and interest in one copper
exploration property in Chile being the Regalito property.

Regalito Property, Chile

Acquisition

On October 20, 2003 the Company entered into an agreement with
La Compañia Minera Caserones and Sociedad Minera California Una de la Sierra de
Peña Negra wherein the Company was granted the exclusive option to acquire 100%
of the Regalito property. Located in Chile the property consists of 4,158
hectares. To acquire the property the Company agreed to make payments totalling
$900,000 over an 8 year period and take responsibility for concession
maintenance payments. The Company has also agreed that, in the event copper
prices shall exceed $1.00 per pound for an entire calendar year, the Company
will pay a minimum of $200,000 in respect of the payments described above for
that year. After the 8th year of the Agreement, provided the price of
copper exceeds $1.00 per pound for the entire calendar year, the Company will
pay $200,000 per year until commercial production

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commences. After commercial production commences, the Company
will pay a NSR of between 1 and 3% depending on the price of copper. The Company
will be entitled to recover a portion of its payments above as an offset against
the NSR. In each of 2004 and 2005 the Company made a payment of US $200,000 as
the price of copper exceeded $1.00 per pound for the entire 2004 and 2005
calendar years.

Property Information

| | The Regalito Property is located in the 3rd region of
      Chile and hosts a large Andean type porphyry copper deposit that
      contains a significant amount of supergene and oxide copper
      mineralization. Copper mineralization was first recognized on the property
      in the early 1980s. The Property has subsequently undergone a number of
      exploration campaigns by the following companies: Newmont, Niugini Mining
      and BHP. A total of 6,717 metres of reverse circulation and diamond
      drilling in 65 holes have been completed on the property.
      Copper-molybdenum mineralization at Regalito is associated with a cluster
      of dacitic porphyry intrusives, hydrothermal breccias, and a potassic and
      phyllic alteration system with a surface area of approximately 2,700
      metres by 1,500 metres. Previous drilling defined a classic weathered
      porphyry copper deposit with a leached cap, an oxide zone, a mixed
      oxide/sulphide zone and a sulphide zone. Recent studies also suggest that
      this style of mineralization extends northwest and southeast from the area
      previously drilled providing optimism for lateral expansion of the
      deposit.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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2004 Drilling Program

The Company began a work program in December 2003 which was
completed in the fall of 2004. The program was a 39,617 meter, 183 hole drill
program.

Based upon the assay results the Company commissioned an
independent mineral resource estimate compliant with National Instrument 43-101.

Cautionary Note to U.S. Investors concerning estimates of
Measured and Indicated Mineral Resources

This section uses the terms measured and indicated mineral
resources. The Company advises U.S. investors that while those terms are
recognized and required by Canadian regulations, the U.S. Securities and
Exchange Commission does not recognize them.U.S. investors are cautioned not
to assume that any part or all of the mineral deposits in these categories will
ever be converted into reserves.

The completed 2004 exploration program identified the following
for Measured and Indicated Resources, as defined by National Instrument
43-101:

Class
    Cut-off (%Cu)
    Tonnage Above Cut-off
      Million Tonnes
    Copper %Measured and Indicated
    0.15
    820
    0.37Measured and Indicated
    0.25
    628
    0.43Measured and Indicated
    0.35
    402
    0.50


Cautionary Note to U.S. Investors concerning estimates of
Inferred Resources

This section uses the terms Inferred Resources. The Company
advises U.S. investors that while this term is recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize it. Inferred Mineral Resources have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part the Inferred Mineral
Resources will ever be upgraded to a higher category. Under Canadian rules
estimates of Inferred Mineral Resources may not form the basis of feasibility or
other economic studies.

U.S. investors are cautioned not to assume that any part or
all of an inferred resource exists, or is economically or legally
mineable.

The completed 2004 exploration program identified the following
  for Inferred Mineral Resource as defined by National Instrument 43-101:

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Class
    Cut-off (%Cu)
    Tonnage Above Cut-off
      Million Tonnes
    Copper %Inferred
    0.15
    185
    0.35Inferred
    0.25
    131
    0.41Inferred
    0.35
    77
    0.49


In February 2006 the Company received final results from the
Regalito MET II, tall column metallurgical test program recently completed at
SGS Lakefields laboratory in Santiago, Chile. The final results show that test
material from the oxide and secondary sulphide zones averaged recoveries of 84%
total copper (CuT)(1) and 89% recoverable copper (CuR)(2)
and sulphuric acid consumption of 5.1 kilograms of acid per tonne of ore over a
test period of 210 to 240 days.

The tall column leach program tested material collected from 8
large diameter core holes that were drilled across the deposit. The column
testing was split between 11 column tests that evaluated the leach
characteristics of the oxide and secondary sulphide mineral zones and 8 column
tests that evaluated sensitivities to variations in operating conditions such as
crush size, column height and irrigation rates including one column that
evaluated the leaching characteristics of the primary sulphide mineralization.
The following table summarizes the results for the 11 column tests that
evaluated the leachable ore material.

Zone
    Number of Columns
    Cu total Recovery,(1)%
    Cu recoverable
      Recovery,(2)%
    Acid Consumption,
      (3)kg/tOverall
    11
    84
    89
    5.1Oxide
    2
    93
    95
    -1.2Mixed (Oxide + Secondary Sulphides)
    2
    88
    94
    6.8Secondary Sulphides
    7
    81
    87
    6.4


|(1) | total recovery is measured against the total amount of
      copper in the sample.          
|--- | ----------------------------------------------------------------------------------------------
|(2) | recoverable recovery is measured against the leachable
      amount of copper in the sample.
|(3) | Negative acid consumption refers to acid
    generation.                                      

The 11 columns were loaded with minus 1⁄2 inch crushed material
and leached in a closed circuit with a solvent extraction unit for a period of
210  240 days with bacterial inoculation occurring between 14 and 30 days after
the beginning of the leach cycle. Each column was 6 metres high by 0.3 metres in
diameter and a 19°C constant temperature was maintained throughout the testing.
The head grade of the 11 columns varied between 0.33 and 0.80% copper.

The typical copper leaching operation achieves 75-80% copper
total recovery from oxide material in approximately 50-100 days and 70-80%
total copper recovery from sulphide material in 250-600 days. In addition,
leaching operations typically consume approximately 10 kilograms of acid per ton
of ore.

The Regalito Property is without known ore reserves and any
exploration undertaken by the Company in the future will be exploratory in
nature.

ITEM 5.      OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

This Item 5 provides the operating and financial review of the
Company for the 2005, 2004, and 2003 fiscal periods. This discussion should be
read in conjunction with the audited financial statements of the Company and
related notes included therein.

All statements other than statements of historical facts
included in this Annual Report, including, without limitation, the statements
under Operating and Financial Review and Prospects, Information on the
Company, and Property, Plant and Equipment and located elsewhere herein
regarding industry prospects and the Companys

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financial positions are forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, neither can give any assurance that such expectations
will prove to have been correct. Important factors that could cause actual
results to differ materially from the Companys expectations (Cautionary
Statements) are disclosed in this Annual Report, including, without limitation,
in conjunction with the forward-looking statements included in this Annual
Report under Item 3(D)  Risk Factors.All subsequent written and oral
forward-looking statements attributed to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statement.
There is significant risk that actual results will vary, perhaps materially from
results projected depending on such factors as changes in general economic
conditions, financial markets, copper prices and other metals, technology and
exploration hazards.

A.      Operating Results

The Company is a natural resource company, engaged in the
acquisition, exploration and development of mineral properties. The Company does
not have any producing properties at this time.

The Company is in the process of exploring, developing and
evaluating the Regalito property and has not yet determined whether this
property contains ore reserves that are economically recoverable. In accordance
with Canadian generally accepted accounting principles, (Canadian GAAP) the
Company follows the practice of capitalizing all costs related to acquisition,
exploration and development of mineral properties until such time as mineral
properties are put into commercial production, sold or abandoned. If commercial
production commences, these capitalized costs will be amortized prospectively on
a unit-of-production basis. If the mineral properties are abandoned, the related
capitalized costs are expensed. On an on-going basis, the Company evaluates each
property based on results to date to determine the nature of exploration work,
if any, that is warranted in the future. If there is little prospect of future
work on a property being carried out within a three year period from completion
of previous activities, the deferred costs related to that property are written
down to the estimated amount recoverable unless there is persuasive evidence
that an impairment allowance is not required. The Company capitalizes costs
related to evaluation of major mineral property projects to which the Company
has contractual rights, but for which acquisition, joint venture or option
agreements are not yet entered into, or which it is evaluating with a view to
possible acquisition. These capitalized costs will be reclassified to mineral
properties when acquisition, joint venture or option agreements are entered into
or the Company otherwise secures its rights to the mineral properties. If the
Company is not successful in acquiring the mineral properties or in entering
into joint venture or option agreements or abandons the project, the related
capitalized costs are expensed. The amounts shown for mineral properties and for
mineral property evaluation costs represent costs incurred to date less
write-downs, and are not intended to reflect present or future values.
Furthermore, the Company does not acquire properties or conduct exploration work
on them on a pre-determined basis. As a result there may not be predictable or
observable trends in the Companys business activities and comparisons of
financial operating results with prior years may not be meaningful.

For the purposes of United States generally accepted accounting
principles, (U.S. GAAP) the Company capitalizes the acquisition costs of
mineral use rights for parcels of land not owned by the Company. The Company
expenses all exploration and development expenditures made prior to commercially
mineable deposits being identified. See Note 14 to the Consolidated Financial
Statements of the Company.

At the date of this Annual Report, although a resource as
defined in accordance with Canadian National Instrument 43-101 - Standards of
Disclosure for Mineral Projects under the guidelines set out in the CIM
standards (the term resource not being a defined term under United States
standards) has been identified on the Companys Regalito property, the necessary
work to demonstrate that the resource is economically recoverable has yet to be
conducted. Until a bankable feasibility study is completed on the property,
there is no assurance that the deposit categorized as resources will be
converted to reserves. As such, the ability of the Company to realize the costs
it has incurred to date on this property is dependent upon the Company being
able to identify a commercial ore body, to finance its exploration costs and to
resolve any environmental, regulatory or other constraints which may hinder the
successful development of a property, or being able to realize the costs
incurred on a subsequent disposal of a property.

The Company's Consolidated Financial Statements have been
prepared on a going-concern basis. The Company has incurred losses since
inception and the ability of the Company to continue as a going concern depends
upon its and managements ability to develop profitable operations and to
continue to raise adequate financing. The Company's sole source of financing is
by the issue of common stock from its treasury or convertible debt.

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Management notes that its ability to finance additional
exploration on its Regalito property or other properties is contingent on the
outcome of exploration, copper prices and the availability of financing in
capital markets, factors which are beyond the Company's control. There can be no
assurance that the Company will be able to continue to raise funds in which case
the Company may be unable to meet its obligations and commitments. Should the
Company be unable to realize on its assets and discharge its liabilities in the
normal course of business, the net realizable value of its assets may be
materially less than the amounts recorded on the Company's balance sheets and
insolvency and liquidation with a total loss to shareholders could result.

The Consolidated Financial Statements utilize estimates and
assumptions principally regarding mineral properties, mineral property
evaluation costs and going-concern that reflect managements expectations at the
date of preparation. Events or circumstances in the future, many of which are
beyond the control of the Company, may impact these expectations and accordingly
could lead to different assumptions and estimates from those utilized in
2005.

The following discussion and analysis of the financial
condition and operating results of the Company for the five fiscal years ended
December 31, 2005, 2004, 2003, 2002 and 2001 (the MD&A) should be read in
conjunction with the Consolidated Financial Statements and related notes to the
financial statements which have been prepared in accordance with Canadian GAAP.
The discussion and analysis set forth below covers the results measured under
Canadian GAAP with comparisons with U.S. GAAP. Material differences between the
application of Canadian GAAP and U.S. GAAP to the Companys audited financial
statements exist as described in Note 14 to the Consolidated Financial
Statements.

As the Company does not have any producing mineral properties,
its sole source of revenue is through interest earned on amounts on deposit and
possible foreign exchange gains. These amounts are used to offset some of the
administrative operating expenses. The interest income is dependent on the funds
available for deposit and fluctuating interest rates.

Critical Accounting Policies

The preparation of financial statements in conformity with
Canadian GAAP requires the Company to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. As described below, significant estimates and assumptions are
used in determining the application of the going concern concept and the
deferral of costs incurred for mineral properties, deferred explorations and
assets held for sale. The Company evaluates its estimates on an ongoing basis
and bases them on various assumptions that are believed to be reasonable under
the circumstances. The Companys estimates form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

The Company believes the policies for mineral properties and
deferred exploration are critical accounting policies that affect judgments and
estimates used in the preparation of the Companys financial statements.

The Company considers that its mineral property has the
characteristics of property, plant and equipment, and, accordingly defers
acquisition and exploration costs under Canadian GAAP. The recoverability of
mineral property and future deferred exploration expenditures is dependant upon
the discovery of economically recoverable reserves and on the future profitable
production or proceeds from disposition, of the Companys property.

Canadian GAAP as set out in the CICA Handbook defines Mineral
Properties to be tangible assets. Recent standards for business combinations,
however, refer to mineral use rights as an example of contract-based
intangibles, without removing the definition that categorizes them as tangible
assets. The Company has classified these assets as Mineral Properties tangible
assets in accordance with its interpretation of Canadian GAAP.

Changes in circumstances in the future, many of which are
outside of managements control, will impact on the Companys estimates of
future recoverability of net amounts to be realized from their assets. Such
factors include, but are not limited to, the availability of financing, the
identification of economically recoverable reserves, co-

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venture decisions and developments, market prices of minerals,
government actions, the Companys plans and intentions with respect to is assets
and other industry and competitor developments.

The Company has not yet determined whether the property contain
mineral resources that are economically recoverable. Development of any property
may take years to complete and the amount of resulting income, if any, is
difficult to determine with any certainty. The sales value of any mineralization
discovered by the Company is largely dependant upon factors beyond the Companys
control, such as the market value of minerals recovered.

The Company believes it has the ability to obtain the necessary
financing to meet commitments and liabilities as they become payable.

While the Company believes that economically recoverable
reserves will be identified, and that the value of the assets held for sale will
be recovered, there is no assurance that this will occur. Failure to discover
economically recoverable reserves will require the Company to write-off costs
capitalized to date.

Recent accounting pronouncements

Asset retirement obligations

In March 2004, the Emerging Issues Task Force (EITF) issued
EITF 04-3, Mining Assets: Impairment and Business Combinations. EITF 04-3
requires mining companies to consider cash flows related to the economic value
of mining assets (including mineral properties and rights) beyond those assets
proven and probable reserves, as well as anticipated market price fluctuations,
when assigning value in a business combination in accordance with SFAS 141,
Business Combinations, and when testing the mining assets for impairment in
accordance with SFAS 144. The consensus is effective for fiscal periods
beginning after March 31, 2004. The adoption of EITF 04-3 had no impact on the
Companys financial position or results of operations.

On December 16, 2004, the Financial Accounting Standards Board
(FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment (SFAS
123(R)), which is a revision of FASB Statement No. 123, Accounting for
Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion No. 25, Accounting
for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of
Cash Flows. Generally, the approach in SFAS 123(R) is similar to the approach
described in Statement 123. However, SFAS 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. As the Company currently uses the fair
value method to account for all stock option grants, SFAS 123(R) will have no
effect on the Companys financial statements as presented herein.

In June 2004, the FASB issued an interpretation of SFAS No.
143, Accounting for Asset Retirement Obligations (SFAS No.143). This
interpretation clarifies the scope and timing of liability recognition for
conditional asset retirement obligations under SFAS No. 143 and is effective no
later than the end of fiscal 2005. The Company has determined that this
interpretation, and the adoption of SFAS No. 143, do not have a material impact
on the Companys condensed consolidated results of operations, financial
position or cash flows.

In December 2004, the FASB issued SFAS 153. This statement
addresses the measurement of exchanges of nonmonetary assets. The guidance in
APB No. 29, Accounting for Nonmonetary Transactions, is based on the principle
that exchanges of nonmonetary 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. This statement amends APB No. 29 to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement will be effective for the Companys 2006 fiscal
year. Earlier application is permitted for nonmonetary asset exchanges incurred
during fiscal years beginning after the date this statement is issued.
Management believes this statement will have no impact on the financial
statements of the Company once adopted.

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In March 2005, the EITF issued EITF 04-6, Accounting for
Stripping Costs in the Mining Industry. The consensus indicated that costs of
removing overburden and waste materials (stripping costs) after production
begins, represent variable production costs and should be considered a component
of mineral inventory cost subject to the guidance in Chapter 4 of Accounting
Research Bulletin No. 43, Restatement and Revision of Accounting Research
Bulletins. EITF 04-6 is effective for fiscal years beginning after December 15,
2005 and upon adoption, can be applied by either retroactively restating prior
periods or using a cumulative catch-up adjustment. The Company believes this
statement will have no impact on the financial statements of the Company once
adopted.

In June 2005, the FASB issued Statement of Financial Accounting
Standards No. 154, Accounting Changes and Error Corrections  a replacement of
APB Opinions No. 20 and FASB Statement No. 3 (SFAS 154). SFAS 154 requires
retrospective application to prior periods financial statements of a change in
accounting principle unless it is impracticable to do so. This is a change from
the existing practice that requires most accounting changes to be accounted for
by including in net income in the period of the change the cumulative effect of
changing to the new accounting principle. SFAS 154 will be effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. The impact of SFAS 154 cannot be determined until which
time the Company makes a change in accounting policy.

Differences Between Canadian and U.S. Generally Accepted
Accounting Principles and Practices

Mineral Property Expenditures

Under Canadian GAAP, it is acceptable to defer both mineral
property acquisition and exploration costs until a decision to abandon the
property is made, it is determined that the property does not have economically
recoverable reserves or the Company is unlikely to pursue exploration activities
on the property. Under US GAAP, mineral property exploration costs are expensed
until it can be proven that economically viable reserves are present on the
property and the Company has the ability and intention to pursue exploitation of
these reserves.

As a result of this reporting difference, the Companys mineral
properties would be $11,627,753 (2004: $9,216,837) less under U.S. GAAP and the
Companys loss for the year $14,011,170 (2004: $8,747,304, 2003: $469,533)
higher.

Canadian GAAP as set out in the CICA Handbook defines Mineral
Properties to be tangible assets. Recent standards for business combinations,
however, refer to mineral use rights as an example of contract-based
intangibles, without removing the definition that categorizes them as tangible
assets. The Company has classified these assets as Mineral Properties tangible
assets in accordance with its interpretation of Canadian GAAP.

Under U.S. GAAP, until March, 2004, mineral interests
representing mineral use rights for parcels of land not owned by the Company
were treated as intangible assets. The amount capitalized related to a mineral
interest represents its fair value at the time it was acquired, either as an
individual asset purchase or as part of a business combination. The Emerging
Issues Task Force (EITF) formed a committee (Committee) to evaluate certain
mining industry accounting issues, including issues arising from the application
of SFAS No. 141, Business Combinations (SFAS No 141) and SFAS No. 142,
Goodwill and Other Intangible Assets (SFAS No. 142) to issues that include
whether mineral interests conveyed by leases represent tangible or intangible
assets and the amortization of such assets. In March 2004, the EITF reached a
consensus in EITF Issue No 04-2 Whether Mineral Rights are Tangible or
Intangible Assets (EITF No. 04-2), subject to ratification by the Financial
Accounting Standards Board (FASB), that mineral interests conveyed by leases
should be considered tangible assets. On March 31, 2004, the FASB ratified the
consensus of the EITF that mineral interests conveyed by leases should be
considered tangible assets subject to the finalization of a FASB Staff Position
(FSP) in this regard. On April 30, 2004 the FASB issued a FSP amending SFAS
No. 141 AND SFAS No. 142 to provide that certain mineral use rights are
considered tangible assets and that mineral use rights should be accounted for
based on their substance. The FSP is effective for the first reporting period
beginning after April 29, 2004, with early adoption permitted.

During the second quarter of 2004, the Company changed its
accounting policy, prospectively from April 1, 2004, with respect to mineral use
rights to reclassify them from intangible to tangible assets. This change was
made as a result of deliberations by the Financial Accounting Standards Boards
(FASB) Emerging Issues Task Force (EITF) at its March 17-18, 2004 meeting,
subsequently approved by FASB, which concluded mining rights should be
classified as tangible assets (EITF 04-02). Prior to this change in accounting
policy, the Company had recorded

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mineral rights as intangible assets on its consolidated balance
sheet as purchased undeveloped mineral interests and amortized the excess of the
carrying value over the residual value on a straight-line basis over the period
that it expected to convert, develop or further explore the underlying property.
Due to this change in accounting policy, the Company has ceased amortization of
the excess of the carrying over the residual value of these assets and account
for them according to its accounting policy for property, plant and equipment.
If this change had been adopted retroactively on January 1, 2003, it would have
decreased the Companys U.S. GAAP net loss for 2003 by $200,110 (2002:
$37,875).

Residual values for mineral interests at the exploration stage
represent the expected fair value of the interests at the time the corporation
plans to convert, develop, further explore or dispose of the interests. Residual
values are determined for each individual property.

Gain on sale of mineral properties

As exploration expenses have been capitalized under Canadian
GAAP and expensed under U.S. GAAP, and since the reorganization referred to in
Note 1 resulted in the Company transferring its mineral properties to related
companies at their Canadian GAAP carrying value, under U.S. GAAP, the Company
has reported a gain on this transaction equal to the exploration expenditures
capitalized under Canadian GAAP.

Income taxes

Under Canadian GAAP, future income taxes are calculated based
on enacted or substantially enacted tax rates applicable to future years. Under
U.S. GAAP, only enacted rates are used in the calculation of future income
taxes. This GAAP difference did not result in a difference in the financial
position, results of operations or cash flows of the Company for the years ended
December 31, 2005, 2004, 2003 and 2002 and for the period from inception on
October 3, 2001 to December 31, 2001.

Flow-through shares

Under Canadian income tax legislation, corporations are
permitted to issue shares whereby the corporation agrees to incur qualifying
expenditures as defined under the Canadian Income Tax Act, and renounce the
related income tax deductions to the investors.

Canadian GAAP treatment of flow-through shares changed during
2004. Before March 2004, the funds received through the issuance of flow-through
shares were recorded as share capital. Once the qualifying expenditures were
made, the carrying values of both the unproven mineral properties and the share
capital were reduced by the amount of the tax benefit renounced, calculated at
the Companys effective tax rate. As the Companys effective tax rate was 0% for
2004, 2003 and 2002, and because the Company did not issue any flow-through
shares before March, 2004, no adjustment of this nature was required.

In March, 2004, the Canadian Institute of Chartered Accountants
(CICA) released EIC  146 Flow-Through Shares, which requires the future
income tax liability resulting from the timing differences on exploration
expenditures renounced to investors and the resulting draw down of such future
income tax liability be recorded as a credit to income upon renunciation of the
exploration expenditures by the Company. EIC  146 is effective for all
flow-through share transactions initiated after March 19, 2004.

Canadian GAAP does not require a separate allocation of the
amount of funds received by the Company attributable to the flow-through feature
at the time of issue. Also, in the absence of a specific restriction or
requirement for the funds to be held in a separate bank account, Canadian GAAP
permits funds which are to be spent within the current period to be included
with cash and cash equivalents for purposes of classification on the balance
sheet and statement of cash flows. Adequate disclosure of the commitment to
incur qualifying expenditures and renounce the related tax deductions is
required under Canadian GAAP.

U.S. GAAP requires the premium or discount from the market
trading price at the time an irrevocable agreement to issue the flow-through
shares exists, to be accounted for separately on the balance sheet. At the time
the

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expenditures are made, the previously recorded premium or
discount is reversed and offset against the tax provision on the income
statement, and the deferred income tax liability on the balance sheet recorded.
Also notwithstanding whether there is a specific requirement to segregate the
funds, the flow through share funds which are unexpired at the balance sheet
date are considered to be restricted and are not considered to be cash or cash
equivalents under U.S. GAAP.

Operating Results of the Company

Fiscal year ended December 31, 2005 compared to fiscal
year ended December 31, 2004

The Companys general and administrative expenses for the year
ended December 31, 2005 were $1,682,236 compared to $1,955,287 for the year
ended December 31, 2004. This is a decrease of $273,051. Higher expenditures
were incurred in fiscal 2004 for regulatory and transfer agent fees, audit and
accounting fees, legal fees and corporate development fees incurred in
connection with the Companys listings of its common shares on both the TSX and
AMEX. The only item of general and administrative expenses which increased
during the year ended December 31, 2005 was office and administration which
increased from $136,355 in 2004 to $194,195 in 2005 due to the increase in
administrative activity during 2005.

During 2005, the Company recorded stock-based compensation of
$380,747 in connection with incentive stock options that vested during the year,
$120,058 in connection with Founders Units (see discussion of fiscal 2003
expenditures for details on these units) and $156,840 in connection with an
employee bonus, for an aggregate expense of $657,645.

The Company incurred a net loss of $1,546,448 for the year
ended December 31, 2005 as compared to a net loss of $1,975,903 for the year
ended December 31, 2004. This decrease of $429,455 can be attributed to a future
income tax recovery in the amount of $760,060. The Company renounced $2,135,000
of its mineral expenditures to flow-through shareholders in 2005. The resultant
loss of future income tax assets, which is treated as a cost of issuing
flow-through shares, gives rise to a future tax liability of $760,060. This
liability has been offset by the Companys recognition of future income tax
assets that have been previously written-down by a valuation allowance.

Comparison of Canadian GAAP and United States GAAP as
applicable to the Companys operations.

Had the Company followed U.S. GAAP, the assets on the
consolidated balance sheet at December 31, 2005 would have been reduced from
$18,316,879 to $6,688,925 as a result of mineral interests amortized and mineral
exploration costs expensed, under U.S. GAAP, of $201 and $11,627,753
respectively. The shareholders equity would have decreased from $17,668,703
under Canadian GAAP to $6,040,222 under U.S. GAAP as a result of the
amortization of mineral interests and mineral exploration costs expensed. The
loss for the year on the consolidated statement of operations ended December 31,
2005 would have increased from a loss of $1,546,448 applying Canadian GAAP to a
loss of $3,992,030 as a result of the amortization of mineral interest,
recognition of deferred tax recovery, mineral exploration costs and gain on sale
of mineral properties under U.S. GAAP of $237,784, ($272,450), ($4,011,179) and
$1,600,263 respectively. The cash flows used in operating activities in the
consolidated statement of cash flows at December 31, 2005 would have increased
from Canadian GAAP of ($1,982,515) to ($5,993,694) under U.S. GAAP as a result
of mineral exploration costs expensed of $4,011,179. In addition the cash flows
used in investing activities in the consolidated statement of cash flows at
December 31, 2005 would have decreased from Canadian GAAP of ($17,036,257) to
($13,025,078) under U.S. GAAP as a result of mineral exploration costs expensed
of $4,011,179.

Fiscal year ended December 31, 2004 compared to fiscal
year ended December 31, 2003

The Companys general and administrative expenses for the year
ended December 31, 2004 were $1,955,287 compared to $1,287,848 for the year
ended December 31, 2003. Fiscal 2004 represented a full year of operations for
the Company. The Company was formed on May 23, 2003 pursuant to the reverse
take-over of First Trimark Ventures Inc. by CRS Copper Resource Corp.
Consequently, the expenses for fiscal 2003 were not representative of a full
year of comparative operations and all expenditures for fiscal 2004 were
significantly higher than expenditures incurred during fiscal 2003.

- 25 -

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Significant expenditures were incurred in fiscal 2004 for
investor relations and corporate development activities, as well as for legal,
audit and regulatory fees. Investor relations and corporate development
activities were incurred in connection with the Companys attendance and
participation at trade shows and conferences, the preparation of trade show
material and publications and other activities to increase awareness about the
Company, its property and its activities amongst Canadian and United States
based fund managers and investors. These services were performed by Company
personnel as well as investor relations contractors. Legal, audit and regulatory
fees increased significantly, by approximately $189,000, due to the Company
acquiring listings for its common shares on the TSX and AMEX.

During 2004, the Company recorded stock-based compensation of
$529,630 in connection with incentive stock options that vested during the year
and $148,000 in connection with Founders Units (see discussion of fiscal 2003
expenditures for details on these units), for an aggregate expense of
$677,630.

The Company incurred a net loss of $1,975,903 for the year
ended December 31, 2004 as compared to a net loss of $1,256,574 for the year
ended December 31, 2003. This increase of $719,329 is a result of a full year of
operations. It should be noted however that the Company incurred additional
legal, audit and regulatory expenses in connection with its listings on the TSX
and AMEX Exchanges, which expenses should not be recurring.

Comparison of Canadian GAAP and United States GAAP as
applicable to the Companys operations.

Had the Company followed U.S. GAAP, the assets on the
consolidated balance sheet at December 31, 2004 would have been reduced from
$20,670,379 to $11,215,837 as a result of mineral interests amortized and
mineral exploration costs expensed, under U.S. GAAP, of $237,985 and $9,216,837
respectively. Liabilities under Canadian GAAP would increase from $504,103 to
$776,553 as a result of a flow-through income tax liability of $272,450. The
shareholders equity would have decreased from $20,166,276 under Canadian GAAP to
$10,439,004 under U.S. GAAP as a result of the amortization of mineral
interests, mineral exploration costs expensed and a flow-through income tax
liability. The loss for the year on the consolidated statement of operations
ended December 31, 2004 would have increased from a loss of $1,975,903 applying
Canadian GAAP to a loss of $10,723,207 as a result of mineral exploration costs
U.S. GAAP of $8,747,304. The cash flows used in operating activities in the
consolidated statement of cash flows at December 31, 2004 would have increased
from Canadian GAAP of ($1,128,284) to ($12,010,588) under U.S. GAAP as a result
of mineral exploration costs expensed of $8,747,304 and reclassification of
funds to be expended on mineral exploration of $2,135,000. In addition the cash
flows from investing activities in the consolidated statement of cash flows at
December 31, 2004 would have increased from Canadian GAAP of ($12,862,821) to
($1,980,517) under U.S. GAAP as a result of mineral exploration costs expensed
of $8,747,304 and funds to be expended on mineral exploration of $2,135,000.

Fiscal year ended December 31, 2003 compared to fiscal
year ended December 31, 2002

The Companys general and administrative expenses for the year
ended December 31, 2003 were $1,287,848 compared to $3,358,657 for the year
ended December 31, 2002 as a result of a decrease in stock-based compensation
from $3,325,067 for the year ended December 31, 2002 to $582,387 for the year
ended December 31, 2003. Included in the share capital of CRS at May 22, 2003,
were 5,060,000 units (Founders Units) that were issued for nominal
consideration of $0.01 per unit. Each unit consisted of one common share and
one-half warrant. Included in the Founders Units were 600,000 units that were
issued into escrow under a Voluntary Pooling Agreement (VPA Founders Units).
The Company has recorded compensation expense related to the issuance of all the
Founders Units at their fair value of $0.75 per unit, under U.S. GAAP, less the
nominal consideration of $0.01 per unit received.

The compensation expense related to the VPA Founders Units is
recognized evenly over the period that these units are held in escrow under a
Voluntary Pooling Agreement. The compensation expense related to the non-VPA
Founders Units has been recognized as a 2002 period expense.

During 2003, stock based compensation expense in the aggregate
amount of $582,387 was recorded. During 2003, the Company granted options to
directors, employees and consultants for the purchase of up to 897,533 common
shares. Compensation expense in the amount of $434,387 was recorded on those
options which vested during the year. The

- 26 -

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Company also recorded $148,000 of compensation expense for VPA
Founders Units issued by CRS in 2002 for services rendered in 2003 by the
recipient unit holders.

As the business activity of the Company commenced in the year
ended December 31, 2003 with the acquisition of CRS all general and
administrative expenses of the Company were significantly higher in all areas.
In particular management and consulting fees for the year ended December 31,
2003 were $149,499 as compared to $nil for the year ended December 31, 2002;
audit and accounting fees were $124,828 for the year ended December 31, 2003 as
compared to $20,000 for the year ended December 31, 2002 and investor relations
and promotion costs were $134,442 for the year ended December 31, 2003 as
compared to $nil for the year ended December 31, 2002. In addition office and
administration costs were $103,576 for the year ended December 31, 2003 as
compared to $1,692 for the year ended December 31, 2002.

The Company incurred a net loss of $1,256,574 for the year
ended December 31, 2003 as compared to a net loss of $3,356,101 for the year
ended December 31, 2002. This improvement of $2,099,527 is a result of a
decrease in stock-based compensation in the year ended December 31, 2003. It
should be noted however that there was a significant increase in all other
expenses including accounting and audit fees, management and consulting
services, investor relations and promotion costs, legal fees and office and
administration to $124,828, $149,499, $134,442, $101,401 and $103,576
respectively due to the commencement of active business by the Company in the
year ended December 31, 2003.

Comparison of Canadian GAAP and United States GAAP as
applicable to the Companys operations.

Had the Company followed U.S. GAAP, the assets on the
consolidated balance sheet at December 31, 2003 would have been reduced from
$9,162,594 to $8,455,076 as a result of mineral interests amortized and mineral
exploration costs expensed, under U.S. GAAP, of $237,985 and $469,533
respectively. The shareholders equity would have decreased from $8,648,187 under
Canadian GAAP to $7,940,669 under U.S. GAAP as a result of the amortization of
mineral interests and mineral exploration costs expensed. The loss for the year
on the consolidated statement of operations ended December 31, 2003 would have
increased from a loss of $1,256,574 applying Canadian GAAP to a loss of
$1,926,217 as a result of the amortization of mineral interest and mineral
exploration costs expensed under U.S. GAAP of $200,110 and $469,533
respectively. The cash flows used in operating activities in the consolidated
statement of cash flows at December 31, 2003 would have increased from Canadian
GAAP of ($564,425) to ($1,033,958) under U.S. GAAP as a result of mineral
exploration costs expensed. In addition the cash flows from investing activities
in the consolidated statement of cash flows at December 31, 2003 would have
decreased from Canadian GAAP of ($728,272) to ($258,739) under U.S. GAAP as a
result of mineral exploration costs expensed.

Fiscal year ended December 31, 2002 compared to fiscal
period from incorporation on October 3, 2001 to December 31, 2001

As the Company was incorporated on October 3, 2001 and did not
commence operations until 2002, no year-to-year comparisons can be made. Its
expenses for the year ended December 31, 2002 were $3,358,657, consisting mainly
of a stock-based compensation expense of $3,325,067 related to the issuance of
units during 2002 and professional fees of $26,248 relating to due diligence and
technical analysis of its mineral properties. The Company incurred a net loss of
$3,356,101 in 2002. In 2002, the Company incurred $1,018,653 in property
acquisition costs in acquiring the Redstone and Hushamu mineral properties,
entering into an option agreement to acquire the Casino Property, and a deposit
on the Taca Taca Property. The Company did not incur any mineral exploration
costs during fiscal 2002.

Comparison of Canadian GAAP and United States GAAP as
applicable to the Company's operations.

Had the Company followed US GAAP as outlined above, the assets
of the Company in the Company's Consolidated Balance Sheet for the year ended
December 31, 2002 would have been reduced from $3,960,836 to $3,922,961 as a
result of the amortization of mineral interests under US GAAP in the amount of
$37,875. In addition, the expenses and net loss of the Company in its
Consolidated Statement of Operations for the year ended December 31, 2002 would
have increased from a loss of $3,356,101 under Canadian GAAP to a loss of
$3,393,976 as a result of the amortization of mineral interests under US GAAP in
the amount of $37,875.

- 27 -

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B.      Liquidity and Capital
Resources

Liquidity and Capital Resources of the
Company

To date, virtually all funding for the Companys business and
ongoing operations has come from common share issuances. During the year ended
December 31, 2005, the Company raised net proceeds of $19,301,211 as compared to
$11,996,109 in equity during the year ended December 31, 2004.

The Companys cash position (including temporary investments)
at December 31, 2005 was $1,374,477 as compared to $3,227,038 at December 31,
2004, representing a 42% decrease.

The Companys net working capital position (current assets less
current liabilities) decreased to $864,227 as at December 31, 2005 from
$2,782,864 at December 31, 2004 due to lower cash balances and an increase in
current liabilities at December 31, 2005.

As at December 31, 2005, amounts capitalized in respect of
mineral properties decreased to $16,702,048 from $17,324,715 in 2004, as a
result of the sale of nine of the Companys mineral properties to Norco, Lumco
and Global, pursuant to the Plan of Arrangement completed on May 19, 2005.

The Company is in the exploration and development stage on its
Regalito property and therefore has no regular cash flow. As at February 28,
2006, the Company had working capital in the amount of $211,000. The Company has
minimum property payment commitments of $75,000 and $100,000 for 2006 and 2007
and an additional US$125,000 and US$100,000 for 2007 and 2008 should copper
prices exceed $1 per pound for the entire calendar year. In addition the Company
has payments totalling $7,512,060 in 2006 and $6,695,000 in 2007 for property
option payments, surface rights and water rights. The Company has sufficient
working capital to cover its costs for the next three months. As the Company
will require additional capital for the aforementioned costs as well as future
general and administrative expenses it will have to depend on raising funds by
the issuance of shares. Due to the general uncertainties of the financial
markets, the Company cannot guarantee that it will be successful in raising any
additional funds required.

In the long term, the Companys financial success will be
dependent on the extent to which it can discover mineralization and establish
the economic viability of developing the Regalito property. Such development may
take years to complete and future cash flows, if any, are difficult to determine
with any certainty. The realization value of any mineralization discovered by
the Company is largely dependent on factors beyond the Companys control such as
the market value of the metals produced, availability of sufficient
infrastructure, mining regulations in Canada and other foreign countries and
foreign exchange rates.

The Companys Regalito property does not currently have
reserves.

The Company does not know of any trends, demands, commitments,
events or uncertainties that will result in, or that are reasonably likely to
result in, its liquidity either materially increasing or decreasing at present
or in the foreseeable future. Material increases or decreases in liquidity are
substantially determined by the success or failure of the exploration programs
or the acquisition of projects.

C.      Research and Development

Not applicable

D.      Trend of
Information

Not applicable

E.      Off-balance sheet
arrangements

Not applicable

- 28 -

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F.      Tabular disclosure of
Contractual Obligations

Not applicable.

ITEM 6.      DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES

A.      Directors and Senior
Management

The following table sets forth certain information as of
February 28, 2006 about the Companys current directors and senior
management:

Name
      Age
      Position
      Other Reporting Companies in Canada or
        the United StatesCompany
      PositionRoss Beaty
      54
      Director
      Pan American Silver Corp. 
        Lumina Resources Corp. 
        Global Copper Corp.
      Chairman of the Board 
        Director 
        DirectorRoss Cory
      49
      Director
      Northern Peru Copper Corp. 
        Lumina Resources Corp. 
        Eldorado Gold Corp.
      Director 
        Director 
        DirectorAnthony Floyd
      55
      Director
      Inca Pacific Resources Inc. 
        Northern Peru Copper Corp. 
        Lumina Resources Corp. 
        Global Copper Corp.
      President and Director 
        Director 
        Director 
        DirectorAziz Shariff
      57
      Director
      Anfield Ventures Inc. 
        Global Copper Corp. 
        Highbury Projects Inc.
      Director 
        Director 
        DirectorJohn Wright
      53
      Director
      Pan American Silver Corp. 
        Northern Peru Copper Corp. 
        Global Copper Corp.
      Director 
        Director 
        DirectorDavid Strang
      37
      President
      N/A
      NARobert Pirooz
      42
      Chief Executive Officer 
        and Secretary
      Pan American Silver Corp. 
        Northern Peru Copper Corp. 
        Lumina Resources Corp. 
        Global Copper Corp.
      Vice-President and Secretary 
        Chairman and Director 
        Secretary and Director 
        Secretary and DirectorSandra Lim
      45
      Chief Financial Officer
      Northern Peru Copper Corp. 
        Lumina Resources Corp. 
        Global Copper Corp. 
        Inca Pacific Resources Inc. 
        Grayd Resource Corporation
      Chief Financial Officer 
        Chief Financial Officer 
        Chief Financial Officer 
        Chief Financial Officer 
        Chief Financial Officer and 
        DirectorLeo Hathaway
      36
      Vice-President, 
        Explorations
      N/A
      N/A


Ross Beaty, Director

Mr. Beaty is currently the Chairman of the Board and Chief
Executive Officer of Pan American Silver Corp. (TSX; NASDAQ). Mr. Beaty was also
the Chairman and Chief Executive Officer of Equinox Resources Ltd. from May 1985
to April 1994 and Da Capo Resources Ltd. from April 1994 to September 1996. Mr.
Beaty graduated from the University of British Columbia with Bachelor of Science
in Geology in 1974 and a Masters of Science in Geology from the University of
London in 1975. In addition Mr. Beaty received a law degree from the University
of British Columbia in 1979. Mr. Beaty is a Fellow of the Geological Association
of Canada and the Canadian Institute of Mining and Metallurgy. In 1997, Mr.
Beaty obtained a P. Geo from the Association of Professional Engineers and
Geoscientists of British Columbia.

- 29 -

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Ross Cory, Director

Mr. Cory has been the Senior Vice-President of Raymond James
Ltd., a Vancouver, BC brokerage firm, since December 2002. He was Senior
Vice-Senior Vice-President and a director of Goepel McDermid Inc. from 1998 to
2000.

Anthony Floyd, Director

Mr. Floyd has been the Chief Executive Officer, President and
Director of Inca Pacific Resources Inc. since April 1994. He has also been the
Chief Executive Officer and Director of Lumina Resources Corp. since May 9,
2005. In addition he was a Director of Grayd Resources Inc. from January 2001 to
September 2002. Mr. Floyd graduated with a Bachelor of Science in Geology
(Honours) from the University of Nottingham in England, and in 1972 received a
Masters of Science in Mineral Exploration from the University of Leicester in
England. In 1992, Mr. Floyd obtained a P. Geo from the Association of
Professional Engineers & Geoscientists of British Columbia. Mr. Floyd will
devote approximately 50% of his professional time to the Companys
operations.

Aziz Shariff, Director

Mr. Shariff was the Chief Executive Officer, President,
Director and a Promoter of the Company from March 8, 2000 to May 23, 2003. Mr.
Shariff continues as a director of the Company. Mr Shariff is an independent
investor and institutional fundraiser operating through a number of corporations
and offices in the United States, Canada and Dubai, Middle East. He is the
President of Trimark Trading, an international institution in Dubai, Middle
East. From 1989 to 1996 Mr. Shariff was a Director of the Hunter Dickinson Group
of Companies, and Hunter Dickinson Inc., a Canadian company that operates
publicly traded mineral exploration and mine development companies around the
world. Since 1996 he has served as an advisor to the Hunter Dickinson Group of
Companies, and Hunter Dickinson Inc. Mr. Shariff was a Member of the Institute
of Chartered Accountants in England and Wales from 1977 to 1997.

John Wright, Director

Mr. Wright is a metallurgical engineer with a degree from
Queens University, Canada. He worked in the Canadian mining industry from 1974
until 1988 primarily with Teck Corporation and Cominco Ltd. In 1988 Mr. Wright
joined Equinox Resources Ltd. as Chief Operating Officer until early 1994 when
he co-founded Pan American Silver Corp. where he was President, and Chief
Operating Officer until July 1st, 2003. Mr. Wright remains a director of Pan
American Silver Corp. Mr. Wright obtained a P. Eng. from the Association of
Professional Engineers and Geoscientists of British Columbia.

David Strang, President

Mr. Strang has been President of the Company since May 19,
2005. He was Vice-President, Corporate Development of the Company from July 2001
to October 2003. Mr. Strang received his Bachelor of Science in Applied Earth
Sciences from Stanford University in June 1991. From September 1996 to June 1998
he was a Investment Analyst and Acquisitions Manager with Gold Fields of South
Africa Limited. From November 1999 to October 2003 he was a senior associate and
Manager with Standard & Poors Corporate Value Consulting Group. Mr. Strang
will devote approximately 90% of his time to the Companys operations.

Robert Pirooz, Chief Executive Officer and
Secretary

Mr. Pirooz has been Chief Executive Officer of the Company
since May 19, 2005 and Secretary since May 23, 2003. He was Chief Financial
Officer of the Company until June 9, 2004, and Vice-President and a director of
the Company from May 23, 2003 until May 19, 2005. He has been a director and
Secretary of Northern Peru Copper Corp., Lumina Resources Corp. and Global
Copper Corp. since May 19, 2005. Mr. Pirooz is General Counsel and Secretary of
Pan American Silver Corp. (TSX; NASDAQ). Mr. Pirooz studied commerce at
Dalhousie University and received a law degree from the University of British
Columbia in 1989. Mr. Pirooz practised law in Vancouver and Victoria, British
Columbia from May 1990 to February 1998 primarily in the areas of corporate and
commercial and securities law. Mr. Pirooz served as Vice-President and Secretary
of Pan American Silver Corp. from April 1998 to October 2000 and

- 30 -

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from October 2000 to December 2002 was General Counsel and Vice
President of the BCR Group of Companies. Mr. Pirooz is currently a lawyer and
business consultant providing services through Iris Consulting Ltd and Mirador
Law Corp. to Pan American Silver Corp. and a limited number of corporate
clients.. Mr. Pirooz will devote approximately 50% of his professional time to
the Companys operations.

Sandra Lim, Chief Financial Officer

Ms. Lim has been the Companys Chief Financial Officer since
June 15, 2004. Ms. Lim has been the Chief Financial Officer of Northern Peru
Copper Corp., Lumina Resources Corp. and Global Copper Corp. since May 19, 2005
and of Inca Pacific Resources Inc. since January 12, 2006. She has also been a
director and Chief Financial Officer of Grayd Resource Corporation since January
24, 2006. She was designated a Certified General Accountant by the CGA
Association of BC in May 1988 and the CGA Association of Canada in June 1988,
and a Certified Financial Planner by the Financial Planners Standards Council in
January 1999. Ms. Lim was an associate with the firm of G. Ross McDonald,
Chartered Accountant (which merged with Smythe Ratcliffe, Chartered Accountants
on February 1, 2005), in Vancouver, BC from November 1988 to May 2005. Prior to
working with G. Ross McDonald, Ms. Lim held positions as controller with several
private companies. Ms. Lim will devote approximately 30% of her time to the
Company.

Leo Hathaway, Vice-President, Exploration

Mr. Hathaway joined the Company as its Vice-President,
Exploration, on June 7, 2004 and is responsible for the exploration management
of the Companys Chilean project. He has a B.Sc. (Hons) degree in Applied
Geology from the University of Plymouth, England, and a M.Sc. in Mineral
Exploration from the Royal School of Mines at Imperial College in London,
England. Most recently, Mr. Hathaway was employed with a Canadian mining company
evaluating base metal opportunities in Spain and South America. Mr. Hathaway
will devote approximately 30% of his time to the Company.

Neither the Company nor any of its officers, directors or
controlling shareholders has (i) been the subject of any penalties or sanctions
imposed by a court relating to Canadian securities legislation or by a Canadian
securities regulatory authority, (ii) entered into a settlement agreement with a
Canadian securities regulatory authority, or (iii) been subject to any other
penalties or sanctions imposed by a court or regulatory authority that would
likely be considered important to a reasonable investor making an investment
decision.

B.      Executive Compensation

The following table contains information about the compensation
paid to, or earned by, those who were, at December 31, 2005, (a) the Companys
chief executive officer (or an individual who acted in a similar capacity); (b)
each of the four other most highly compensated executive officers and (c) any
additional individuals whose total salary and bonus exceeded $150,000 during the
year ended December 31, 2005. The Company currently has three Named Executive
Officers, namely David Strang, President, Robert Pirooz, CEO and Secretary, and
Sandra Lim, CFO.

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Summary Compensation Table

Name and Principal
        Position
      Fiscal Year
        Ended December 31
      Annual Compensation
      Long Term Compensation
      All Other
        Compen- sation ($)Salary ($)
      Bonus ($)
      Other Annual
        Com- pensa- tion ($)
      Awards
      PayoutsSecurities Under
        Options/ SARs Granted1
        (#)
      Restricted Shares
        or Restricted Share Units ($)
      LTIP Payouts
        ($)David Strang2
        President
      2005 
        2004 
        2003
      104,400 
        104,400 
        17,400
      156,8406
        nil 
        n/a
      nil 
        nil 
        nil
      nil 
        nil 
        150,000
      nil 
        n/a 
        n/a
      nil 
        n/a 
        n/a
      nil 
        n/a 
        n/aRobert Pirooz3
        CEO and 
        Secretary
      2005 
        2004 
        2003
      nil 
        nil 
        nil
      nil 
        28,3506
        nil
      41,7897
        65,0007
        65,0007
      nil 
        nil 
        200,000
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nilAnthony Floyd4FormerCEO 
        and President
      2005 
        2004 
        2003
      nil 
        nil 
        nil
      nil 
        28,3506
        n/a
      23,965 
        60,0007
        60,0007
      nil 
        nil 
        200,000
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nilAziz Shariff5FormerCEO 
        and President
      2005 
        2004 
        2003
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        50,000
      nil 
        nil 
        nil
      nil 
        nil 
        nil
      nil 
        nil 
        nilSandra Lim8
        CFO
      2005 
        2004 
        2003
      nil 
        nil 
        n/a
      nil 
        nil 
        n/a
      31,914 
        10,833 
        n/a
      20,000 
        nil 
        n/a
      nil 
        nil 
        n/a
      nil 
        nil 
        n/a
      nil 
        nil 
        n/aLeo Hathaway9
        Vice-President, 
        Exploration
      2005 
        2004 
        2003
      23,525 
        71,500 
        n/a
      nil 
        nil 
        n/a
      nil 
        nil 
        n/a
      nil 
        150,000 
        n/a
      nil 
        nil 
        n/a
      nil 
        nil 
        n/a
      nil 
        nil 
        n/a


| | 1. | The sum of the number of securities under option granted
        during each fiscal year, on a non-cumulative basis.                               
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Mr. Strang was appointed President on May 9, 2005.                                                                                                 
| | 3. | Mr. Pirooz was appointed Secretary on May 23, 2003 and
        CEO on May 9, 2005; and was Vice-President from May 23, 2003 to May 9,
        2005.
| | 4. | Mr. Floyd was President and CEO from May 23, 2003 to
        May 9, 2005.                                                                          
| | 5. | Mr. Shariff was CEO from August 3, 2000 to May 23, 2003
        and President from March 8, 2000 to May 23, 2003.                                  
| | 6. | Represents the cash value of bonus shares issued under
        the Companys stock option and stock bonus plan.                                    
| | 7. | Paid for management and consulting services.                                                                                                       
| | 8. | Ms. Lim was appointed CFO on June 9, 2004.                                                                                                         
| | 9. | Mr. Hathaway was appointed Vice-President, Exploration
        on June 15, 2004.                                                                   

Options and Stock Appreciation Rights (SARs)

The Company currently has in place a stock option and stock
bonus plan (the Stock Option Plan) for the purpose of attracting and
motivating directors, officers, employees and consultants of the Company and
advancing the interests of the Company by affording such person with the
opportunity to acquire an equity interest in the Company through rights granted
under the Stock Option Plan to purchase shares of the Company. In addition, the
Stock Option Plan provides for the issuance of up to an aggregate of 200,000
bonus shares in each calendar year to those directors, officers, employees and
consultants who are deemed to have provided extraordinary contributions to the
advancement of the Company. Any such issuance would be based on performance
reviews and recommendations by the Companys Compensation Committee. At December
31, 2005, options granted and outstanding under the Stock Option Plan provide
for the purchase, in the aggregate, of 950,000 common shares of the Company.

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Any grant of options under the Stock Option Plan will be within
the discretion of the board of directors, subject to the condition that the
maximum number of shares which may be issuable under the Stock Option Plan shall
not exceed 10% of the Companys issued and outstanding shares, from time to time
inclusive of the bonus shares. The number of option shares and bonus shares
issuable under the Stock Option Plan to any one individual during a one year
period must not exceed 5% of the total number of issued and outstanding common
shares on a non-diluted basis. In addition, the number of option shares and
bonus shares which may be issuable under the Stock Option Plan within a one year
period: (i) to insiders of the Company in aggregate, shall not exceed 10% of the
outstanding issue; (ii) to one individual who is an insider of the Company or
any associates of such insider, shall not exceed 5% of the outstanding issue;
and (iii) to a consultant or an employee performing investor relations
activities, shall not exceed 2% of the outstanding issue.

The term of any options granted under the Stock Option Plan
will be fixed by the board of directors at the time such options are granted,
provided that options will not be permitted to exceed a term of 10 years in
accordance with the rules and policies of the TSX. Upon expiry of an option, or
in the event an option is otherwise terminated for any reason, without having
been exercised in full, the number of shares in respect of the expired or
terminated option shall again be available for the purposes of the Stock Option
Plan. The exercise price of any options granted under the Stock Option Plan will
be determined by the board of directors, in its sole discretion, but shall not
be less than the weighted average market price for the five (5) trading days
prior to the date the option is granted. The Stock Option Plan also provides for
reclassification of options in the event of any consolidation, subdivision,
conversion or exchange of the Companys common shares.

Under the Stock Option Plan, options are non-assignable and
non-transferable. For stock options granted to employees, consultants or
management company employees, the Company represents that the proposed optionee
is a bona fide employee, consultant or management company employee, as the case
may be. If the optionee ceases to be a director of the Company or ceases to be
employed by the Company (other than by reason of death), as the case may be,
then the option granted shall expire on no later than the 30th day following the
date that the optionee ceases to be a director or ceases to be employed by the
Company, subject to the terms and conditions set out in the Stock Option
Plan.

The board of directors may make certain amendments to the Stock
Option Plan or any option without shareholder approval. The directors have the
authority to make changes such as: amendments of a housekeeping nature; a
change to the vesting provisions of an option; a change to the termination
provisions of an option which does not entail an extension beyond the original
expiry date; and the addition of a cashless exercise feature, payable in cash or
securities, which provides for a full deduction of the number of underlying
options from the Stock Option Plan reserve. Amendments which reduce the exercise
price or extend the term of an option held by an insider or which increase the
fixed maximum percentage of common shares issuable under the Stock Option Plan
will require shareholder approval. Any amendment to the Stock Option Plan is
also subject to the acceptance of the TSX.

Other than Sandra Lim, the Companys CFO, the Company did not
grant any stock options to its Named Executive Officers during the Companys
completed financial year ended December 31, 2005. In addition, the Company
issued to David Strang, its President, a total of 21,000 bonus shares at a cash
value of $156,840. The following table discloses the particulars of the stock
options granted to Ms. Lim during year ended December 31, 2005:

- 33 -

---

Option/SAR Grants during the Most Recently Completed
Financial Year

Name
    Securities
      Under Options/SARs Granted
    % of Total
      Options/SARs Granted in Financial Year
    Exercise or
      Base Price ($/Security)
    Market Value of
      Securities Underlying Options/SARs on the
      Date of Grant ($/Security)
    Expiry
      DateSandra Lim
    20,000
    20%
    $5.39
    $5.81
    Jan.27/10


The Named Executive Officers did not exercise any options
during the most recently completed financial year. The following table sets out
the financial year-end value of unexercised options, on an aggregated basis,
held by the Named Executive Officers:

Aggregated Option/SAR Exercises during the Most Recently
Completed Financial Year and Financial Year-End Option/SAR Values

Name
    Securities
      Acquired on Exercise (#)
    Aggregate
      Value Realized ($)1
    Unexercised
      Options/SARs at FY-End (#) Exercisable/
      Unexercisable
    Value of
      Unexercised in-the-Money2
      Options/SARs at FY-End ($) Exercisable/
      UnexercisableDavid Strang
    nil
    Nil
    150,000 / 0
    $583,500Robert Pirooz
    nil
    nil
    200,000 / 0
    $1,072,000Sandra Lim
    nil
    nil
    20,000 / 0
    $30,800Leo Hathaway
    nil
    nil
    150,000 / 0
    $88,0003


|1. | Aggregate Value Realized is calculated by determining
      the difference between the market value of the securities underlying the
      options or SARs at the date of exercise and the exercise price of the
      options or SARs and is not necessarily indicative of the value (i.e. loss
      or gain) actually realized by the Named Executive Officer.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | In-the-Money Options means the excess of the market
      value of the Companys shares on December 31, 2005 over the exercise price
      of the options. The closing price of the Companys shares on December 31,
      2005 was $6.93.                                                                                                                       
|3. | Of the 150,000 stock options granted, only 50,000 were
      in-the-Money Options as at December 31, 2005.                                                                                                                                                                                                                                                       

Option and SAR Repricings

There were no repricings of stock options under the Stock
Option Plan or otherwise during the Companys completed financial year ended
December 31, 2005.

Defined Benefit or Actuarial Plan

The Company does not have a defined benefit or actuarial
plan.

Termination of Employment, Change in Responsibilities and
Employment Contracts

Of the Named Executive Officers, only David Strang, the
Companys President, Sandra Lim, its CFO, and Leo Hathaway, its Vice-President,
Exploration, are currently engaged under employment contracts. These contracts
are for an indefinite term and provide for base salary, discretionary bonus and
grant of stock options. See Summary

- 34 -

---

Compensation Table above for details relating to the payments
made to David Strang, Sandra Lim and Leo Hathaway during the Companys completed
financial year ended December 31, 2005.

In addition, the Company has entered into an Executive
Bonus/Retention Agreement with David Strang, which became effective June 21,
2004 and was amended on May 9, 2005. Under the agreement, should Mr. Strang be
in the employ of the Company at such time as the price of the Companys shares
reaches Cdn$8.00 and trades at or above an average of Cdn$8.00 for a period of
five consecutive trading days, the Company will award from its Stock Option Plan
10,000 common shares as a fully-earned bonus. Further, should Mr. Strang be in
the employ of the Company at such time as the earlier of December 31, 2008 or
the date when the Company undertakes a sale of all, or substantially all, of its
assets to an arms-length party, the Company will award from its Stock Option
Plan 34,000 shares as a fully-earned bonus. In addition, provided Mr. Strang is
in the employ of the Company when the Company undertakes a sale in respect of
one or more of its resource properties in a single transaction for a value
greater than US$100,000,000, he shall be awarded 25,000 shares from the
Companys Stock Option Plan as a fully-earned bonus.

Except as otherwise disclosed herein, there are no other
compensatory plans, contracts or arrangements in place with the Named Executive
Officers resulting from the resignation, retirement or any other termination of
employment of the Named Executive Officers with the Company or from a change in
control of the Company or a change in the Named Executive Officers
responsibilities following a change in control, where in respect of the Named
Executive Officers the value of such compensation exceeds $100,000.

Aggregated option/SAR exercises during the most recently
completed financial year and financial year-end option/SAR values

Name
    Securities
      Acquired on Exercise (#)
    Aggregate
      Value Realized ($)1
    Unexercised
      Options/SARs at FY-End (#) Exercisable/
      Unexercisable
    Value of
      Unexercised in-the-Money2
      Options/SARs at FY-End ($) Exercisable/
      UnexercisableDavid Strang
    Nil
    Nil
    150,000 / 0
    583,500Robert Pirooz
    Nil
    Nil
    200,000 / 0
    1,072,000Sandra Lim
    Nil
    Nil
    20,000 / 0
    30,800Leo Hathaway
    Nil
    Nil
    150,000 / 0
    88,0003


|1. | Aggregate Value Realized is calculated by determining
      the difference between the market value of the securities underlying the
      options or SARs at the date of exercise and the exercise price of the
      options or SARs and is not necessarily indicative of the value (i.e. loss
      or gain) actually realized by the Executive Officer.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | In-the-Money Options means the excess of the market
      value of the Companys shares on December 31, 2005 over the exercise price
      of the options. The closing price of the Companys shares on December 31,
      2005 was $6.93.                                                                                                                 
|3. | Of the 150,000 stock options granted, only 50,000 were
      in-the-Money Options as at December 31, 2005.                                                                                                                                                                                                                                                 

Compensation of Directors

The Company has no arrangements, standard or otherwise,
pursuant to which directors are compensated by the Company for their services in
their capacity as directors, or for committee participation, involvement in
special assignments or for services as consultant or expert during the most
recently completed financial year.

None of the Companys directors have received any manner of
compensation for services provided in their capacity as directors during the
Companys most recently completed financial year. However, during the fiscal
year ended December 31, 2005, the Company used the services of directors and
companies owned by directors in order to supervise all geological activities, as
well as provide management and other services. These transactions occurred in
the normal course of operations. In this regard, the Company paid during the
past fiscal year: (i) Floyd Consultants, a sole proprietorship of Anthony Floyd,
the former Chief Executive Officer and President and a current director of

- 35 -

---

the Company, $23,965 for geological consulting services bonus
under the Companys stock option plan; and (ii) Iris Consulting Ltd., a private
company which employs Robert Pirooz, the Chief Executive Officer and Secretary
and a former director of the Company, $41,789 for management services.

Long Term Incentive Plan (LTIP) Awards

The Company does not have LTIP awards pursuant to which cash or
non-cash compensation is intended to serve as an incentive for performance
whereby performance is measured by reference to financial performance or the
price of the Companys securities, was paid or distributed.

Defined Benefit or Actuarial Plan Disclosure

The Company has no defined benefit or actuarial plans.

C.      Board Practices

The Board of Directors of the Company is currently comprised of
Ross Beaty, Ross Cory, Anthony Floyd, Aziz Shariff and John Wright. Each
director of the Company is elected annually and holds office until the next
Annual General Meeting of the Members unless that person ceases to be a director
before then.

The Board of Directors has assigned specific governance
responsibilities to three committees: the Audit Committee, Compensation
Committee, and the Nominating and Governance Committee. Committee members are
appointed annually following the Companys annual general meeting. The following
is a description of the composition and mandate of each of the committees of the
Board of Directors:

Audit Committee

Pursuant to the provisions of section 224 of the BCBCA, the
Company is required to have an Audit Committee, which, at the present time, is
comprised of three independent directors. All members of the Audit Committee are
financially literate. The Company considers Financial Literacy to be the
ability to read and understand a companys fundamental financial statements,
including a companys balance sheet, income statement and a cash flow statement.
The members of the Audit Committee are elected by the Board of Directors at its
first meeting following the annual shareholders meeting to serve one year terms
and are permitted to serve an unlimited number of consecutive terms.

Audit Committee Charter

Mission

Senior management, as overseen by the Board of Directors, has
primary responsibility for the Companys financial reporting, accounting systems
and internal controls. The Audit Committee is a standing committee of the Board
of Directors established to assist the Board of Directors in fulfilling its
responsibilities in this regard.

Composition and Meetings

|(a) | the Audit Committee shall be composed of three
      independent members;                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                           
|(b) | the members of the Audit Committee shall be appointed by
      the Board of Directors to serve one year terms and are permitted to serve
      an unlimited number of consecutive terms;                                  
|    |                                                                                                                                                                                                                           
|(c) | the Audit Committee shall meet at least four times per
      year and any member may call special meetings as required. A quorum at
      meetings of the Audit Committee shall be a majority of members;
  and           
|    |                                                                                                                                                                                                                           
|(d) | the minutes of the Audit Committee meetings shall
      accurately record the decisions reached and shall be distributed to all
      directors with copies to the chief financial officer and the external
      auditor;

- 36 -

---

Responsibilities

Financial Information

Review:

|(a) | the annual financial statements and recommend their
      approval to the Board, after discussing matters such as the selection of
      accounting policies, major accounting judgements, accruals and estimates
      with management;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                         
|(b) | other financial information included in the annual
      report;                                                                                                                                                                        
|    |                                                                                                                                                                                                                                         
|(c) | the Annual Information Form;                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                         
|(d) | Management Discussions and Analysis contained in the
      annual report and quarterly statements, if any;                                                                                                                              
|    |                                                                                                                                                                                                                                         
|(e) | the planning and results of the external audit,
      including:                                                                                                                                                                        
|    |                                                                                                                                                                                                                                         
|    | (i)                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                         
|    | (ii)                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                         
|    | (iii)                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                         
|    | (iv)                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                         
|    | (v)                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                         
|    | (vi)                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                         
|    | (vii)                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                         
|    | (viii)                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                         
|    | (ix)                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                         
|    | (x)                                                                                                                                                                                                                                     

Interim Financial Statements

|(a) | Obtain reasonable assurance on the process for preparing
      reliable quarterly interim financial statements from discussions with
      management and, where appropriate, reports from the external and internal
      auditors.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                     
|(b) | Review, or engage the external auditors to review, the
      quarterly interim financial statements.                                                                                                                                
|    |                                                                                                                                                                                                                                     
|(c) | Obtain reasonable assurance from management about the
      process for ensuring the reliability of other public disclosure documents
      that contain audited and unaudited financial
information.                               

Accounting System and Internal Controls

|(a) | Obtain reasonable assurance from discussions with and(or)
      reports from management, and reports from external and internal auditors
      that the Companys accounting systems are reliable and that the prescribed
      internal controls are operating effectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 37 -

---

|(b) | Direct the auditors examinations to particular
    areas.                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                           
|(c) | Request the auditors to undertake special examinations
      (e.g., review compliance with conflict of interest policies).
|    |                                                                                                                           
|(d) | Review control weaknesses identified by the external and
      internal auditors, together with managements response.    
|    |                                                                                                                           
|(e) | Review the appointments of the chief financial officer
      and key financial executives.                                
|    |                                                                                                                           
|(f) | Review accounting and financial human resources and
      succession planning within the corporation.                     

Statutory Responsibilities

Ensure compliance by the corporation of any regulatory
requirements.

Other Responsibilities

Additional responsibilities to be defined as required, but may
include:

|(a) | reviewing the prospectuses and other offering
      memoranda;                 
|--- | -------------------------------------------------------------------------------
|    |                                                                                
|(b) | monitoring compliance with the corporate code of
      conduct;                
|    |                                                                                
|(c) | investigating fraud, illegal acts or conflicts of
      interest;              
|    |                                                                                
|(d) | discussing selected issues with corporate counsel;
    and                     
|    |                                                                                
|(e) | reviewing compliance with environmental codes of conduct
      and legislation.

Liaison with Other Financial Officer/Audit Committees of
Subsidiary Companies

|(a) | review the mandate and terms of reference of a
      subsidiarys Audit Committee.                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                 
|(b) | review the report(s) of the subsidiarys Audit Committee
      to its Board of Directors.                                                                       
|    |                                                                                                                                                                 
|(c) | follow up, as appropriate, with management, the
      chairperson of the Audit Committee or the audit partner of the subsidiary
      on any matters of concern.

Reporting

|(a) | Report, through the chairperson, to the Board of
      Directors following each meeting on the major discussions and decisions
      made by the Audit Committee.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                  
|(b) | Report annually, through the Board of Directors, to the
      shareholders on the Audit Committees responsibilities and how it has
      discharged them.       
|    |                                                                                                                                                                  
|(c) | Review the Audit Committees terms of reference annually
      and propose recommended changes to the Board of
  Directors.                                      

Regulations

|(a) | The members and the chairperson of the Audit Committee
      shall be appointed by the Board of Directors for a one year term and may
      serve any number of consecutive terms.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 38 -

---

|(b) | The chairperson shall, in consultation with management
      and the auditors, establish the agenda for the meetings and ensure that
      properly prepared agenda materials are circulated to members with
      sufficient time for study prior to the meeting.                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(c) | The Audit Committee shall have the power, authority and
      discretion delegated to it by the Board of Directors which shall not
      include the power to change the membership of or fill vacancies in the
      Audit Committee.                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(d) | The Audit Committee shall conform to the regulations
      which may from time to time be imposed upon it by the Board of
      Directors.                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(e) | The Audit Committee may meet and adjourn, as they think
      proper. Questions arising shall be determined by a majority of votes of
      the members of the Audit Committee present, and in the case of an equality
      of votes, the chairman shall not have a second or casting vote.                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(f) | A resolution approved in writing by the members of the
      Audit Committee shall be valid and effective as if it had been passed at a
      duly called meeting. Such resolution shall be filed with the minutes of
      the proceedings of the Audit Committee and shall be effective on the date
      stated thereon or on the latest date stated in any counterpart.
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(g) | The Audit Committee shall keep regular minutes of its
      meetings and record all material matters and shall cause such minutes to
      be recorded in the books kept for that purpose and shall distribute such
      minutes to the Board of Directors.                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(h) | The Board of Directors shall have the power at any time
      to revoke or override the authority given to or acts done by the Audit
      Committee except as to acts done before such revocation or act of
      overriding and to terminate the appointment or change the membership of
      the Audit Committee or fill vacancies in it as it shall see fit.          
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(i) | A majority of the members of the Audit Committee shall
      constitute a quorum thereof.                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(j) | The Audit Committee shall have unrestricted and
      unfettered access to all Company personnel and documents and shall be
      provided with the resources necessary to carry out its
      responsibilities.                                                                                                                                                           

Composition of the Audit Committee

The Audit Committee is presently composed of Ross Cory, John
Wright and Aziz Shariff, all independent directors. The Chairman of the Audit
Committee is Aziz Shariff. All members of the Audit Committee are financially
literate. The Company considers financial literacy to be the ability to read
and understand a companys fundamental financial statements, including a
companys balance sheet, income statement and a cash flow statement.

Relevant Education and Experience

Each member of the Audit Committee has the ability to perform
his responsibilities as an Audit Committee member based on their education
and/or experience as summarized below:

Aziz Shariff -Mr. Shariff, of Dubai, UAE is an
independent investor and institutional fundraiser operating through a number of
corporations and offices in the United States, Canada and Dubai, Middle East. He
is an advisor to the Dickinson Group of Companies and Hunter Dickinson Inc. (a
Canadian company that operates publicly traded mineral exploration and mine
development companies around the world). Mr. Shariff was a qualified member of
the Institute of Chartered Accountants in England and Wales from 1977 to 1997.
He is a former CEO and President of the Company.

Ross Cory Mr. Cory, of Vancouver, BC, is a Senior
Vice-President of Investment Banking at Raymond James Ltd. As a founding
shareholder of a predecessor firm, Mr. Cory has held various senior executive
positions in the investment industry since 1989 with a primary focus on
providing investment banking services to the mining sector.

- 39 -

---

Mr. Cory is also a director of Lumina Resources Corp. and
Eldorado Gold Corp. Mr. Cory is a graduate of the University of British Columbia
with a Bachelor of Science degree in General Sciences and an MBA in Finance and
International Business.

John Wright Mr. Wright, of Vancouver, BC, is a
Metallurgical Engineer and Honours graduate of Queens University in Ontario. Mr.
Wright is a co-founder, director and former President and Chief Operating
Officer of Pan American Silver Corp. and was co-founder of Equinox Resources.
Mr. Wright is also a director of Northern Peru Copper Corp. and Global Copper
Corp. Previously, he spent 10 years with TeckCominco where he worked at the
Trail Smelter operations and later participated in the management of the
feasibility studies, marketing and mine construction at the Afton, Highmont,
Bull Moose and David Bell Mines.

Audit Committee Oversight

At no time since the commencement of the Companys most recent
completed financial year was a recommendation of the Audit Committee to nominate
or compensate an external auditor not adopted by the Board of Directors.

Compensation Committee

The Company has a Compensation Committee presently comprised of
John Wright and Aziz Shariff, both of whom are unrelated directors for the
purposes of the TSX Policies and independent directors for the purposes of the
AMEX rules. The Chairman of the Compensation Committee is John Wright. The
Compensation Committee determines the salary and benefits of the executive
officers of the Company, determines the general compensation structure, policies
and programs of the Company, administers the Companys stock option plan, and
delivers an annual report to shareholders on executive compensation.

Nominating and Governance Committee

The Nominating and Governance Committee is comprised of two
directors, John Wright and Aziz Shariff, both of whom are unrelated directors
for the purposes of the TSX Policies and independent directors for the purposes
of the AMEX rules. The Chairman of the Nominating and Governance Committee is
John Wright. The Nominating and Governance Committee: oversees the effective
functioning of the Board of Directors; oversees the relationship between the
Board of Directors and management of the Company; ensures that the Board of
Directors can function independently of management at such times as is desirable
or necessary; assists the Board of Directors in providing efficient and
effective corporate governance for the benefit of shareholders; identifies
possible nominees for the Board of Directors; and reviews the qualifications of
possible nominees for, and current members, of the Board of Directors. The
Nominating and Governance Committee also annually reviews and makes
recommendations to the Board of Directors with respect to: (i) the size and
composition of the Board of Directors; (ii) the appropriateness of the
committees of the Board of Directors, their mandates and responsibilities and
the allocation of directors to the committees; (iii) the appropriateness of the
terms of the mandate and responsibilities of the Board of Directors; (iv) the
compensation of the directors of the Company; (v) the directorships held by the
Companys directors and officers in other corporations; (vi) the Companys
nominees on the boards of directors of its subsidiaries and other corporations;
and (vii) the corporate objectives which the President and Chief Executive
Officer of the Company is responsible for meeting, the assessment of the
President and Chief Executive Officer of the Company by the Board of Directors
against these objectives and the appropriateness of the duties and
responsibilities of the President and Chief Executive Officer.

Termination of Employment, Changes in Responsibility and
Employment Contracts

The Company does not have any compensatory plan or arrangement
which will result from the resignation, retirement or other termination of
employment of any Directors and/or member of the Companys administrative,
supervisory or management bodies or from a change of control of the Company or a
change in any of such persons responsibilities following a change of
control.

D.      Employees

- 40 -

---

The Company has two full-time employees being David Strang,
President, who is paid $8,700 per month plus benefits, and Leo Hathaway, Vice
President, Exploration, who is paid $11,000 per month plus benefits.

E.      Share Ownership

The following table lists as of February 28, 2006, the share
ownership, including options and share purchase warrants of all of the Companys
directors and members of its administrative, supervisory and management bodies.
The Company has only one class of shares, common, with no par value and all of
the common shares have the same voting rights.

Name
    Number of Shares
      Held
    Percentage of
      Shares Held(1)
    Number of Stock
      Options Held
    Exercise Price
      ($)
    Expiration DateRoss Beaty
    5,598,301
    25.53%
    50,000
    1.57
    June 8, 2006Ross Cory
    nil
    nil
    80,000
    6.22
    June 17, 2010Anthony Floyd
    200,000
    0.91%
    200,000
    1.57
    June 8, 2008Robert Pirooz
    100,400
    0.46%
    200,000
    1.57
    June 8, 2008John Wright
    58,000
    0.26%
    25,000
    3.80
    December 17, 2008David Strang
    21,000
    0.14%
    150,000
    3.04
    October 17, 2008Sandra Lim
    nil
    nil
    20,000
    5.39
    January 27, 2010Leo Hathaway
    nil
    nil
    100,000 50,000
    7.88 5.17
    April 20, 2009 December 2, 2009


(1)
    The percentage ownership is based on 21,922,442 shares
      outstanding as of February 28, 2006.


None of the above parties hold any warrants to purchase common
shares of the Company.

None of the aforementioned options were issued to officers,
directors or senior management of the Company as part of a compensation
plan.

ITEM 7.      MAJOR SHAREHOLDERS AND
RELATED PARTY TRANSACTIONS

A.      Major Shareholders

As of February 28, 2006, to the best of the Companys
knowledge, the following parties have ownership of 5% or greater of the
Companys common shares, all of which have the same voting rights attached
thereto as all other common shares of the Company:

Name
    Number of Common Shares
      Held
    Percentage of Common
      Shares HeldRoss Beaty
    5,598,301
    25.53%Exploration Capital Partners 2000 Limited
      Partnership (1)and Global Resource Investments Ltd
      (2)acting in concert (3).
    2,075,000
    9.46%


|1. | a Nevada Limited Partnership with 91 limited partners
      none holding 10% or more of the limited partnership units. The General
      Partner is Resource Capital Investments Corporation. Arthur Richards Rule
      is the principal shareholder of the General Partner.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                              
|2. | a Nevada Limited Partnership. All general and limited
      partnership units are owned by Rule Investments Inc. which in turn is
      owned by the Rule Family Trust. Arthur Richards Rule and Bonnie Rule are
      the Trustee and Grantors of the Rule Family Trust.    
|   |                                                                                                                                                                                                                                                                              
|3. | by virtue of the relationship between Arthur Richards
      Rule and both Exploration Capital Partners 2000 Limited Partnership and
      Global Resource Investments Ltd the parties are deemed under Canadian
      securities laws to be acting in concert.               

- 41 -

---

Other than as disclosed above the Company is not aware of any
other company, any foreign government or any other person, jointly or severally,
that directly or indirectly controls the Company. The Company is not aware of
any arrangements the operation of which may at a future date result in a change
in control of the Company.

B.      Related Party
Transactions

The Company paid $65,754 (2004 - $181,700, 2003 - $125,000) for
management and geological consulting services to a director and a company
controlled by a director. As at December 31, 2005 accrued liabilities include
$5,675 (2004 - $56,700, 2003 - nil) of these fees.

The Company shares office and administrative services on a
pro-rata basis commencing on May 19, 2005 with four other companies with certain
directors in common. The Companys share of these expenses is included in office
and administrative expenses. These expenses include $21,897 (2004 - nil, 2003 -
nil) for rental of office premises. Included in receivables is an aggregate of
$59,787 owed by these companies for shared expenses.

The directors, senior officers and principal shareholders of
the Company and associates or affiliates of the foregoing have had no material
interest, direct or indirect, in any transaction in which the Company has
participated within the last three years prior to the date hereof which will
materially affect the Company or any of its subsidiaries, except as stated above
or elsewhere in this Annual Report. See Summary Compensation Table for
information regarding compensation paid to its Named Executive Officers.

C.      Not Applicable

ITEM 8.      FINANCIAL
INFORMATION

A.      Consolidated Statement and
Other Financial Information

See Item 17 for Financial Statements of the Company.

The Company knows of no pending material legal or arbitration
proceedings including those relating to bankruptcy, governmental receivership or
similar proceeding and those involving any third party against it, nor is the
Company involved as a plaintiff in any material pending litigation.

The Company knows of no pending proceedings to which any
director, member of senior management, or affiliate is either a party adverse to
the Company or its subsidiaries or has a material interest adverse to the
Company or its subsidiaries.

To the best of managements knowledge, the Company has not
since the date of its incorporation, declared or paid any dividends, nor does it
intend to declare any dividend for the foreseeable future.

B.      Significant Changes

Since December 31, 2005 the Company has not issued any common
shares or other securities.

ITEM 9.      THE LISTING

A.      Listing Details and
Markets

The Common Shares of the Company were originally listed on the
TSX-V under the symbol LUM. Effective July 14, 2004 the Company delisted its
shares from the TSX-V and listed on the TSX under the symbol RLO. The Common
Shares of the Company were called for trading on the AMEX as LCC on May 10,
2004. On July 14, 2005 the shares commenced trading on TSX under the symbol
RLO.

The following table sets out the market price range of the
Common Shares on the various exchanges for each full quarterly period within
each of the calendar years indicated:

- 42 -

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High
      Low
      TradingMarket Prices
      ($)
      ($)
      VolumeAnnual High and Low2005
      9.80
      5.10
      8,792,6162004
      9.20
      4.30
      5,217,4642003
      4.55
      1.00
      1,873,5682002
      0.50
      0.08
      12,3182001
      0.60
      0.17
      2,936Quarterly High and Low20054thQuarter
      7.25
      5.90
      1,941,0673rdQuarter
      7.40
      5.10
      1,105,7592ndQuarter
      8.55
      5.67
      1,557,5711stQuarter
      9.80
      5.25
      3,188,12920044thQuarter
      6.10
      4.70
      957,0833rdQuarter(1)
      5.25
      4.51
      738,1302ndQuarter
      9.20
      4.10
      1,546,0131stQuarter
      8.00
      3.20
      2,068,758Most Recent Six MonthsFebruary 2006
      6.78
      5.82
      386,434January 2006
      7.72
      6.45
      907,118December 2005
      7.08
      6.05
      1,789,992November 2005
      6.52
      5.90
      669,050October 2005
      7.25
      6.18
      482,025September 2005
      7.40
      6.33
      459,285


|(1) | The Companys shares traded on the TSX.V from July 1 to
      July 13, 2004. On July 14, 2004 the Companys shares were delisted from
      the TSX.V and commenced trading on the TSX.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets out the market price range of the
Common Shares in US$ on AMEX for the periods shown:

High
      Low
      TradingMarket Prices
      (US$)
      (US$)
      VolumeQuarterly High and Low20054thQuarter
      6.17
      5.10
      1,308,2003rdQuarter
      6.25
      4.21
      2,051,2002ndQuarter
      7.05
      4.85
      1,726,4001stQuarter
      8.15
      4.30
      4,196,80020044thQuarter
      4.89
      3.85
      1,555,8003rdQuarter
      4.10
      3.50
      828,9002ndQuarter(1)
      4.55
      3.10
      405,4001stQuarter
      N/A
      N/A
      N/AMost Recent Six MonthsFebruary 2006
      5.90
      5.09
      421,000January 2006
      6.69
      5.64
      585,300December 2005
      6.14
      5.15
      495,400November 2005
      5.53
      5.10
      215,400October 2005
      6.17
      5.20
      589,000September 2005
      6.25
      5.36
      906,000


|(1) | The Companys commenced trading on AMEX on May 10,
      2004.
|--- | --------------------------------------------------------------

- 43 -

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B.      Plan Of
Distribution

Not Applicable

C.      Markets

The Companys Common Shares are listed and traded in Canada on
the TSX under the symbol RLO. In addition, the Companys Common Shares are
listed and traded on the AMEX under the symbol RLO.

ITEM 10.     ADDITIONAL
INFORMATION

A.      Share Capital

Not applicable

B.      Memorandum and Articles of
Incorporation

The Company was incorporated by registration of its Memorandum
and Articles under the BC Act on March 3, 2000 under the name First Trimark
Ventures Inc.. On May 23, 2003 the Company changed its name to Lumina Copper
Corp. On May 19, 2005 the Company changed its name to Regalito Copper Corp.

On March 29, 2004, the new BCBCA came into force in British
Columbia and replaced the former British Columbia Company Act. The Company filed
a transition application with the Registrar of Companies, British Columbia and
completed the transition from the BC Act to the BCBCA on June 14, 2004.

Highlights of the Companys new Articles

The Companys objects and purposes as set forth in the
Companys Articles:

The Companys Articles are silent as to the Companys objects
and purposes.

Number of shares, if any, required for
qualification:

A director is not required to hold shares issued by the
Corporation.

Borrowing Power of the directors:

The Board may without authorization of the Shareholders:

|(a) | borrow money on the credit of the Company;                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | issue, reissue, sell or pledge debt obligations of the
      Company;                                                                                                                                        
|(c) | guarantee on behalf of the Company to secure performance
      of an obligation of any person; and                                                                                                           
|(d) | mortgage, charge, by specific or floating charge, grant a
      security interest in or give other security on, the whole or any part of
      the present or future assets and undertaking of the
  Company.

Remuneration and Expenses of the directors:

The directors are entitled to remuneration for acting as
directors if the directors so determine. If the directors so decide, such
remuneration, if any, will be determined by the Companys shareholders. That
remuneration may be in addition to any salary or other remuneration paid to any
officer or employee of the Company, as such, who is also a director.

The Company must reimburse each director for reasonable
expenses incurred in and about the business of the Company.

- 44 -

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Directors may be paid special remuneration fixed by the
directors, or, at the option of that director, fixed by ordinary resolution, if
he or she performs any professional or other services for the Company that in
the opinion of the directors are outside the ordinary duties of a director, and
such remuneration may be in addition to or substitution for, any other
remuneration paid to such director.

Conflict of Interest:

A director or senior officer who holds any office or possesses
any property, right or interest that could result, directly or indirectly, in
the creation of a duty or interest that materially conflicts with that
individuals duty or interest as a director or senior officer, must disclose the
nature and extent of the conflict. A director who holds such a disclosable
interest in a contract or transaction in which the Company is involved is not
entitled to vote on any directors resolution to approve that contract or
transaction unless all of the directors have a disclosable interest in such
contract or transaction, in which case any or all of those directors may vote on
such resolution.

Age of Directors:

A director must be at least 18 years of age; there is no upper
age limitation requirement for directors in the Companys Articles.

Rights, preferences and restrictions attaching to each class
of shares:

Common Shares

The Common Shares of the Company shall have attached to them
the following special rights and restrictions:

|(a) | Voting: Each holder shall be entitled to receive
      notice of and attend all shareholder meetings of the Company and shall
      have one vote for each Common Share held at all shareholder meeting except
      those at which only holders of another specified class or series of shares
      of the Company are entitled to vote separately as a class or
  series.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                             
|(b) | Dividends:Subject to the rights and restrictions
      attached to any other class of shares of the Company, the holders of
      Common Shares are entitled to dividends if and when declared by the
      directors of the Company, in such amount and in such form as the directors
      may from time to time determine.                                               
|    |                                                                                                                                                                                                                                                                                                                                                                             
|(c) | Liquidation, Dissolution or Winding-Up: Subject to
      the rights and restrictions attached to any other class of shares of the
      Company, the holders of Common Shares are entitled to share equally in the
      remaining property of the Company upon liquidation, dissolution or
      winding-up of the Company.                                                

Meetings of Shareholders:

Annual Meeting: The Company must hold an annual general
meeting once in each calendar year and not more than 15 months after the last
annual meeting date at a time and place determined by the directors. If all
shareholders entitled to vote at an annual general meeting consent by unanimous
resolution to all business that is required to be transacted at that annual
general meeting, then the annual general meeting shall be deemed to have been
held on the date of such unanimous resolution.

Special Meetings: The directors may at any time call a
special meeting of shareholders.

Quorum:The quorum required for the transaction
of business at a shareholders meeting is one person who is or represents by
proxy one or more shareholders who, in the aggregate, at least 5% of the issued
shares entitled to be voted at the meeting.

Special Majority: The majority of votes required for the
Company to pass a special resolution at a meeting of shareholders if two-thirds
(2/3) of the votes cast on the resolution.

Casting Vote: In case of an equality of votes, the
chairman of the meeting shall have the casting vote.

- 45 -

---

Description of Share Capital:

Common Shares

The Companys authorized to issue an unlimited number of Common
Shares without par value. As of February 28, 2006 a total of 21,922,442 Common
Shares were issued and outstanding. Holders of the Companys Common Shares do
not have rights to share in the profits of the Company. There are no redemption
or sinking fund provisions with respect to the Companys Common Shares. Common
shareholders have no liability as to further capital calls by the Company. There
are no provisions discriminating against any existing or prospective holder of
the Companys Common Shares as a result of such shareholder owning a substantial
number of the Companys Common Shares. Holders of the Companys Common Shares do
not have pre-emptive rights.

Changes to rights and restrictions of shares

In order to change the rights of holders of a class of the
Company's stock, a vote of at least two-thirds of the issued and outstanding
shares of that class is required.

Dividend record

The Company has not paid any dividends on its common shares and
has no policy with respect to the payment of dividends.

Ownership of securities and change of control

There are no limitations on the rights to own securities,
including the rights of non-resident or foreign shareholders to hold or exercise
voting rights on the securities imposed by foreign law or by the constituent
documents of the Company.

Any person who beneficially owns or controls, directly or
indirectly, more than 10% of the Company's voting shares is considered an
insider, and must file an insider report with the British Columbia, Alberta and
Ontario Securities Commissions within ten days of becoming an insider disclosing
any direct or indirect beneficial ownership of, or control over direction over
securities of the Company. In addition, if the Company itself holds any of its
own securities, the Company must disclose such ownership.

There are no provisions in the Companys Articles that would
have an effect of delaying, deferring or preventing a change in control of the
Company operating only with respect to a merger, acquisition or corporate
restructuring involving the Company or its subsidiary.

Differences from requirements in the United States

Except for the Companys quorum requirements and certain
requirements related to related party transactions discussed above, there are no
significant differences in the law applicable to the Company, in the areas
outlined above, in Canada versus the United States. In most states in the United
States, a quorum must consist of a majority of the shares entitled to vote. Some
states allow for a reduction of the quorum requirements to less than a majority
of the shares entitled to vote. Having a lower quorum threshold may allow a
minority of the shareholders to make decisions about the Company, its management
and operations.

C.      Material Contracts

Other than contracts described elsewhere in this Annual Report
there are no contracts that may be regarded as presently material.

D.      Exchange Controls

- 46 -

---

There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to a non-resident holder of Common Shares,
other than withholding tax requirements. See Item 10(D)  Taxation.

There is no limitation imposed by Canadian law or by the
constituent documents of the Company on the right of a non-resident to hold or
vote Common Shares, other than are provided in the Investment Canada Act
(Canada) (the ICA). The following summarizes the principal features of the
ICA.

The ICA requires certain non-Canadian individuals,
governments, corporations or other entities who wish to acquire a Canadian
business (as defined in the ICA), or establish a new Canadian business (as
defined in the ICA) to file either a notification or an application for review
with a governmental agency known as Investment Canada. The ICA requires that
certain acquisitions of control by a Canadian business by a non-Canadian must
be reviewed and approved by the Minister responsible for the ICA on the basis
that the Minister is satisfied that the acquisition is likely to be of net
benefit to Canada, having regard to criteria set forth in the ICA. Only
acquisitions of control rules for the determination of whether control has been
acquired and, pursuant to those rules, the acquisition of one-third or more of
the voting shares of a corporation may, in some circumstances, be considered to
constitute an acquisition of control. Certain reviewable acquisitions of control
may not be implemented before being approved by the Minister; if the Minister
does not ultimately approve a reviewable acquisition which has been completed,
the acquired Canadian business would be divested. Failure to comply with the
review provisions of the ICA could result in, among other things, an injunction
or a court order directing disposition of assets or shares.

E.      Taxation

Material Canadian Federal Income Tax Consequences

Management of the Company considers that the following
discussion describes the material Canadian federal income tax consequences
applicable to a holder of Common Stock of the Company who is a resident of the
United States and who is not a resident of Canada and who does not use or hold,
and is not deemed to use or hold, his shares of Common Stock of the Company in
connection with carrying on a business in Canada (a "non-resident shareholder").

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

Dividends

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

Capital Gains

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

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

- 47 -

---

| | (c) | the non-resident holder and persons with whom the
      non-resident holder did not deal with at arms
length,
| | --- | -------------------------------------------------------------------------------------------------------------

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

Material United States Federal Income Tax
Considerations

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

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

U.S. Holders

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

Distributions on Shares of Common Stock

Subject to the passive foreign investment company rules
discussed below, for cash dividends, the gross amount of any such distribution
(other than in liquidation) that you receive with respect to our common shares
generally will be taxed to you as dividend income to the extent such
distribution does not exceed our current or accumulated earnings and profits
(E&P), as calculated for U.S. federal income tax purposes. Such income
will be includable in your gross income as ordinary income on the date of
receipt, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder's United States federal income tax
liability or, alternatively, may be deducted in computing the U.S. Holder's
United States federal taxable income by those who itemize deductions. (See more
detailed discussion at "Foreign Tax Credit" below.)

Under the tax law recently enacted in the United States,
dividends received by individuals in their tax years beginning on January 1,
2003 from qualified foreign corporations are taxed at the rate of 5% (zero, in
2008) or 15%, depending upon the particular taxpayers U.S. federal income tax
bracket. This law sunsets after December 31, 2008, at which time dividends will
be taxed at the ordinary income tax rates of up to 35%. A foreign corporation is

- 48 -

---

a qualified foreign corporation with respect to its stock
that is traded on an established securities market in the United States,
provided that the foreign corporation is not a passive foreign investment
company, as defined under the U.S federal income tax law.

To the extent any distribution exceeds our E&P, the
distribution will first be treated as a tax-free return of capital to the extent
of your adjusted tax basis in our common shares and will be applied against and
reduce such basis on a dollar-for-dollar basis (thereby increasing the amount of
gain and decreasing the amount of loss recognized on a subsequent disposition of
such shares). To the extent that such distribution exceeds your adjusted tax
basis, the distribution will be taxed as gain recognized on a sale or exchange
of our common shares. Preferential tax rates for long-term capital gains are
applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains or a U.S. Holder
which is a corporation.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of the Company's common stock
may be entitled, at the option of the U.S. Holder, to either a deduction or a
tax credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayer's income subject to tax. This election is made on a year-by-year basis
and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
during that year.

Subject to certain limitations, Canadian taxes withheld will be
eligible for credit against the U.S. Holder's United States federal income
taxes. Under the Code, the limitation on foreign taxes eligible for credit is
calculated separately with respect to specific classes of income. Dividends paid
by the Company generally will be either "passive" income or "financial services"
income, depending on the particular U.S. Holder's circumstances. Foreign tax
credits allowable with respect to each class of income cannot exceed the U.S.
federal income tax otherwise payable with respect to such class of income. The
consequences of the separate limitations will depend on the nature and sources
of each U.S. Holder's income and the deductions appropriately allocated or
apportioned thereto. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific and holders and
prospective holders of common stock are advised to consult their own tax
advisors regarding their individual circumstances.

Disposition of Shares of Common Stock

A U.S. Holder will recognize gain or loss upon the sale of
shares of common stock equal to the difference, if any, between

| | (a) | the amount of cash plus the fair market value of any
      property received; and
| | --- | ---------------------------------------------------------------------------------
| | (b) | the shareholder's tax basis in the common
  stock.                               

This gain or loss will be capital gain or loss if the shares
are a capital asset in the hands of the U.S. Holder, and such gain or loss will
be long-term capital gain or loss if the U.S. Holder has held the common stock
for more than one year. Gains and losses are netted and combined according to
special rules in arriving at the overall capital gain or loss for a particular
tax year. Deductions for net capital losses are subject to significant
limitations. For U.S. Holders who are individuals, any unused portion of such
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders which are corporations
(other than corporations subject to Subchapter S of the Code), an unused net
capital loss may be carried back three years from the loss year and carried
forward five years from the loss year to be offset against capital gains until
such net capital loss is thereby exhausted.

Other Considerations

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

- 49 -

---

If more than 50% of the voting power or value of the Company
were owned (actually or constructively) by U.S. Holders who each owned (actually
or constructively) 10% or more of the voting power of the Company's common
shares (10% Shareholders), then the Company would become a CFC and each 10%
Shareholder would be required to include in its taxable income as a constructive
dividend an amount equal to its share of certain undistributed income of the
Company.

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

If the Company were to be a PFIC, then a U.S. Holder would be
required to pay an interest charge together with tax calculated at maximum tax
rates on certain "excess distributions" (defined to include gain on the sale of
stock) unless such U.S. Holder made an election either to (1) include in his or
her taxable income certain undistributed amounts of the Company's income or (2)
mark to market his or her Company common shares at the end of each taxable year
as set forth in Section 1296 of the Code.

F.      Dividends and paying
agents

Not Applicable

G.      Statements by
Experts

Not Applicable

H.      Documents on
Display

The Company is a reporting company under the Act and is a
foreign private issuer as defined in the Exchange Act. A foreign private
issuer is exempt from the provisions of the Act which prescribe the furnishing
and content of proxy statements to shareholders and relating to short swing
profits reporting and liability. Readers may review a copy of the Companys
filings with the SEC, including exhibits and schedules filed with it, at the
SECs public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Readers may also obtain copies of such
materials from the Public Reference Section of the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Readers may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. The SEC maintains a Web site (http://www.sec.gov) that contains
reports, submissions and other information regarding registrants that file
electronically with the SEC. The Company has only recently become subject to the
requirement to file electronically through the EDGAR system most of its
securities documents, including registration statements under the Act, as
amended and registration statements, reports and other documents under the Act,
as amended.

The Company is required to file financial statements and other
information with the Securities Commissions in the Provinces of British
Columbia, Alberta and Ontario, electronically through the Canadian System for
Electronic Document Analysis and Retrieval (SEDAR) which can be viewed at
www.sedar.com.

The Documents concerning the Company which are referred to in
this Annual Report are either annexed hereto as exhibits (See Item 19) or
may be inspected at the principal offices of the Company.

ITEM 11.     QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A.      Qualitative Information
about Market Risk

Currency Exchange Rate Sensitivity

The results of the Companys operations are subject to currency
transnational risk and currency transaction risk. Regarding currency
transnational risk, the operating results and financial position of the Company
and Companys subsidiaries are reported in Canadian dollars in the Companys
consolidated financial statements. The fluctuation of

- 50 -

---

the US dollar in relation to the Canadian dollar will therefore
have an impact upon the profitability of the Company and may also affect the
value of the Companys assets and the amount of shareholders equity.

In regards to transaction risk, the Companys functional
currency is the Canadian dollar and its activities are predominantly executed
using the Canadian dollar. The Company incurs a relatively small portion of its
expenses in U.S. dollars. The Company has not entered into any agreements or
purchased any instruments to hedge any possible currency risks at this time.

Interest Rate Sensitivity

The Company currently has no short term or long term debt
requiring interest payments. As a result, the Company has not entered into any
agreement or purchased any instrument to hedge against possible interest rate
risks at this time.

Commodity Price Sensitivity

The future revenue and profitability of the Company will be
dependent, to a significant extent, upon prevailing spot market prices for
copper/gold. In the past copper/gold prices have been volatile. Prices are
subject to wide fluctuations in response to changes in supply of and demand for
copper/gold, market uncertainty and a variety of additional factors that are
beyond the control of the Company. The Companys Regalito property is in the
exploration and development phase and accordingly the Company is not generating
any operating revenues and is therefore not subject to any short term volatility
in the prices of copper/gold. As the Company is in the exploration and
development phase, the above factors have had no material impact on operations
or income. No futures or forward contracts have been entered into by the
Company.

PART II

ITEM 12.     DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES

None

ITEM 13.     DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES

None

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

None

ITEM 15.     CONTROLS AND
PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Companys President and Chief Financial Officer have
evaluated the effectiveness of the Company's disclosure controls and procedures
(as such term is defined in Rules 13a-15 and 15d-15 under the Act), amended as
of the end of the period covered by this annual report (the "Evaluation Date").
Based on such evaluation, such officers have concluded that, as of the
Evaluation Date, the Company's disclosure controls and procedures are effective
in alerting them on a timely basis to material information relating to the
Company required to be included in our reports filed or submitted under the
Act.

Changes in Internal Controls Over Financial
Reporting

The Companys management is responsible for establishing and
maintaining adequate internal control over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.

- 51 -

---

In November, 2005, the Company identified certain material
weaknesses in its internal controls over financial reporting, as defined in
Public Company Accounting Oversight Board (PCAOB), Auditing Standard No. 2. As
defined by the PCAOB, a material weakness is a significant deficiency, or a
combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.

The following material weaknesses in the Companys internal
over financial reporting have been indentified:

| | 1) | There is a lack of segregation of duties with respect to
      the preparation of GAAP financial statements in that the individual
      responsible for preparing the financial statements was also responsible
      for certain operational and monitoring controls pertaining to the
      preparation of those financial statements; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                              
| | 2) | Financial results presented in regulatory reports were
      not independently compared to information in the accounting
  records.                                                                                                                                                                                                          

The Company has compensating controls to mitigate the above
weaknesses in that the financial statements are reviewed on a regular basis, and
before public dissemination, by the audit committee composed of directors who
are financially literate.

The material weaknesses were identified by the Companys
independent registered Chartered Accountants during the course of their audit of
the financial statements for the year ended December 31, 2005. The auditors did
not rely on the Companys system of internal controls in order to form their
opinion, although they did review these controls as required as part of their
audit. An unqualified opinion on the Companys annual consolidated financial
statements included herein was issued by the Companys independent registered
public accounting firm which confirmed that the annual consolidated financial
statements have been prepared in accordance with Canadian and U.S. GAAP and
present fairly, in all material respects, the Companys consolidated financial
position, results of operations and cash flows.

The Company has implemented the following control procedures in
order to address the weaknesses identified:

| | 1) | engaged an outside accountant, with the designation of
      Chartered Accountant, to review the interim consolidated financial
      statements for accordance with GAAP, prior to the statements being filed;
      and                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                             
| | 2) | reassigned certain duties between the Companys
      accountant and CFO to provide for an independent trace of information
      presented in the consolidated financial statements and other regulatory
      reports to the accounting and other records.

The material weaknesses identified above did not relate to
fraud or require any change to the Companys Canadian GAAP accounts.

During the most recent fiscal year, there have not been any
changes, other than those disclosed above, in the Companys internal controls
over financial reporting or in other factors that have materially affected, or
are reasonably likely to materially affect, the Companys internal controls over
financial reporting.

ITEM 16A:   AUDIT COMMITTEE FINANCIAL
EXPERT

All of the members of the Audit Committee are financially
literate and the Board has determined that Aziz Shariff of the Audit Committee
meets the requirements of an audit committee financial expert as defined in
Item 16A of the Form 20F.

ITEM 16B:   CODE OF ETHICS

The Company has a code of ethics that applies to all the Companys
  Officers, including the President and the Chief Financial Officer. A copy of
  the code of ethics was filed as an exhibit to the Company annual report for
  the year ended 2003.

- 52 -

---

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Grant Thornton LLP acted as the Companys independent auditor
for the fiscal periods ended December 31, 2005, 2004, 2003, 2002 and 2001. The
chart below sets forth the total amount billed the Company by Grant Thornton LLP
for services performed in the years 2005 and 2004 and breaks down these amounts
by category of service in Canadian Dollars:

Year 2005
      ($)
    Year 2004
      ($)Audit
    40,000
    65,900Audit Related
    nil
    9,000Tax
    15,200
    22,100All Other Fees
    nil
    nil


Audit Fees are the aggregate fees billed by Grant Thornton
LLP for the audit of the Companys consolidated annual financial statements,
reviews of interim financial statements, attestation services that are provided
in connection with statutory and regulatory filings or engagements and
assistance in responding to comment letters from securities regulatory bodies
and consultations with the Companys management as to accounting or disclosure
treatment of transactions or events and/or the actual or potential impact of
final or proposed rules, standards or interpretation by the securities
regulatory authorities, accounting standard vetting bodies or other regulatory
or standard setting bodies.

Audit-Related Fees are fees charged by Grant Thornton LLP for
assurance and related services that are reasonably related to the performance of
the audit or review of the Companys financial statements and are not reported
under Audit Fees. This category comprises fees billed for independent
accountant review of the interim financial statements and Management Discussion
and Analysis, as well as advisory services associated with the Companys
financial reporting.

Tax Fees are fees for professional services rendered by Grant
Thornton LLP for tax compliance and tax advice on actual or contemplated
transactions.

Audit Committees pre-approval policies and procedures

The Audit Committee nominates and engages the independent
auditors to audit the financial statements, and approves all audit,
audit-related services, tax services and other services provided by Grant
Thornton LLP. Any services provided by Grant Thornton that are not specifically
included within the scope of the audit must be pre-approved by the Audit
Committee prior to any engagement. The Audit Committee is permitted to approve
certain fees for audit-related services, tax services and other services
pursuant to a de minimusexception before the completion of the
engagement.

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

Not Applicable

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

None

PART III

- 53 -

---

ITEM 17.      FINANCIAL
STATEMENTS

The consolidated financial statements of the Company have been
prepared on the basis of Canadian GAAP. A reconciliation to U.S. GAAP is
included therein.

The auditors report, financial statements and notes thereto
and schedules thereto as required under Item 17 are found immediately below.

Financial Statements of the Company:

Report of Independent Auditors dated February 27, 2006, with
the exception of Note 15 to the consolidated financial statements, which is
dated March 13, 2006.

Comment by Auditors for U.S. Readers on Canada - U.S. Reporting
Difference

Audited Consolidated Balance Sheets as of December 31, 2005 and
2004

Audited Consolidated Statements of Operation and Deficit for
the cumulative period from inception (October 3, 2001) to December 31, 2005, the
Fiscal Years Ended December 31, 2005, 2004 and 2003.

Audited Consolidated Statement of Cash Flows for the cumulative
period from inception (October 3, 2001) to December 31, 2005, the Fiscal Years
Ended December 31, 2005, 2004 and 2003.

Audited Consolidated Statement of Changes in Shareholders
Equity.

Notes to the Audited Consolidated Financial Statements for the
Fiscal Periods Ended December 31, 2005, 2004 and 2003.

All other financial statement schedules are omitted because the
  information is not required, is not material or is otherwise included in the
  financial statements or related notes thereto.

- 54 -

---



(formerly Lumina Copper Corp.)

(A Development Stage Enterprise)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005 AND 2004





F-1

|TSX  AMEX : RLO | www.regalitocopper.com
|---------------- | ----------------------

---

|                                                                                | 
|------------------------------------------------------------------------------- | 
|**Grant Thornton LLP
      Chartered Accountants
      Management Consultants** | 

Report of Independent Registered Chartered Accountants

To the Shareholders of Regalito Copper Corp. (formerly Lumina
  Copper Corp.)

We have audited the consolidated balance sheets of Regalito Copper
  Corp. (formerly Lumina Copper Corp.) (A Development Stage Enterprise),
  as at December 31, 2005 and 2004 and the consolidated statements of operations
  and deficit, cash flows and changes in shareholders equity for the years
  ended December 31, 2005, 2004 and 2003, and for the cumulative period from inception
  (October 3, 2001) to December 31, 2005. 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 audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States) and in accordance
  with auditing standards generally accepted in Canada. Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. The Company is not
  required to have, nor were we engaged to perform an audit of its internal control
  over financial reporting. Our audits included consideration of internal control
  over financial reporting as a basis for designing audit procedures that are
  appropriate in the circumstances, but not for the purpose of expressing an opinion
  on the effectiveness of the Companys internal control over financial reporting.
  Accordingly, we express no such opinion. An audit also includes examining, on
  a test basis, evidence supporting the amounts and disclosures in the financial
  statements, assessing the accounting principles used and significant estimates
  made by management, as well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in
  all material respects, the financial position of the Company as at December
  31, 2005 and 2004 and the results of its operations and its cash flows for the
  years ended December 31, 2005, 2004 and 2003 and for the cumulative period from
  inception (October 3, 2001) to December 31, 2005 in accordance with Canadian
  generally accepted accounting principles.



|Vancouver, Canada                       | Independent Registered
|--------------------------------------- | ----------------------
|February 27, 2006 except as to Note 15, | Chartered Accountants 
|which is as at March 13, 2006           |                       

Comment by Independent Registered Chartered Accountants for
  US Readers on Canada  US Reporting Differences

The standards of the Public Company Accounting Oversight Board
  (United States) require the addition of an explanatory paragraph (following
  the opinion paragraph) when there is a change in accounting principles that
  has a material effect on the comparability of the Companys financial statements,
  such as the change described in Note 14(b) to the financial statements or when
  the financial statements are affected by conditions and events that cast substantial
  doubt on the Companys ability to continue as a going concern, such as
  those described in Note 1 to the consolidated financial statements. Our report
  to the shareholders dated February 27, 2006, is expressed in accordance with
  Canadian reporting standards which do not require a reference to such a change
  in accounting principles nor permit a reference to such events and conditions
  in the report of the independent registered Chartered Accountants when the change
  is properly accounted for and the events and conditions are adequately disclosed
  in the financial statements.



|Vancouver, Canada                       | Independent Registered
|--------------------------------------- | ----------------------
|February 27, 2006 except as to Note 15, | Chartered Accountants 
|which is as at March 13, 2006           |                       

P.O. Box 11177, Royal CentreSuite 28001055 West Georgia StreetVancouver, BC V6E 4N3T (604) 687-2711F (604) 685-6569E Vancouver@GrantThornton.caW www.GrantThornton.ca

Canadian Member of Grant Thornton International

F-2

---

REGALITO COPPER CORP.(formerly Lumina Copper Corp.)(A Development Stage Enterprise)

CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004

|                                                |   | 2005       |   |   | 2004       |  
|----------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                |   |            |   |   |            |  
|ASSETS                                          |  
|CURRENT ASSETS                                  |   |            |   |   |            |  
|Cash and
      cash equivalents                 | $ | 1,374,477  |   | $ | 1,092,038  |  
|Cash, exploration funds (Note
      12)         |   | -          |   |   | 2,135,000  |  
|Receivables                                     |   | 84,941     |   |   | 17,449     |  
|Prepaid expenses                                |   | 53,512     |   |   | 42,480     |  
|                                                |   |            |   |   |            |  
|TOTAL CURRENT ASSETS                            |   | 1,512,930  |   |   | 3,286,967  |  
|                                                |   |            |   |   |            |  
|PROPERTY AND EQUIPMENT (Note 3)                 |   | 101,901    |   |   | 58,697     |  
|                                                |   |            |   |   |            |  
|MINERAL PROPERTIES
      (Note 4)               |   | 16,702,048 |   |   | 17,324,715 |  
|                                                |   |            |   |   |            |  
|TOTAL ASSETS                                    | $ | 18,316,879 |   | $ | 20,670,379 |  
|                                                |   |            |   |   |            |  
|LIABILITIES                                     |  
|                                                |   |            |   |   |            |  
|CURRENT LIABILITIES                             |   |            |   |   |            |  
|Accounts
      payable                          | $ | 134,639    |   | $ | 321,633    |  
|Accrued liabilities                             |   | 514,064    |   |   | 182,470    |  
|                                                |   |            |   |   |            |  
|TOTAL LIABILITIES                               |   | 648,703    |   |   | 504,103    |  
|                                                |   |            |   |   |            |  
|SHAREHOLDERS EQUITY                            |  
|                                                |   |            |   |   |            |  
|SHARE CAPITAL (Note 6)                          |   | 24,263,820 |   |   | 24,476,047 |  
|                                                |   |            |   |   |            |  
|CONTRIBUTED SURPLUS (Note 7)                    |   | 1,540,116  |   |   | 2,279,541  |  
|                                                |   |            |   |   |            |  
|DEFICIT ACCUMULATED DURING THE                  |   |            |   |   |            |  
|DEVELOPMENT STAGE                               |   | (8,135,760 | ) |   | (6,589,312 | )
|                                                |   |            |   |   |            |  
|TOTAL SHAREHOLDERS EQUITY                      |   | 17,668,176 |   |   | 20,166,276 |  
|                                                |   |            |   |   |            |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY      | $ | 18,316,879 |   | $ | 20,670,379 |  
|                                                |   |            |   |   |            |  
|Nature of operations and going concern (Note 1) |   |            |   |   |            |  
|Subsequent event (Note 15)                      |   |            |   |   |            |  

APPROVED BY THE DIRECTORS

|Anthony
      Floyd | 
|--------------------- | 
|Director              | 
|                      | 
|Ross Beaty          | 
|Director              | 

See Accompanying Notes to the Consolidated Financial Statements

F-3

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REGALITO COPPER CORP.(formerly Lumina Copper Corp.)(A Development Stage Enterprise)

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

|                                           |   | For the        |   |   |              |   |   |              |   |   |              |  
|------------------------------------------ | - | -------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                           |   | Cumulative     |   |   |              |   |   |              |   |   |              |  
|                                           |   | Period         |   |   |              |   |   |              |   |   |              |  
|                                           |   | from Inception |   |   |              |   |   |              |   |   |              |  
|                                           |   | (October 3,    |   |   | For the      |   |   | For the      |   |   | For the      |  
|                                           |   | 2001) to       |   |   | Year Ended   |   |   | Year Ended   |   |   | Year Ended   |  
|                                           |   | December 31,   |   |   | December 31, |   |   | December 31, |   |   | December 31, |  
|                                           |   | 2005           |   |   | 2005         |   |   | 2004         |   |   | 2003         |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|GENERAL AND ADMINISTRATIVE                 |   |                |   |   |              |   |   |              |   |   |              |  
|EXPENSES                                   |   |                |   |   |              |   |   |              |   |   |              |  
|Stock-based compensation
      (Note 6(e)) | $ | 5,242,730      |   | $ | 657,645      |   | $ | 677,630      |   | $ | 582,387      |  
|Investor relations and promotion           |   | 797,362        |   |   | 313,693      |   |   | 349,227      |   |   | 134,442      |  
|Office and administration                  |   | 435,818        |   |   | 194,195      |   |   | 136,355      |   |   | 103,576      |  
|Management and consulting services         |   | 509,201        |   |   | 169,535      |   |   | 190,167      |   |   | 149,499      |  
|Regulatory and transfer
      agent fees   |   | 379,072        |   |   | 122,179      |   |   | 183,850      |   |   | 67,393       |  
|Audit and accounting                       |   | 410,080        |   |   | 98,930       |   |   | 166,322      |   |   | 124,828      |  
|Legal                                      |   | 294,197        |   |   | 53,807       |   |   | 132,007      |   |   | 101,401      |  
|Corporate development                      |   | 172,483        |   |   | 46,426       |   |   | 107,313      |   |   | 18,744       |  
|Amortization                               |   | 43,820         |   |   | 25,826       |   |   | 12,416       |   |   | 5,578        |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|                                           |   | 8,284,763      |   |   | 1,682,236    |   |   | 1,955,287    |   |   | 1,287,848    |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|OTHER INCOME (EXPENSE)                     |   |                |   |   |              |   |   |              |   |   |              |  
|Interest income                            |   | 206,602        |   |   | 80,235       |   |   | 80,226       |   |   | 46,141       |  
|Interest expense                           |   | (36,061        | ) |   | -            |   |   | -            |   |   | (36,061      | )
|Mineral property written-off               |   | (49,491        | ) |   | -            |   |   | -            |   |   | (49,491      | )
|Property investigations                    |   | (51,616        | ) |   | (890         | ) |   | (36,658      | ) |   | (14,068      | )
|Foreign exchange gain (loss)               |   | (97,028        | ) |   | (120,154     | ) |   | (64,184      | ) |   | 84,753       |  
|Reorganization (Note 1)                    |   | (498,698       | ) |   | (498,698     | ) |   | -            |   |   | -            |  
|Flow-through
      share taxes             |   | (84,765        | ) |   | (84,765      | ) |   | -            |   |   | -            |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|                                           |   | (611,057       | ) |   | (624,272     | ) |   | (20,616      | ) |   | 31,274       |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|NET LOSS BEFORE FUTURE                     |   |                |   |   |              |   |   |              |   |   |              |  
|INCOME TAXES                               |   | (8,895,820     | ) |   | (2,306,508   | ) |   | (1,975,903   | ) |   | (1,256,574   | )
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|FUTURE INCOME TAX RECOVERY                 |   |                |   |   |              |   |   |              |   |   |              |  
|(Note 12)                                  |   | 760,060        |   |   | 760,060      |   |   | -            |   |   | -            |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|NET LOSS                                   |   | (8,135,760     | ) |   | (1,546,448   | ) |   | (1,975,903   | ) |   | (1,256,574   | )
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|DEFICIT, BEGINNING
      OF PERIOD         |   | -              |   |   | (6,589,312   | ) |   | (4,613,409   | ) |   | (3,356,835   | )
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|DEFICIT, END OF PERIOD                     | $ | (8,135,760     | ) | $ | (8,135,760   | ) | $ | (6,589,312   | ) | $ | (4,613,409   | )
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|BASIC AND DILUTED LOSS                     |   |                |   |   |              |   |   |              |   |   |              |  
|PER
      SHARE                            |   | -              |   | $ | (0.08        | ) | $ | (0.16        | ) | $ | (0.21        | )
|                                           |   |                |   |   |              |   |   |              |   |   |              |  
|WEIGHTED AVERAGE NUMBER OF                 |   |                |   |   |              |   |   |              |   |   |              |  
|SHARES OUTSTANDING                         |   | -              |   |   | 20,519,129   |   |   | 12,122,890   |   |   | 6,057,876    |  

See Accompanying Notes to the Consolidated Financial Statements

F-4

---

REGALITO COPPER CORP.(formerly Lumina Copper Corp.)(A Development Stage Enterprise)

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                             |   | For the        |   |   |              |   |   |              |   |   |              |  
|-------------------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                             |   | Cumulative     |   |   |              |   |   |              |   |   |              |  
|                                             |   | Period         |   |   |              |   |   |              |   |   |              |  
|                                             |   | from Inception |   |   |              |   |   |              |   |   |              |  
|                                             |   | (October 3,    |   |   | For the      |   |   | For the      |   |   | For the      |  
|                                             |   | 2001) to       |   |   | Year Ended   |   |   | Year Ended   |   |   | Year Ended   |  
|                                             |   | December 31,   |   |   | December 31, |   |   | December 31, |   |   | December 31, |  
|                                             |   | 2005           |   |   | 2005         |   |   | 2004         |   |   | 2003         |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|CASH PROVIDED FROM (USED IN):                |   |                |   |   |              |   |   |              |   |   |              |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|OPERATING ACTIVITIES                         |   |                |   |   |              |   |   |              |   |   |              |  
|Loss for the period                          | $ | (8,135,760     | ) | $ | (1,546,448   | ) | $ | (1,975,903   | ) | $ | (1,256,574   | )
|Items not involving cash:                    |   |                |   |   |              |   |   |              |   |   |              |  
|Amortization                                 |   | 43,819         |   |   | 25,826       |   |   | 12,416       |   |   | 5,578        |  
|Stock-based
      compensation               |   | 5,242,730      |   |   | 657,645      |   |   | 677,630      |   |   | 582,387      |  
|Mineral property written-off                 |   | 49,491         |   |   | -            |   |   | -            |   |   | 49,491       |  
|Future income
      tax recoveries           |   | (760,060       | ) |   | (760,060     | ) |   | -            |   |   | -            |  
|Net changes in non-cash working capital      |   |                |   |   |              |   |   |              |   |   |              |  
|items:                                       |   |                |   |   |              |   |   |              |   |   |              |  
|Receivables                                  |   | (163,389       | ) |   | (164,212     | ) |   | 34,517       |   |   | (33,694      | )
|Prepaid expenses                             |   | (77,496        | ) |   | (35,016      | ) |   | (38,628      | ) |   | (3,852       | )
|Accounts payable                             |   | (835           | ) |   | (107,288     | ) |   | 22,214       |   |   | 84,239       |  
|Accrued liabilities                          |   | 129,507        |   |   | (52,962      | ) |   | 139,470      |   |   | 8,000        |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|                                             |   | (3,671,993     | ) |   | (1,982,515   | ) |   | (1,128,284   | ) |   | (564,425     | )
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|FINANCING ACTIVITIES                         |   |                |   |   |              |   |   |              |   |   |              |  
|Due to related parties                       |   | -              |   |   | -            |   |   | -            |   |   | (267,223     | )
|Shares and warrants issued for
      cash,   |   |                |   |   |              |   |   |              |   |   |              |  
|net of issue costs                           |   | 36,694,861     |   |   | 19,301,211   |   |   | 11,996,109   |   |   | 2,952,138    |  
|Mineral property purchase obligations        |   | (584,798       | ) |   | -            |   |   | (382,338     | ) |   | (202,460     | )
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|                                             |   | 36,110,063     |   |   | 19,301,211   |   |   | 11,613,771   |   |   | 2,482,455    |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|INVESTING ACTIVITIES                         |   |                |   |   |              |   |   |              |   |   |              |  
|Cash and other assets sold pursuant to       |   |                |   |   |              |   |   |              |   |   |              |  
|reorganization
      (Note 1)                |   | (8,476,689     | ) |   | (8,476,689   | ) |   | -            |   |   | -            |  
|Cash acquired on reverse take-over with      |   |                |   |   |              |   |   |              |   |   |              |  
|CRS, net
      of acquisition costs (Note 1) |   | 349,338        |   |   | -            |   |   | -            |   |   | 349,338      |  
|Deferred acquisition costs                   |   | (9,000         | ) |   | -            |   |   | -            |   |   | -            |  
|Purchase of equipment                        |   | (175,729       | ) |   | (97,590      | ) |   | (33,749      | ) |   | (44,390      | )
|Expenditures on mineral properties           |   | (22,691,332    | ) |   | (10,596,978  | ) |   | (10,694,072  | ) |   | (1,026,608   | )
|Cash, exploration funds (Note 12)            |   | -              |   |   | 2,135,000    |   |   | (2,135,000   | ) |   | -            |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|                                             |   | (31,003,412    | ) |   | (17,036,257  | ) |   | (12,862,821  | ) |   | (721,660     | )
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|FOREIGN EXCHANGE                             |   | (60,181        | ) |   | -            |   |   | -            |   |   | (60,181      | )
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|INCREASE (DECREASE) IN CASH AND              |   |                |   |   |              |   |   |              |   |   |              |  
|CASH EQUIVALENTS                             |   | 1,374,477      |   |   | 282,439      |   |   | (2,377,334   | ) |   | 1,136,189    |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|CASH AND CASH EQUIVALENTS,                   |   |                |   |   |              |   |   |              |   |   |              |  
|BEGINNING OF PERIOD                          |   | -              |   |   | 1,092,038    |   |   | 3,469,372    |   |   | 2,333,183    |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|CASH AND CASH EQUIVALENTS,                   |   |                |   |   |              |   |   |              |   |   |              |  
|END
      OF PERIOD                          | $ | 1,374,477      |   | $ | 1,374,477    |   | $ | 1,092,038    |   | $ | 3,469,372    |  
|                                             |   |                |   |   |              |   |   |              |   |   |              |  
|Supplemental cash flow information (Note 10) |   |                |   |   |              |   |   |              |   |   |              |  

See Accompanying Notes to the Consolidated Financial Statements

F-5

---

REGALITO COPPER CORP.(formerly Lumina Copper Corp.)(A Development Stage Enterprise)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

|                                                    |               |  |   |            |   |   | Deficit             |   |   |                     |  
|--------------------------------------------------- | ------------- |  | - | ---------- | - | - | ------------------- | - | - | ------------------- | -
|                                                    |               |  |   |            |   |   | Accumulated         |   |   |                     |  
|                                                    | Common Shares |  |   | during the |   |   | Total Shareholders |  
|                                                    | Number        |  |   | Amount     |   |   | Development Stage   |   |   | Equity (Deficiency) |  
|                                                    |               |  |   |            |   |   |                     |   |   |                     |  
|Common stock issued for cash at $1.00 per share     | 1             |  | $ | 1          |   | $ | -                   |   | $ | 1                   |  
|Net loss for the period from inception to           |               |  |   |            |   |   |                     |   |   |                     |  
|December 31, 2001                                   | -             |  |   | -          |   |   | (734                | ) |   | (734                | )
|                                                    |               |  |   |            |   |   |                     |   |   |                     |  
|Balance, December 31, 2001                          | 1             |  |   | 1          |   |   | (734                | ) |   | (733                | )
|Common stock issued for cash and past services      |               |  |   |            |   |   |                     |   |   |                     |  
|at $0.75 per share                                  | 4,460,000     |  |   | 3,345,000  |   |   | -                   |   |   | 3,345,000           |  
|Common stock issued for cash and future             |               |  |   |            |   |   |                     |   |   |                     |  
|services valued at $0.75
      per share            | 600,000       |  |   | 6,000      |   |   | -                   |   |   | 6,000               |  
|Recognition of compensation expense on shares       |               |  |   |            |   |   |                     |   |   |                     |  
|issued by CRS in
      2002                         | -             |  |   | 24,667     |   |   | -                   |   |   | 24,667              |  
|Common stock issued for cash at $1.00 per share     | 2,415,000     |  |   | 2,415,000  |   |   | -                   |   |   | 2,415,000           |  
|Common stock issued as finders fee                 | 112,500       |  |   | -          |   |   | -                   |   |   | -                   |  
|Shares subscribed                                   | 600,000       |  |   | 600,000    |   |   | -                   |   |   | 600,000             |  
|Professional fees                                   | -             |  |   | (20,199    | ) |   | -                   |   |   | (20,199             | )
|Net loss for the year
      ended December 31, 2002 | -             |  |   | -          |   |   | (3,356,101          | ) |   | (3,356,101          | )
|                                                    |               |  |   |            |   |   |                     |   |   |                     |  
|Balance, December 31, 2002                          | 8,187,501     |  |   | 6,370,469  |   |   | (3,356,835          | ) |   | 3,013,634           |  
|                                                    |               |  |   |            |   |   |                     |   |   |                     |  
|Acquisition of 100% of the outstanding common       |               |  |   |            |   |   |                     |   |   |                     |  
|shares of CRS                                       | -             |  |   | 333,780    |   |   | -                   |   |   | 333,780             |  
|Share capital of Lumina Copper Corp. at             |               |  |   |            |   |   |                     |   |   |                     |  
|May 22, 2003                                        | 768,700       |  |   | -          |   |   | -                   |   |   | -                   |  
|Common shares issued for cash at $1 per share       |               |  |   |            |   |   |                     |   |   |                     |  
|(net of issue costs)                                | 500,000       |  |   | 470,575    |   |   | -                   |   |   | 470,575             |  
|Common shares issued on exercise of options         | 10,000        |  |   | 16,500     |   |   | -                   |   |   | 16,500              |  
|Fair value of options exercised                     | -             |  |   | 7,805      |   |   | -                   |   |   | 7,805               |  
|Common shares issued on exercise of warrants        | 1,223,375     |  |   | 1,865,063  |   |   | -                   |   |   | 1,865,063           |  
|Fair value of warrants exercised                    | -             |  |   | 104,602    |   |   | -                   |   |   | 104,602             |  
|Common shares issued for mineral property           |               |  |   |            |   |   |                     |   |   |                     |  
|payments                                            | 681,875       |  |   | 2,426,000  |   |   | -                   |   |   | 2,426,000           |  
|Recognition of compensation expense on shares       |               |  |   |            |   |   |                     |   |   |                     |  
|issued by CRS in 2002                               | -             |  |   | 148,000    |   |   | -                   |   |   | 148,000             |  
|Employee options cancelled                          | -             |  |   | -          |   |   | -                   |   |   | 10,485              |  
|Stock based compensation on unexercised             |               |  |   |            |   |   |                     |   |   |                     |  
|vested options                                      | -             |  |   | -          |   |   | -                   |   |   | 436,097             |  
|Fair value of unexercised warrants                  | -             |  |   | -          |   |   | -                   |   |   | 1,072,220           |  
|Net loss for the year
      ended December 31, 2003 |               |  |   |            |   |   | (1,256,574          | ) |   | (1,256,574          | )
|                                                    |               |  |   |            |   |   |                     |   |   |                     |  
|Balance, December 31, 2003                          | 11,371,451    |  |   | 11,742,794 |   |   | (4,613,409          | ) |   | 8,648,187           |  

See Accompanying Notes to the Consolidated Financial Statements

F-6

---

REGALITO COPPER CORP.(formerly Lumina Copper Corp.) (A Development Stage Enterprise)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

(continued)

|                                                    |               |  |   |             |   |   | Deficit             |   |   |                     |  
|--------------------------------------------------- | ------------- |  | - | ----------- | - | - | ------------------- | - | - | ------------------- | -
|                                                    |               |  |   |             |   |   | Accumulated         |   |   |                     |  
|                                                    | Common Shares |  |   | during the  |   |   | Total Shareholders |  
|                                                    | Number        |  |   | Amount      |   |   | Development Stage   |   |   | Equity (Deficiency) |  
|                                                    |               |  |   |             |   |   |                     |   |   |                     |  
|Common shares issued for cash pursuant to           |               |  |   |             |   |   |                     |   |   |                     |  
|private placements                                  | 2,380,200     |  |   | 10,125,372  |   |   | -                   |   |   | 10,125,372          |  
|Common shares issued on exercise of options         | 75,533        |  |   | 120,800     |   |   | -                   |   |   | 120,800             |  
|Fair value of options exercised                     | -             |  |   | 40,144      |   |   | -                   |   |   | 40,144              |  
|Common shares issued on exercise of warrants        | 1,166,625     |  |   | 1,749,937   |   |   | -                   |   |   | 1,749,937           |  
|Common shares issued for mineral property           |               |  |   |             |   |   |                     |   |   |                     |  
|payments                                            | 100,000       |  |   | 549,000     |   |   | -                   |   |   | 549,000             |  
|Recognition of compensation expense on shares       |               |  |   |             |   |   |                     |   |   |                     |  
|issued by CRS in 2002                               | -             |  |   | 148,000     |   |   | -                   |   |   | 148,000             |  
|Net change in contributed surplus (Note 7)          | -             |  |   | -           |   |   | -                   |   |   | 760,739             |  
|Net loss for the year ended December 31, 2004       |               |  |   |             |   |   | (1,975,903          | ) |   | (1,975,903          | )
|                                                    |               |  |   |             |   |   |                     |   |   |                     |  
|Balance, December 31, 2004                          | 15,093,809    |  |   | 24,476,047  |   |   | (6,589,312          | ) |   | 20,166,276          |  
|                                                    |               |  |   |             |   |   |                     |   |   |                     |  
|Common shares issued for cash pursuant to           |               |  |   |             |   |   |                     |   |   |                     |  
|private placement                                   | 1,000,000     |  |   | 5,459,371   |   |   | -                   |   |   | 5,459,371           |  
|Common shares issued on exercise of warrants        | 5,475,100     |  |   | 13,553,050  |   |   | -                   |   |   | 13,553,050          |  
|Fair value of warrants exercised                    | -             |  |   | 1,343,473   |   |   | -                   |   |   | 1,343,473           |  
|Common shares issued on exercise of options         | 112,533       |  |   | 288,790     |   |   | -                   |   |   | 288,790             |  
|Fair value of options exercised                     | -             |  |   | 128,040     |   |   | -                   |   |   | 128,040             |  
|Common shares issued for mineral property           |               |  |   |             |   |   |                     |   |   |                     |  
|payments                                            | 200,000       |  |   | 1,882,000   |   |   | -                   |   |   | 1,882,000           |  
|Common shares issued in settlement of accounts      |               |  |   |             |   |   |                     |   |   |                     |  
|payable                                             | 20,000        |  |   | 111,100     |   |   | -                   |   |   | 111,100             |  
|Common shares issued for employee                   |               |  |   |             |   |   |                     |   |   |                     |  
|remuneration                                        | 21,000        |  |   | 156,840     |   |   | -                   |   |   | 156,840             |  
|Recognition of compensation expense on shares       |               |  |   |             |   |   |                     |   |   |                     |  
|issued by CRS in 2002                               | -             |  |   | 120,058     |   |   | -                   |   |   | 120,058             |  
|Tax cost recognized on issuance of flow-through     |               |  |   |             |   |   |                     |   |   |                     |  
|shares (Note 12)                                    | -             |  |   | (760,060    | ) |   |                     |   |   | (760,060            | )
|Reduction of capital as a result of the             |               |  |   |             |   |   |                     |   |   |                     |  
|reorganization (Note 1)                             | -             |  |   | (22,494,889 | ) |   | -                   |   |   | (22,494,889         | )
|Net change in contributed surplus (Note 7)          | -             |  |   | -           |   |   | -                   |   |   | (739,425            | )
|Net loss for the
      year ended December 31, 2005 | -             |  |   | -           |   |   | (1,546,448          | ) |   | (1,546,448          | )
|                                                    |               |  |   |             |   |   |                     |   |   |                     |  
|Balance, December 31, 2005                          | 21,922,442    |  | $ | 24,263,820  |   | $ | (8,135,760          | ) | $ | 17,668,176          |  

See Accompanying Notes to the Consolidated Financial Statements

F-7

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|1. | NATURE OF OPERATIONS AND GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Regalito Copper Corp. (formerly Lumina Copper Corp.)
        (Regalito or the Company) is engaged in the identification,
        acquisition, exploration and development of mineral resources. The Company
        is considered to be in the development stage as it has not placed any
        of its mineral properties into production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company was incorporated on October 3, 2001 and
        became active on May 23, 2003 pursuant to the acquisition of all of the
        outstanding securities of CRS Copper Resource Corp. (CRS).
        Pursuant to a Securities Exchange Agreement, the Company issued 8,187,501
        common shares and warrants to purchase an additional 5,657,500 common
        shares of the Company, exercisable at a price of $1.50 per share to May
        23, 2005, to the security holders of CRS. The acquisition was accounted
        for by the purchase method, with CRS deemed to be the acquirer, and reported
        as a reverse take-over as the shareholders of CRS obtained control of
        the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On May 19, 2005, Lumina Copper Corp. completed a reorganization,
        by way of a statutory plan of arrangement which resulted in the Company
        transferring its mineral resource assets amongst four separate companies:
        Regalito, Northern Peru Copper Corp. (Norco), Global Copper
        Corp. (Global) and Lumina Resources Corp. (Lumco).
        The results of operations and the cash flows for Norco, Global and Lumco
        are included in these consolidated financial statements to May 18, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The reorganization restructured Lumina Copper Corp,
        as follows:
      The existing company was renamed Regalito Copper Corp. and holds the
          Regalito property.Norco holds the Galeno and Pashap properties.Global holds the Relincho, Vizcachitas, Taca Taca and San Jorge properties.Lumco holds the Casino, Redstone and Hushamu properties.Under the reorganization, shareholders of record at the
        close of trading on the day prior to the date of the reorganization received
        one new share of the three new companies for each share held in the existing
        company, in addition to their existing shareholdings.
      As there had been no substantial changes in the beneficial
        ownership of the Company as a result of the reorganization, the consideration
        received for the transfer of the foregoing mineral properties and other
        related net assets was recorded by the Company at $22,494,889, which was
        the carrying cost of the vended net assets in the accounts of the Company
        on the date of the reorganization.
      The Company received 20,917,442 common shares from each
        of the new companies created pursuant to the reorganization. These shares
        were then distributed to the shareholders of the Company on a pro rata
        basis according to their ownership of common shares of the Company.
      At December 31, 2005, the Company had working capital of
        $864,227. The Company will require additional financing or outside participation
        to undertake further exploration and subsequent development of its mineral
        properties and to sustain the Companys planned corporate and administrative
        expenses for the coming year. The Companys ability to continue as
        a going concern is dependent on continued financial support from its shareholders,
        the ability of the Company to raise equity financing or the attainment
        of profitable operations to meet the Companys liabilities as they
        become payable.

F-8

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|1. | NATURE OF OPERATIONS AND GOING CONCERN
        (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These consolidated financial statements have
        been prepared on a going concern basis, which assumes the realization
        of assets and liquidation of liabilities in the normal course of business.
        These financial statements do not include any adjustments to the recoverability
        and classification of recorded asset amounts and classification of liabilities
        that might be necessary, should the Company be unable to continue as a
        going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company has entered into mineral property
        acquisition and option agreements that will require significant future
        outlays of cash to maintain the properties and options in good standing
        and to fulfil its contractual obligations. The Companys continuing
        operations as intended are dependent on managements ability to raise
        required funding through future equity issuances, asset sales or a combination
        thereof.                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F-9

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------
|   |                                            
|   | (e)                                        
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            
|   |                                            

F-10

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------

This alternative interpretation would
  provide for the capitalization of a contract based mining asset as an intangible
  asset at its fair value at the time it was acquired, either as an individual
  asset purchase or as part of a business combination. For exploration stage mineral
  interests such as those owned by the Company, the excess of the carrying value
  over the residual value of the intangible assets would be amortized on a straight-line
  basis over the period in which the Company expected to: (a) complete its exploration
  process or (b) convert, develop or further explore the underlying properties.
  For the Company, a reasonable estimate of this amortization period would be
  from 4 to 11 years.

| | (f) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company considers the Canadian dollar its functional
        currency. The Companys subsidiaries are integrated foreign operations.
        Monetary items are translated at the exchange rate in effect at the balance
        sheet date; non-monetary items are translated at historical exchange rates;
        revenue and expense items are translated at the average rate of exchange
        for the period. The net foreign currency gain or loss is included in the
        statement of operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (g) | Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company has a stock option plan as disclosed in
        Note 8. The Company follows the Canadian Institute of Chartered Accountants
        Handbook Section 3870 Stock-based compensation and other stock-based
        paymentsto account for grants under this plan. As recommended by
        Section 3870, the Company has adopted the fair value method for stock-based
        compensation granted to employees and non-employees and all direct awards
        of stocks.                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The fair value of stock options is determined by the
        Black-Scholes Option Pricing Model with assumptions for risk-free interest
        rates, dividend yields, volatility factors of the expected market price
        of the Companys common shares and an expected life of the options.
        The fair value of direct awards of stock is determined by the quoted market
        price of the Companys stock.                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (h) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company follows the asset and liability method of
        accounting for income taxes. Under this method, current income taxes are
        recognized for the estimated income taxes payable for the period. Future
        income tax assets and liabilities are recognized in the period for temporary
        differences between the tax and accounting bases of assets and liabilities
        as well as for the potential benefit of income tax losses carried forward
        to future years.         

F-11

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------

Future income tax assets and liabilities
  are measured using substantively enacted tax rates and laws expected to apply
  in the years in which temporary differences are expected to be recovered or
  settled. The effect of a change in tax rates on future income tax assets and
  liabilities is recognized in operations in the period that includes the substantive
  enactment date. A valuation allowance is recognized to the extent it is considered
  not likely that future income tax assets will be realized.

| | (i) | Amounts per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Amounts per share are calculated using the weighted
        average number of shares outstanding. The Company uses the treasury stock
        method to calculate diluted earnings per share. Diluted per share amounts
        are not presented as the effect of the exercise of all 1,050,000 (2004:
        6,495,133) potentially dilutive securities is anti-dilutive.                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (j) | Environmental protection practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company is subject to the laws and regulations relating
        to environmental matters in all jurisdictions in which it operates, including
        provisions relating to property reclamation, discharge of hazardous material
        and other matters. The Company may also be held liable should environmental
        problems be discovered that were caused by former owners and operators
        of its properties and properties in which it has previously had an interest.                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company conducts its mineral exploration activities
        in compliance with applicable environmental protection legislation. The
        Company is not aware of any existing environmental problems related to
        any of its current or former properties that may result in material liability
        to the Company.                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (k) | Capital stock issued for other than cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Capital stock issued for other than cash is valued at
        the price at which the stock traded on the principal stock exchange on
        which the stock trades at the time the agreement to issue the stock is
        made or, if such issuance is at the option of the Company, at the time
        the Company determines to issue such stock.                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (l) | Flow-through financing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company has financed a portion of its exploration
        activities through the issue of flow- through shares, which transfer the
        tax deductibility of exploration expenditures to the investor. The proceeds
        received on the issue of such shares have been credited to capital stock.
        Resource expenditure deductions for income tax purposes related to exploration
        and development activities funded by flow-through share arrangements are
        renounced to investors in accordance with income tax legislation. When
        these expenditures are renounced, temporary taxable differences created
        by the renunciation will reduce share capital.

F-12

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------

| | (m) | Consolidation of variable interest entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company has adopted Accounting Guideline 15, Consolidation
        of Variable Interest Entities, issued by the CICA for annual and
        interim periods beginning on or after November 1, 2004. This guideline
        addresses the application of consolidation principles to entities that
        are subject to control on a basis other than ownership of voting interests.
        The adoption of this guideline did not have any impact on the Companys
        consolidated financial statements.                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (n) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company recognizes the fair value of liabilities
        for asset retirement obligations in the period in which a reasonable estimate
        of such costs can be made. The asset retirement obligation is recorded
        as a liability with a corresponding increase to the carrying amount of
        the related long-lived asset. Subsequently, the asset retirement cost
        is allocated to expenses using a systematic and rational method and is
        also adjusted to reflect period- to-period changes in the liability resulting
        from passage of time and revisions to either timing or the amount of the
        original estimate of the undiscounted cash flow. As at December 31, 2005,
        the Company did not have any asset retirement obligations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (o) | Comparative amounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Certain amounts in the prior year have been reclassified
        to conform with the current years presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|3. | EQUIPMENT
|-- | ---------

| |                         |   |         |  |   | 2005         |  |   |                | 
| | ----------------------- | - | ------- |  | - | ------------ |  | - | -------------- | 
| |                         |   | Cost    |  |   | Accumulated  |  |   | Net Book Value | 
| |                         |   |         |  |   | Amortization |  |   |                | 
| | Furniture and equipment | $ | 126,973 |  | $ | 25,072       |  | $ | 101,901        | 
| |                         |   |         |  |   |              |  |   |                | 
| |                         |   |         |  |   | 2004         |  |   |                | 
| |                         |   | Cost    |  |   | Accumulated  |  |   | Net Book Value | 
| |                         |   |         |  |   | Amortization |  |   |                | 
| | Furniture and equipment | $ | 78,138  |  | $ | 19,441       |  | $ | 58,697         | 

F-13

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                           
|   | At December 31, 2004, the Companys mineral properties
        were comprised of properties located in North and South America. Pursuant
        to the reorganization (Note 1) on May 19, 2005, the Company sold nine
        of its properties and, as at December 31, 2005, its remaining mineral
        property is located in Chile.

Chile
      
      
      Peru
      
      
      Argentina
      
      
      Canada
      
      
      TotalBalance, December 31, 2003
      $
      3,266,845
      
      $
      250,646
      
      $
      952,469
      
      $
      1,128,632
      
      $
      5,598,592Additions during year:Property acquisition
      
      1,503,557
      
      
      655,009
      
      
      549,000
      
      
      271,253
      
      
      2,978,819Property explorationGeological and assays
      
      1,727,346
      
      
      220,496
      
      
      88,884
      
      
      58,781
      
      
      2,095,507Drilling
      
      4,442,652
      
      
      16,800
      
      
      -
      
      
      -
      
      
      4,459,452Other exploration
      
      446,427
      
      
      178,220
      
      
      150,379
      
      
      6,383
      
      
      781,409Taxes
        and filing fees
      
      1,310,705
      
      
      45,394
      
      
      19,744
      
      
      35,093
      
      
      1,410,936Net additions during
        year
      
      9,430,687
      
      
      1,115,919
      
      
      808,007
      
      
      371,510
      
      
      11,726,123Balance, December 31, 2004
      
      12,697,532
      
      
      1,366,565
      
      
      1,760,476
      
      
      1,500,142
      
      
      17,324,715Additions during year:Property acquisition
      
      4,810,651
      
      
      1,354,856
      
      
      1,882,000
      
      
      371,340
      
      
      8,418,847Property explorationGeological and assays
      
      2,400,329
      
      
      85,388
      
      
      62,910
      
      
      204,047
      
      
      2,752,674Taxes and filing fees
      
      623,377
      
      
      9,349
      
      
      -
      
      
      9,513
      
      
      642,239Metallurgical
      
      612,362
      
      
      -
      
      
      -
      
      
      -
      
      
      612,362Other exploration
      
      484,651
      
      
      28,068
      
      
      67,137
      
      
      -
      
      
      579,856Travel
        and accommodation
      
      233,926
      
      
      20,077
      
      
      2,322
      
      
      866
      
      
      257,191Net additions during
        year
      
      9,165,296
      
      
      1,497,738
      
      
      2,014,369
      
      
      585,766
      
      
      13,263,169Properties sold pursuant toreorganization (Note 1)
      
      (5,160,780
      )
      
      (2,864,303
      )
      
      (3,774,845
      )
      
      (2,085,908
      )
      
      (13,885,836
      )Balance, December 31, 2005
      $
      16,702,048
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      16,702,048


F-14

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
      Chile
|-- | ------------------------------------------

| |                             |   | Regalito   |  |   | Vizcachitas |   |   | Relincho   |   |   | Total      |  
| | --------------------------- | - | ---------- |  | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Balance, December 31, 2003  | $ | 105,809    |  | $ | 3,106,086   |   | $ | 54,950     |   | $ | 3,266,845  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Property acquisition        |   | 269,723    |  |   | 122         |   |   | 1,233,712  |   |   | 1,503,557  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Property exploration        |   |            |  |   |             |   |   |            |   |   |            |  
| | Geological and assays       |   | 1,554,074  |  |   | 31,977      |   |   | 141,295    |   |   | 1,727,346  |  
| | Drilling                    |   | 4,442,652  |  |   | -           |   |   | -          |   |   | 4,442,652  |  
| | Other exploration           |   | 394,225    |  |   | 14,717      |   |   | 37,485     |   |   | 446,427    |  
| | Taxes and filing fees       |   | 1,139,069  |  |   | 10,423      |   |   | 161,213    |   |   | 1,310,705  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Additions during year       |   | 7,799,743  |  |   | 57,239      |   |   | 1,573,705  |   |   | 9,430,687  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Balance, December 31, 2004  |   | 7,905,552  |  |   | 3,163,325   |   |   | 1,628,655  |   |   | 12,697,532 |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Property acquisition        |   | 4,785,317  |  |   | 16,024      |   |   | 9,310      |   |   | 4,810,651  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Property exploration        |   |            |  |   |             |   |   |            |   |   |            |  
| | Geological and assays       |   | 2,252,649  |  |   | 94,152      |   |   | 53,528     |   |   | 2,400,329  |  
| | Metallurgical               |   | 612,362    |  |   | -           |   |   | -          |   |   | 612,362    |  
| | Taxes and filing fees       |   | 465,963    |  |   | 13,575      |   |   | 143,839    |   |   | 623,377    |  
| | Travel and accommodation    |   | 225,397    |  |   | 6,798       |   |   | 1,731      |   |   | 233,926    |  
| | Other
      exploration     |   | 454,808    |  |   | 18,865      |   |   | 10,978     |   |   | 484,651    |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Additions during year       |   | 8,796,496  |  |   | 149,414     |   |   | 219,386    |   |   | 9,165,296  |  
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Properties sold pursuant to |   |            |  |   |             |   |   |            |   |   |            |  
| | reorganization (Note 1)     |   | -          |  |   | (3,312,739  | ) |   | (1,848,041 | ) |   | (5,160,780 | )
| |                             |   |            |  |   |             |   |   |            |   |   |            |  
| | Balance, December 31, 2005  | $ | 16,702,048 |  | $ | -           |   | $ | -          |   | $ | 16,702,048 |  

F-15

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

| | (a) | Regalito Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | On October 16, 2003, the Company obtained
        the right to acquire a 100% interest in the Regalito Property, consisting
        of 4,158 hectares located in the 3rdregion of Chile. In consideration
        for the acquisition, the Company will make minimum cash payments aggregating
        US $900,000 (US $25,000 paid in 2004, US $50,000 paid in 2005) over an
        8 year period to October 16, 2011.                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Should copper prices exceed $1 per pound for
        an entire calendar year at any time during the 8 year period (as it did
        during 2004 and 2005), the Company shall increase the minimum payment
        to US $200,000 in respect of that year. After the 8thyear
        of the agreement, should the price of copper exceed $1 per pound for any
        entire calendar year, the Company must pay advance payments of US $200,000
        per year until the commencement of commercial production and thereafter,
        the Company must pay a net smelter royalty of 1% to 3% depending on the
        price of copper.                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Upon achieving commercial production, should
        the royalty payment in the first calendar year exceed US $200,000, the
        Company may deduct from the royalty payment 50% of the amount in excess
        of US $200,000 and apply this amount against the accumulated advance payments
        in each succeeding year until the accumulated advance payments have been
        fully offset. The Company must also pay certain current and past annual
        concession maintenance payments in the aggregate of US $53,000 and is
        also responsible for the payment of all future annual concession maintenance
        payments on the property.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Options to purchase mining concessions,
        surface and water rights:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F-16

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

| | (iii) | On October 18, 2005 the Company obtained the right to
        acquire certain water and surface rights located 38 kilometres from the
        Regalito property for US $12,300,000 (US $1,500,000 paid) payable in unequal
        annual instalments to October 18, 2008. The balance owing is subject to
        interest at the rate of Libor 360 days plus 2.9 points and is payable
        with each instalment. The Company must also pay 50% of the capital gains
        taxes applicable to each payment corresponding to the water rights (the
        rate of tax currently being 17%). The Company is responsible for installing
        the systems necessary for the extraction of water. Should the volume yielded
        from the wells on the property be less than 239.5 litres per second, the
        balance of instalments remaining to be paid shall be subject to reduction,
        in proportion to the actual volume yield. The Company may terminate the
        agreement at any time without penalty in which event the vendors will
        be entitled to retain all payments made by the Company to the date of
        termination.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iv)  | On October 18, 2005 the Company entered into an agreement
        to lease a portion of the surface rights to be acquired by the Company
        in (iii) above for lease payments of US $4,000 per annum receivable in
        arrears. The Company has also granted an option to the lessee to purchase
        the leased surface rights for US $100,000 less any lease payments already
        received by the Company. The option may be exercised by the lessee on
        or after October 18, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (v)   | On October 26, 2005 the company entered into two agreements
        to acquire certain surface rights located on the Regalito property for
        US $1,913,700 (US $466,640 paid) payable in unequal annual instalments
        to October 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The balance owing is subject to interest at the rate
        of 5% per annum. The Company may terminate this agreement at any time
        without penalty in which event the vendors are entitled to retain all
        payments received from the Company to the date of termination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (vi)  | On November 14, 2005 the company obtained the right
        to acquire water rights from two wells located approximately 70 kilometres
        from the Regalito property for US $5,675,000 (US $1,000,000 paid) payable
        in unequal annual instalments to November 14, 2007. The agreement shall
        terminate should the Company not be able to obtain regulatory authorization
        to establish a system to allow for the capture of water in accordance
        with certain restrictions already existing on the water rights. Should
        the authorizations not be obtained within two years from the date of this
        agreement, this agreement shall be terminated with a maximum of US $1,000,000
        of prior payments made being retained by the vendors. The agreement may
        also be terminated by the Company at any time without penalty with the
        vendors retaining all payments received from the Company to the date of
        termination. The vendors retain a mortgage on the water rights as security
        for the unpaid balance.                                                                    

F-17

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

| |       | The vendors also granted an option to the Company to
        acquire an additional 67.5 litres per second of water rights for US $1,575,000
        payable in instalments over two years commencing upon registration of
        such water rights in the name of the Company. The vendors have entered
        into an agreement with a third party to sell 15 litres per second of water
        from these optioned water rights. Should the vendors not be able to fulfill
        this promise, the Company will be obligated to transfer this amount of
        water rights from the water rights obtained from the initial two wells
        acquired from the vendors. Should this transaction occur, the price to
        acquire the two wells will be reduced by US $450,000.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | Pursuant to the agreement to acquire water rights from
        the two wells, as disclosed above, the Company was granted certain easements
        by the owner of the property to enable the Company to occupy and construct
        those systems necessary for the obtainment of water from the wells in
        consideration of US $325,000. Of this amount, US $200,000 has been paid
        and the remainder is payable by November 14, 2006. The agreement may be
        terminated without penalty with the owner retaining the payment already
        made.                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (vii) | On August 24, 2005 the Company retained the services
        of a consultant In order to assist the Company in acquiring certain of
        the water rights referred to above. Consideration for the services are
        based on a total of US $12,500 per litre per second of water purchased
        payable in various stages commencing from the time the water rights are
        registered in the name of the Company through to the commencement of construction
        at the Regalito project, for a maximum term of four years. During 2005,
        the Company paid fees of Cdn $228,306 pursuant to the terms under this
        agreement.                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | The aggregate minimum payments, net of tax, agreed to
        in connection with the Companys Regalito Property are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Note 4(a)
      
      
      Note 4(a)(i)
      
      
      Note 4(a)(ii)
      
      
      Note 4(a)(iii)
      
      
      Note 4(a)(v)
      
      
      Note 4(a)(vi)
      
      
      Note 4(a)(vi)Total minimumOctober 13,
      
      
      October 18,
      
      
      October 25,
      
      
      November 14,
      
      
      November 14,
      
      
      payments net of2005
      
      
      2005
      
      
      2005
      
      
      2005
      
      
      2005
      
      
      tax in connectionAcquisition
      
      
      July 22,
      
      
      acquisition of
      
      
      acquisition of
      
      
      acquisition of
      
      
      acquisition of
      
      
      easement
      
      
      with the Regalitoof
        property
      
      
      2005
        option
      
      
      surface rights
      
      
      water
        rights
      
      
      surface rights
      
      
      water
        rights
      
      
      agreement
      
      
      Property2005
      $
      50,000
      
      $
      100,000
      
      $
      186,916
      
      $
      1,500,000
      
      $
      466,640
      
      $
      1,000,000
      
      $
      200,000
      
      $
      3,503,556
      (paid)2006
      
      75,000
      
      
      100,000
      
      
      225,000
      
      
      4,300,000
      
      
      487,060
      
      
      2,275,000
      
      
      125,000
      
      
      7,587,0602007
      
      100,000
      
      
      200,000
      
      
      315,000
      
      
      3,300,000
      
      
      480,000
      
      
      2,400,000
      
      
      -
      
      
      6,795,0002008
      
      125,000
      
      
      300,000
      
      
      380,000
      
      
      3,200,000
      
      
      480,000
      
      
      -
      
      
      -
      
      
      4,485,0002009
      
      150,000
      
      
      400,000
      
      
      450,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,000,0002010
      
      175,000
      
      
      1,300,000
      
      
      538,084
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      2,013,0842011
      
      200,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      200,000$
      875,000
      
      $
      2,400,000
      
      $
      2,095,000
      
      $
      12,300,000
      
      $
      1,913,700
      
      $
      5,675,000
      
      $
      325,000
      
      $
      25,583,700


| | (b) | Vizcachitas Property                                                                                                                                                                                                                                                       
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                            
| |     | Pursuant to an agreement dated October 28, 2003, the
        Company acquired 100% of the shares of Compania Minera Vizcachitas Holdings,
        a company incorporated under the laws of Chile, in consideration for the
        issuance of 500,000 common shares of the

F-18

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

Company (issued in 2003) and 500,000
  warrants (issued in 2003) to acquire up to an additional 500,000 common shares
  at $3.20 per share until December 19, 2007. Compania Minera Vizcachitas Holdings
  is the beneficial holder of the Vizcachitas Property, which consists of 19 exploration
  concessions, located in the 4th region of Chile.

The Vizcachitas property was sold to
  Global pursuant to the reorganization (Note 1).

| | (c) | Relincho Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Pursuant to an agreement dated December 10, 2003, the
        Company obtained an option to acquire a 100% interest in the Relincho
        Property consisting of certain mining rights located in the 3rdregion
        of Chile in consideration of payments in the aggregate of US $6,000,000
        payable in stages to January 9, 2007 (US $1,000,000 paid in 2004). Certain
        of the mining rights comprising the property are also subject to a 2%
        net smelter return royalty.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Relincho property was sold to Global pursuant to
        the reorganization (Note 1).                                                                                                                                                                                                                                                                                                                                                                                                             

Peru

| |                                  |   | Galeno     |   |   | Pashpap  |   |   | Total      |  
| | -------------------------------- | - | ---------- | - | - | -------- | - | - | ---------- | -
| |                                  |   |            |   |   |          |   |   |            |  
| | Balance, December 31, 2003       | $ | 182,409    |   | $ | 68,237   |   | $ | 250,646    |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Property acquisition             |   | 655,009    |   |   | -        |   |   | 655,009    |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Property exploration             |   |            |   |   |          |   |   |            |  
| | Geological and assays            |   | 123,155    |   |   | 97,341   |   |   | 220,496    |  
| | Drilling                         |   | 16,800     |   |   | -        |   |   | 16,800     |  
| | Other exploration                |   | 158,304    |   |   | 19,916   |   |   | 178,220    |  
| | Taxes and filing fees            |   | 31,309     |   |   | 14,085   |   |   | 45,394     |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Additions during year            |   | 984,577    |   |   | 131,342  |   |   | 1,115,919  |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Balance, December 31, 2004       |   | 1,166,986  |   |   | 199,579  |   |   | 1,366,565  |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Property acquisition             |   | 1,354,856  |   |   | -        |   |   | 1,354,856  |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Property exploration             |   |            |   |   |          |   |   |            |  
| | Geological and assays            |   | 84,904     |   |   | 484      |   |   | 85,388     |  
| | Taxes and filing fees            |   | 9,349      |   |   | -        |   |   | 9,349      |  
| | Travel and accommodation         |   | 20,077     |   |   | -        |   |   | 20,077     |  
| | Other exploration                |   | 28,068     |   |   | -        |   |   | 28,068     |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Additions during year            |   | 1,497,254  |   |   | 484      |   |   | 1,497,738  |  
| |                                  |   |            |   |   |          |   |   |            |  
| | Properties sold pursuant to      |   |            |   |   |          |   |   |            |  
| | reorganization (Note 1)          |   | (2,664,240 | ) |   | (200,063 | ) |   | (2,864,303 | )
| |                                  |   |            |   |   |          |   |   |            |  
| | Balance, December
      31, 2005 | $ | -          |   | $ | -        |   | $ | -          |  

F-19

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------
|   |                               
|   | (d)                           
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   | (e)                           
|   |                               
|   |                               

F-20

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
      Argentina
|-- | ----------------------------------------------

| |                             |   | Taca Taca  |   |   | San Jorge |   |   | Total      |  
| | --------------------------- | - | ---------- | - | - | --------- | - | - | ---------- | -
| | Balance, December 31, 2003  | $ | 506,971    |   | $ | 445,498   |   | $ | 952,469    |  
| | Property acquisition        |   | 549,000    |   |   | -         |   |   | 549,000    |  
| | Property exploration        |   |            |   |   |           |   |   |            |  
| | Geological and assays       |   | 67,479     |   |   | 21,405    |   |   | 88,884     |  
| | Other exploration           |   | 56,243     |   |   | 94,136    |   |   | 150,379    |  
| | Taxes
      and filing fees |   | 19,744     |   |   | -         |   |   | 19,744     |  
| | Additions during year       |   | 692,466    |   |   | 115,541   |   |   | 808,007    |  
| | Balance, December 31, 2004  |   | 1,199,437  |   |   | 561,039   |   |   | 1,760,476  |  
| | Property acquisition        |   | 1,882,000  |   |   | -         |   |   | 1,882,000  |  
| | Property exploration        |   |            |   |   |           |   |   |            |  
| | Geological and assays       |   | 27,010     |   |   | 35,900    |   |   | 62,910     |  
| | Other exploration           |   | 31,559     |   |   | 35,578    |   |   | 67,137     |  
| | Travel and accommodation    |   | 681        |   |   | 1,641     |   |   | 2,322      |  
| | Additions during year       |   | 1,941,250  |   |   | 73,119    |   |   | 2,014,369  |  
| | Properties sold pursuant to |   |            |   |   |           |   |   |            |  
| | reorganization (Note 1)     |   | (3,140,687 | ) |   | (634,158  | ) |   | (3,774,895 | )
| | Balance, December 31, 2005  | $ | -          |   | $ | -         |   | $ | -          |  

| | (f) | Taca Taca Property                                                                                                                                                                                                                                                                                                                                                  
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| |     | Pursuant to an agreement dated October 7,
        2002 the Company paid Corriente Resources Inc. US $25,000 towards the
        purchase of all the issued and outstanding shares of Corriente Argentina
        SA (Corriente). Corriente is the beneficial holder of the
        Taca Taca mining rights, located in the Salta Province, northwestern Argentina.
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| |     | The purchase price agreed is as follows:                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                

F-21

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

| | (iii) | 100,000 of the Companys shares on the second and
        third anniversaries of the agreement date (100,000 shares valued at $549,000
        issued in 2004 and 100,000 shares valued at $922,000 issued in 2005);
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                     
| | (iv)  | US $100,000 on the fourth anniversary of the agreement
        date;                                                                                                                                                
| |       |                                                                                                                                                                                                                     
| | (v)   | US $1,000,000 on the fifth anniversary of the agreement
        date.                                                                                                                                               

The requisition has been accounted for
  as an asset purchase. The property is subject to a 1.5% net smelter returns
  royalty in favour of eight individuals.

Pursuant to an amending agreement dated
  March 22, 2005, the Company satisfied the requirements to pay the US $100,000
  and US $1,000,000 on the fourth and fifth anniversaries of the agreement date,
  respectively, with the issuance of 100,000 common shares valued at $960,000.
  The purchase of Corriente was completed in full upon the issuance of these shares
  on March 21, 2005.

The Taca Taca property was sold to Global
  pursuant to the reorganization (Note 1).

| | (g) | San Jorge Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Pursuant to an agreement dated September 3, 2003, the
        Company acquired 100% of the shares of Minera San Jorge S.A. (San
        Jorge), a company incorporated under the laws of Argentina, in consideration
        of a cash payment of US $200,000 (paid in 2003) and issuing common shares
        of the Company valued at US $100,000 (81,875 shares issued in 2003). San
        Jorge is the beneficial holder of the San Jorge property, which consists
        of 2 mining concessions and 44 mining claims (444.6 hectares) located
        in the Las Heras Department of the Province of Mendoza, Argentina.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The San Jorge property was sold to Global pursuant to
        the reorganization (Note 1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-22

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued) Canada
|-- | -------------------------------------

| |                             |   | Casino   |   |   | Redstone |   |   | Hushamu  |   |   | Total      |  
| | --------------------------- | - | -------- | - | - | -------- | - | - | -------- | - | - | ---------- | -
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Balance, December 31, 2003  |   | 172,452  |   |   | 796,545  |   |   | 159,635  |   |   | 1,128,632  |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Property acquisition        |   | 271,253  |   |   | -        |   |   | -        |   |   | 271,253    |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Property exploration        |   |          |   |   |          |   |   |          |   |   |            |  
| | Geological and assays       |   | 3,759    |   |   | 699      |   |   | 54,323   |   |   | 58,781     |  
| | Other exploration           |   | -        |   |   | 28       |   |   | 6,355    |   |   | 6,383      |  
| | Taxes and filing fees       |   | 100      |   |   | 27,980   |   |   | 7,013    |   |   | 35,093     |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Additions during year       |   | 275,112  |   |   | 28,707   |   |   | 67,691   |   |   | 371,510    |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Balance, December 31, 2004  |   | 447,564  |   |   | 825,252  |   |   | 227,326  |   |   | 1,500,142  |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Property acquisition        |   | 351,340  |   |   | -        |   |   | 20,000   |   |   | 371,340    |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Property exploration        |   |          |   |   |          |   |   |          |   |   |            |  
| | Geological and assays       |   | 671      |   |   | 5,669    |   |   | 197,707  |   |   | 204,047    |  
| | Taxes and filing fees       |   | 1,680    |   |   | -        |   |   | 7,833    |   |   | 9,513      |  
| | Travel and accommodation    |   | 109      |   |   | -        |   |   | 757      |   |   | 866        |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Additions during year       |   | 353,800  |   |   | 5,669    |   |   | 226,297  |   |   | 585,766    |  
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Properties sold pursuant to |   |          |   |   |          |   |   |          |   |   |            |  
| | reorganization (Note 1)     |   | (801,364 | ) |   | (830,921 | ) |   | (453,623 | ) |   | (2,085,908 | )
| |                             |   |          |   |   |          |   |   |          |   |   |            |  
| | Balance, December 31, 2005  | $ | -        |   | $ | -        |   | $ | -        |   | $ | -          |  

| | (h) | Casino Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Casino property encompasses 161 mining
        claims, all of which are subject to a 5% net profits royalty. A third
        party has a pre-existing option to purchase 55 of the claims for $1 and
        a 10% net profits royalty.                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Pursuant to an agreement dated July 15, 2002
        with Great Basin Gold Ltd. the Company acquired an option to purchase
        a 100% interest in the Casino Deposit claim group located in the Whitehorse
        Mining Division, Yukon Territory, Canada. The option may be exercised
        at any time until July 15, 2007 by paying $1,000,000 to Great Basin. Until
        it is exercised or it expires, the option can be maintained in good standing
        by:
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-23

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|4. | MINERAL PROPERTIES (continued)
|-- | ------------------------------

| | (ii)  | issuing warrants to purchase 100,000 shares
        of the Company exercisable at a price of $1.80 per share on or before
        May 23, 2005 (issued at an ascribed fair value of $104,602 during 2003);                        
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                   
| | (iii) | issuing warrants to purchase another 100,000
        shares of the Company exercisable at a price of $5.80 per share on or
        before May 21, 2006 (issued at an ascribed fair value of $271,253 on May
        21, 2004); and
| |       |                                                                                                                                                                                                                                   
| | (iv)  | issuing warrants to purchase another 100,000
        shares of the Company exercisable at a price of $9.22 per share on or
        before March 14, 2007 (issued at an ascribed fair value of $351,340 on
        March 14, 2005).

The Casino property was sold to Lumco
  pursuant to the reorganization (Note 1).

| | (i) | Redstone Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Company owns a 100% interest in the Redstone Property
        which consists of 5 mineral leases expiring in 2013 covering 60 units
        and 5,662 hectares in the Coates Lake area of the Northwest Territories,
        Canada.                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Redstone property was sold to Lumco pursuant to
        the reorganization (Note 1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (j) | Hushamu Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Company owns a 100% interest in the Hushamu Property,
        which consists of 144 mineral claims located on northern Vancouver Island,
        British Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Pursuant to a letter agreement dated February 3, 2005,
        the Company obtained an option to acquire a 100% interest in 54 mineral
        claims located on Vancouver Island, British Columbia, Canada in consideration
        of cash payments in the aggregate of $200,000, payable over a three year
        period. Should a production decision be made, an additional $800,000,
        payable in cash or in shares of the Company, will be paid to the optionor.
        The mineral claims comprise 14,600 hectares surrounding the Companys
        Hushamu Property.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | As additional consideration for this option, the Company
        granted the right to the optionor to explore and exploit the Hushamu claims
        for non-metallic industrial minerals, subject to the Companys right
        to terminate such activities should such right conflict with the Companys
        plans for the property.                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Hushamu property was sold to Lumco pursuant to the
        reorganization (Note 1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-24

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|5. | RELATED PARTY TRANSACTIONS                                                                                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                 
|   |                                                                                                                                                                                                     
|   | (b)                                                                                                                                                                                                 
|   |                                                                                                                                                                                                     
|   | The foregoing related party transactions
        are recorded at the exchange amount which is the amount of consideration
        paid or received as established and agreed to between the parties.
|   |                                                                                                                                                                                                     
|6. | SHARE CAPITAL                                                                                                                                                                                       
|   |                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                 
|   |                                                                                                                                                                                                     
|   |                                                                                                                                                                                                     
|   |                                                                                                                                                                                                     
|   |                                                                                                                                                                                                     

F-25

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|6. | SHARE CAPITAL (continued)
|-- | -------------------------
|   |                          
|   | (b)                      

| |                                                        |  | Number of  |  |   |             |  
| | ------------------------------------------------------ |  | ---------- |  | - | ----------- | -
| |                                                        |  | Shares     |  |   | Amount      |  
| |                                                        |  |            |  |   |             |  
| | Balance, December 31, 2003                             |  | 11,371,451 |  | $ | 11,742,794  |  
| |                                                        |  |            |  |   |             |  
| | Issued for cash:                                       |  |            |  |   |             |  
| | Private placements, net of issue costs (Note 6(c)(i)   |  |            |  |   |             |  
| | and (ii))                                              |  | 2,380,200  |  |   | 10,125,372  |  
| | Exercise of warrants (Note 9)                          |  | 1,166,625  |  |   | 1,749,937   |  
| |                                                        |  |            |  |   |             |  
| | Issued for cash and other consideration                |  |            |  |   |             |  
| | Exercise of options (Note 8)                           |  |            |  |   |             |  
| | - for cash                                             |  | 75,533     |  |   | 120,800     |  
| | - fair value of options exercised                      |  | -          |  |   | 40,144      |  
| |                                                        |  |            |  |   |             |  
| | Issued for mineral property (Note 4(f)(iii))           |  | 100,000    |  |   | 549,000     |  
| | Recognition of compensation
      expense (Note 6(e))  |  | -          |  |   | 148,000     |  
| |                                                        |  |            |  |   |             |  
| | Balance, December 31, 2004                             |  | 15,093,809 |  |   | 24,476,047  |  
| |                                                        |  |            |  |   |             |  
| | Issued for cash                                        |  |            |  |   |             |  
| | - private placement                                    |  | 1,000,000  |  |   | 5,459,371   |  
| |                                                        |  |            |  |   |             |  
| | Issued for cash and other consideration:               |  |            |  |   |             |  
| | Exercise of warrants (Note 9)                          |  |            |  |   |             |  
| | - for cash                                             |  | 5,475,100  |  |   | 13,553,050  |  
| | - fair value of warrants exercised                     |  | -          |  |   | 1,343,473   |  
| |                                                        |  |            |  |   |             |  
| | Exercise of options (Note 8)                           |  |            |  |   |             |  
| | - for cash                                             |  | 112,533    |  |   | 288,790     |  
| | - fair value of options exercised                      |  | -          |  |   | 128,040     |  
| |                                                        |  |            |  |   |             |  
| | Issued for mineral property (Note 4(f))                |  | 200,000    |  |   | 1,882,000   |  
| |                                                        |  |            |  |   |             |  
| | Issued in settlement of accounts payable               |  | 20,000     |  |   | 111,100     |  
| |                                                        |  |            |  |   |             |  
| | Issued for employee remuneration                       |  | 21,000     |  |   | 156,840     |  
| |                                                        |  |            |  |   |             |  
| | Recognition of compensation expense (Note 6(e)(i))     |  | -          |  |   | 120,058     |  
| |                                                        |  |            |  |   |             |  
| | Tax cost recognized on issuance of flow-through        |  |            |  |   |             |  
| | shares (Note 12)                                       |  | -          |  |   | (760,060    | )
| |                                                        |  |            |  |   |             |  
| | Reduction of capital as a result of the reorganization |  |            |  |   |             |  
| | (Note
      1)                                         |  | -          |  |   | (22,494,889 | )
| |                                                        |  |            |  |   |             |  
| | Balance, December
      31, 2005                       |  | 21,922,442 |  | $ | 24,263,820  |  

F-26

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|6. | SHARE CAPITAL (continued)
|-- | -------------------------
|   |                          
|   | (c)                      
|   |                          
|   |                          
|   |                          
|   |                          
|   |                          
|   |                          
|   |                          
|   | (d)                      

| |  | (i)   | Issued into escrow on reverse
      take-over on May 23, 2003 to be released in |  |            |  
| |  | ----- | ------------------------------------------------------------------------------- |  | ---------- | -
| |  |       | four instalments of 1,422,000
      each, in six month intervals commencing     |  |            |  
| |  |       | May 23, 2003.                                                                   |  | 5,688,001  |  
| |  |       |                                                                                 |  |            |  
| |  | (ii)  | Issued into escrow under a Voluntary
      Pooling Agreement in November, 2002. |  |            |  
| |  |       | One-third of these shares are
      to be released on each anniversary assuming |  |            |  
| |  |       | the recipient shareholders continue
      to be employed by the Company.        |  | 600,000    |  
| |  |       |                                                                                 |  |            |  
| |  | (iii) | Released from escrow                                                            |  |            |  
| |  |       | - during 2003                                                                   |  | (3,044,001 | )
| |  |       | - during 2004                                                                   |  | (3,044,000 | )
| |  |       | - during 2005                                                                   |  | (200,000   | )
| |  |       |                                                                                 |  |            |  
| |  |       | Shares held in escrow at December 31, 2005                                      |  | -          |  

| |     | As at December 31, 2005, there were no (2004 
        200,000) shares held in escrow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (e) | Compensation Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | In November, 2002 CRS Copper Resources Corp., a subsidiary
        that was sold to Lumco pursuant to the reorganization (Note 1), issued
        600,000 units for services to be rendered after issuance. One-third of
        these 600,000 units were to be released on each anniversary assuming the
        recipient shareholders continued to be employed by the Company. As at
        December 31, 2005 there were no (2004: 200,000) units remaining in escrow.
        Compensation expense related to these units, in the amount of $148,000
        per annum, was recognized evenly over the period that they were held in
        escrow under a Voluntary Pooling Agreement. For the period January 1,
        2005 to December 31, 2005, a total of $120,058 (2004 - $148,000, 2003
        - $148,000) was recorded as compensation expense.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | During 2005, the Company also issued 21,000 common shares
        valued at $156,840 to an officer of the Company as a bonus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-27

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|6. | SHARE CAPITAL (continued)
|-- | -------------------------

Compensation ExpenseCommonShares orUnits
      
      
      2005
      
      
      2004
      
      
      2003(i)
      Issued for services to be rendered
        afterissuance. The compensation
        expenserelated to the issuance of
        these units isrecognized evenly over the
        period thatthey are held in escrow under
        theVoluntary Pooling Agreement(Note 6(d)(ii)
      
      600,000
      
      $
      120,058
      
      $
      148,000
      
      $
      148,000(ii)
      Compensation expense related
        to optionsissued (Note 8(b))
      
      -
      
      
      380,747
      
      
      529,630
      
      
      434,387(iii)
      Issued for employee remuneration(Note
        6(e))
      
      21,000
      
      
      156,840
      
      
      -
      
      
      -$
      657,645
      
      $
      677,630
      
      $
      582,387


|7. | CONTRIBUTED SURPLUS
|-- | -------------------

| |                                              |   | 2005       |   |   | 2004      | 
| | -------------------------------------------- | - | ---------- | - | - | --------- | 
| |                                              |   |            |   |   |           | 
| | Balance at beginning of year                 | $ | 2,279,541  |   | $ | 1,518,802 | 
| |                                              |   |            |   |   |           | 
| | Changes during year:                         |   |            |   |   |           | 
| | Fair value of vested and unexercised stock   |   |            |   |   |           | 
| | options (Note 8(b))                          |   | 380,748    |   |   | 489,486   | 
| | Fair value of options exercised              |   | (128,040   | ) |   | -         | 
| | Fair value of warrants issued
      (Note 9) |   | 351,340    |   |   | 271,253   | 
| | Fair
      value of warrants exercised       |   | (1,343,473 | ) |   | -         | 
| |                                              |   |            |   |   |           | 
| | Net change during
      year                 |   | (739,425   | ) |   | 760,739   | 
| |                                              |   |            |   |   |           | 
| | Balance at end of
      year                 | $ | 1,540,116  |   | $ | 2,279,541 | 

|8. | STOCK OPTIONS
|-- | -------------
|   |              
|   | (a)          
|   |              
|   |              
|   |              
|   |              

F-28

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|8. | STOCK OPTIONS (continued)                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                       
|   | Summary of the Companys stock options as at December
        31, 2005 and 2004 and changes during the years then ended is as follows:

| |                                  |  | 2005      |   |   |          |  |  | 2004      |   |   |          | 
| | -------------------------------- |  | --------- | - | - | -------- |  |  | --------- | - | - | -------- | 
| |                                  |  |           |   |   | Weighed  |  |  |           |   |   | Weighted | 
| |                                  |  |           |   |   | Average  |  |  |           |   |   | Average  | 
| |                                  |  | Number    |   |   | Exercise |  |  | Number    |   |   | Exercise | 
| |                                  |  | of Shares |   |   | Price    |  |  | of Shares |   |   | Price    | 
| |                                  |  |           |   |   |          |  |  |           |   |   |          | 
| | Outstanding at beginning of year |  | 1,012,533 |   | $ | 3.40     |  |  | 823,066   |   | $ | 2.06     | 
| |                                  |  |           |   |   |          |  |  |           |   |   |          | 
| | Granted                          |  | 100,000   |   |   | 6.05     |  |  | 265,000   |   |   | 7.02     | 
| | Exercised                        |  | (112,533  | ) |   | 2.58     |  |  | (75,533   | ) |   | 1.60     | 
| | Cancelled                        |  | (50,000   | ) |   | 8.29     |  |  | -         |   |   | -        | 
| |                                  |  |           |   |   |          |  |  |           |   |   |          | 
| | Outstanding at end of year       |  | 950,000   |   | $ | 3.37     |  |  | 1,012,533 |   | $ | 3.40     | 

At December 31, 2005, the Company has
  outstanding stock options to purchase an aggregate 950,000 common shares as
  follows:

| | Options Outstanding |  |                   | Options Exercisable |  
| | ------------------- |  | ----------------- | ------------------- | -
| | Number              |  |                   |                     |  
| | of Shares           |  | Expiry Date       |                     |  
| |                     |  |                   |                     |  
| | 450,000             |  | June 6, 2008      |                     | $
| | 25,000              |  | August 8, 2008    |                     |  
| | 150,000             |  | October 17, 2008  |                     |  
| | 25,000              |  | December 17, 2008 |                     |  
| | 100,000             |  | April 20, 2009    |                     |  
| | 100,000             |  | December 2, 2009  |                     |  
| | 20,000              |  | January 27, 2010  |                     |  
| | 80,000              |  | June 17, 2010     |                     |  
| |                     |  |                   |                     |  
| | 950,000             |  |                   |                     | $

| | (1) | Pursuant to anti-dilution provisions of options outstanding
        on the date of reorganization (Note 1), the holders of these options were
        granted options to purchase an equal number of common shares in each of
        the three new companies formed under the reorganization. The original
        exercise prices and fair values of those options were allocated amongst
        the four companies as follows: 95.1%, to Regalito options, 0.8% to Lumco
        options, 0.7% to Norco options and 3.4% to Global options.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-29

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|8. | STOCK OPTIONS (continued)
|-- | -------------------------

| | (b) | Fair Value of Stock Options
| | --- | ---------------------------

| |                                        |  | Number of |   |   | Fair Value Amount |  
| | -------------------------------------- |  | --------- | - | - | ----------------- | -
| |                                        |  | Options   |   |   | Unvested          |  
| |                                        |  |           |   |   |                   |  
| | Unexercised options, December 31, 2003 |  | 823,066   |   | $ | 405,007           |  
| |                                        |  |           |   |   |                   |  
| | Granted                                |  | 265,000   |   |   | 551,747           |  
| | Vested                                 |  | -         |   |   | (231,457          | )
| | Exercised                              |  | (75,533   | ) |   | -                 |  
| |                                        |  |           |   |   |                   |  
| | Net change during year                 |  | 189,467   |   |   | 320,290           |  
| |                                        |  |           |   |   |                   |  
| | Unexercised options, December 31, 2004 |  | 1,012,533 |   |   | 725,297           |  
| |                                        |  |           |   |   |                   |  
| | Granted                                |  | 100,000   |   |   | 158,175           |  
| | Vested                                 |  | -         |   |   | (290,494          | )
| | Exercised                              |  | (112,533  | ) |   | -                 |  
| | Cancelled                              |  | (50,000   | ) |   | (95,975           | )
| | Adjustment pursuant to reorganization  |  |           |   |   |                   |  
| | (Note 8(a)(1))                         |  | -         |   |   | (30,837           | )
| |                                        |  |           |   |   |                   |  
| | Net change during
      year           |  | (62,533   | ) |   | (259,131          | )
| |                                        |  |           |   |   |                   |  
| | Unexercised options, December 31, 2005 |  | 950,000   |   | $ | 466,166           |  

The fair value used to calculate the
  compensation expense related to the stock options issued to employees and non-employees
  is estimated using the Black-Scholes Option Pricing Model with the following
  assumptions:

| |                                 | 2005  | 2004 
| | ------------------------------- | ----- | -----
| |                                 |       |      
| | Weighted average:               |       |      
| | Risk-free interest rate         | 3.04% | 3.04%
| | Expected dividend yield         | -     | -    
| | Expected stock price volatility | 93%   | 90%  
| | Expected option life in years   | 2     | 2    

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 options.

F-30

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|9. | WARRANTS                                                               
|-- | -----------------------------------------------------------------------
|   |                                                                        
|   | The following summarizes warrant activity during 2005
        and 2004:

| |                                                  |  | Number of  |   |   |                  |  
| | ------------------------------------------------ |  | ---------- | - | - | ---------------- | -
| |                                                  |  | Warrants   |   |   | Fair
      Value |  
| |                                                  |  |            |   |   |                  |  
| | Balance, December 31, 2003                       |  | 5,534,125  |   | $ | 1,072,220        |  
| |                                                  |  |            |   |   |                  |  
| | Issued in private placement (Note
      6(c)(i)) |  | 1,015,100  |   |   | -                |  
| | Issued on acquisition of Casino Property option  |  |            |   |   |                  |  
| | (Note
      4(h)(iii))                           |  | 100,000    |   |   | 271,253          |  
| | Warrants
      exercised during the year         |  | (1,166,625 | ) |   | -                |  
| |                                                  |  |            |   |   |                  |  
| | Net change during
      year                     |  | (51,525    | ) |   | 271,253          |  
| |                                                  |  |            |   |   |                  |  
| | Balance, December 31, 2004                       |  | 5,482,600  |   |   | 1,343,473        |  
| |                                                  |  |            |   |   |                  |  
| | Issued on acquisition of Casino Property option  |  |            |   |   |                  |  
| | (Note
      4(h)(iv))                            |  | 100,000    |   |   | 351,340          |  
| | Warrants exercised during the year               |  | (5,475,100 | ) |   | (1,343,473       | )
| | Warrants expired during the year                 |  | (7,500     | ) |   | -                |  
| |                                                  |  |            |   |   |                  |  
| | Net change during year                           |  | (5,382,600 | ) |   | (992,133         | )
| |                                                  |  |            |   |   |                  |  
| | Balance, December 31, 2005                       |  | 100,000    |   | $ | 351,340          |  

The fair value of the warrants has been
  calculated using the Black-Scholes Option Pricing Model with the following assumptions:

| |                                 | 2005  | 2004 
| | ------------------------------- | ----- | -----
| |                                 |       |      
| | Weighted average:               |       |      
| | Risk-free interest rate         | 3.01% | 2.89%
| | Expected dividend yield         | -     | -    
| | Expected stock price volatility | 71%   | 85%  
| | Expected warrant life in years  | 2     | 2    

F-31

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|9. | WARRANTS (continued)                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                     
|   | At December 31, 2005, the Company has outstanding warrants
        to purchase an aggregate 100,000 common shares of LCC as follows:

Outstanding
      
      
      
      
      
      
      
      
      
      
      Outstandingat
      
      
      
      
      
      
      
      
      
      
      atExercise
      
      December 31,
      
      
      
      
      
      
      
      
      Expired/
      
      December 31,Price
      Expiry Date
      2004
      
      
      Issued
      
      
      Exercised
      
      
      Cancelled
      
      2005$1.50
      May 23, 2005
      3,567,500
      
      
      -
      
      
      (3,560,000
      )
      
      (7,500
      )
      -$1.50
      May 23, 2005
      300,000
      
      
      -
      
      
      (300,000
      )
      
      -
      
      -$3.20
      December 19, 2007
      500,000
      
      
      -
      
      
      (500,000
      )
      
      -
      
      -$5.50
      March 17, 2005 (1)
      1,015,100
      
      
      -
      
      
      (1,015,100
      )
      
      -
      
      -$5.80
      May 21, 2006
      100,000
      
      
      -
      
      
      (100,000
      )
      
      -
      
      -$9.22
      March 14, 2007
      -
      
      
      100,000
      
      
      -
      
      
      -
      
      100,000
      (2)(3)5,482,600
      
      
      100,000
      
      
      (5,475,100
      )
      
      (7,500
      )
      100,000


| | (1) | On February 17, 2005, the expiry period of these warrants
        was shortened from January 8, 2006 to March 17, 2005 pursuant to a provision
        entitling the Company, upon giving notice, to reduce the exercise period
        should the closing price of the Companys common shares be at least
        $7.00 per share for ten consecutive days.                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (2) | Pursuant to the reorganization (Note 1), these warrants
        are exercisable to acquire up to 100,000 common shares of each of the
        Company, Lumco, Norco and Global. Should the warrants be exercised, the
        exercise price of $9.22 per share will be allocated to each of the four
        companies as follows: $8.78 to the Company. $0.07 to Lumco, $0.06 to Norco
        and $0.31 to Global. The warrants are exercisable only upon exercising
        the warrants with the Company and are not exercisable to acquire common
        shares of each of the four companies separately.                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (3) | Subsequent to the year end, on February 14, 2006, the
        Company arranged for the cancellation of these warrants and their replacement
        with warrants for the purchase of 100,000 common shares of each of Lumco,
        Norco and Global, exercisable at the prices as indicated in (2) above.
        Should the shares of the Company be purchased by a third party pursuant
        to a takeover bid or similar acquisition for an amount greater than $8.78
        per share, the Company would pay to the warrant holder the difference
        between such price per share and $8.78 per share for 100,000 shares.

F-32

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|10. | SUPPLEMENTAL CASH FLOW INFORMATION
|--- | ----------------------------------

| |                                                               |   | Cumulative   |  |   |           |  |   |         |  |   |           | 
| | ------------------------------------------------------------- | - | ------------ |  | - | --------- |  | - | ------- |  | - | --------- | 
| |                                                               |   | Period from  |  |   |           |  |   |         |  |   |           | 
| |                                                               |   | Inception to |  |   |           |  |   |         |  |   |           | 
| |                                                               |   | December 31, |  |   |           |  |   |         |  |   |           | 
| |                                                               |   | 2005         |  |   | 2005      |  |   | 2004    |  |   | 2003      | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Significant non-cash financing and investing
      activities |   |              |  |   |           |  |   |         |  |   |           | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Warrants issued for mineral property payments                 | $ | 1,694,813    |  | $ | 351,340   |  | $ | 271,253 |  | $ | 1,072,220 | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Common shares issued for mineral property payments            |   | 4,857,000    |  |   | 1,882,000 |  |   | 549,000 |  |   | 2,426,000 | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Common shares issued in settlement of accounts
      payable  |   | 111,100      |  |   | 111,100   |  |   | -       |  |   | -         | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Common shares issued for employee remuneration                |   | 156,840      |  |   | 156,840   |  |   | -       |  |   | -         | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Shares issued for subscriptions receivable                    |   | 600,000      |  |   | -         |  |   | -       |  |   | -         | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Shares and warrants issued in reverse takeover                |   | 333,780      |  |   | -         |  |   | -       |  |   | 333,780   | 
| |                                                               |   |              |  |   |           |  |   |         |  |   |           | 
| | Options assumed in reverse takeover                           |   | 20,000       |  |   | -         |  |   | -       |  |   | 20,000    | 

F-33

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|11. | SEGMENTED DISCLOSURE                                                                                                                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                 
|    | The Company has one operating segment, mineral exploration,
        and all capital assets of the Company are located in Canada except for
        certain of its mineral properties, as disclosed in Note 4, and certain
        equipment with a net book value of $73,954 located in Chile.                                                  
|    |                                                                                                                                                                                                                                                                                                                                                 
|    | The Company operates in two geographical segments: Canada
        and South America. Corporate administrative activities are conducted from
        Canada. The income and expenses for the years ended December 31, 2005,
        2004 and 2003 and the assets at the end of those years identifiable to
        these segments are as follows:

| |                                    |   | Canada    |   |   | South America |  |   | Total      |  
| | ---------------------------------- | - | --------- | - | - | ------------- |  | - | ---------- | -
| | Year ended December 31, 2005       |   |           |   |   |               |  |   |            |  
| | Interest income                    |   |           |   |   |               |  | $ | 80,235     |  
| | Corporate expenses                 |   |           |   |   |               |  |   | (2,386,743 | )
| | Future income tax recovery         |   |           |   |   |               |  |   | 760,060    |  
| | Net loss for the year              |   |           |   |   |               |  | $ | (1,546,448 | )
| |                                    |   |           |   |   |               |  |   |            |  
| | Mineral exploration segment assets | $ | -         |   | $ | 16,702,048    |  | $ | 16,702,048 |  
| | Corporate assets                   |   |           |   |   |               |  |   | 1,614,831  |  
| |                                    |   |           |   |   |               |  |   |            |  
| | Total assets                       |   |           |   |   |               |  | $ | 18,316,879 |  
| |                                    |   |           |   |   |               |  |   |            |  
| |                                    |   |           |   |   |               |  |   |            |  
| |                                    |   | Canada    |   |   | South America |  |   | Total      |  
| | Year ended December 31, 2004       |   |           |   |   |               |  |   |            |  
| | Interest income                    |   |           |   |   |               |  | $ | 80,226     |  
| | Corporate expenses                 |   |           |   |   |               |  |   | (2,056,129 | )
| | Net loss for the year              |   |           |   |   |               |  | $ | (1,975,903 | )
| |                                    |   |           |   |   |               |  |   |            |  
| | Mineral exploration segment assets | $ | 1,500,142 |   | $ | 15,824,573    |  | $ | 17,324,715 |  
| | Corporate assets                   |   |           |   |   |               |  |   | 3,345,664  |  
| |                                    |   |           |   |   |               |  |   |            |  
| | Total assets                       |   |           |   |   |               |  | $ | 20,670,379 |  
| |                                    |   |           |   |   |               |  |   |            |  
| |                                    |   |           |   |   |               |  |   |            |  
| |                                    |   | Canada    |   |   | South America |  |   | Total      |  
| | Year ended December 31, 2003       |   |           |   |   |               |  |   |            |  
| | Mineral property costs written off | $ | (49,491   | ) | $ | -             |  | $ | (49,491    | )
| | Geographical segment loss          | $ | (49,491   | ) | $ | -             |  |   | (49,491    | )
| |                                    |   |           |   |   |               |  |   |            |  
| | Interest income                    |   |           |   |   |               |  |   | 46,141     |  
| | Corporate expenses                 |   |           |   |   |               |  |   | (1,253,224 | )
| | Net loss for the year              |   |           |   |   |               |  | $ | (1,256,574 | )
| |                                    |   |           |   |   |               |  |   |            |  
| | Mineral exploration segment assets |   | 1,128,632 |   |   | 4,469,960     |  | $ | 5,598,592  |  
| | Corporate assets                   |   |           |   |   |               |  |   | 3,564,002  |  
| |                                    |   |           |   |   |               |  |   |            |  
| | Total assets                       |   |           |   |   |               |  | $ | 9,162,594  |  

F-34

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|12. | INCOME TAX                                                                                                                                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                  
|    | As at December 31, 2005, the Company has non-capital
        losses of approximately $3,542,200 which may be applied against future
        income for income tax purposes. The potential future tax benefits of these
        losses have not been recorded in these financial statements. The losses
        expire as follows:

2015
      $
      1,470,3002014
      
      1,455,3002010
      
      616,600$
      3,542,200
      (1)


| | (1) | Losses from years prior to 2005 have been reduced by
        the amount of non-capital losses held by certain Canadian subsidiaries
        which were sold pursuant to the reorganization.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The reconciliation of income tax provision
  computed at statutory rates to the reported income tax provision is as follows:

| |                                                       |   | 2005     |   |   | 2004     |   |   | 2003     |  
| | ----------------------------------------------------- | - | -------- | - | - | -------- | - | - | -------- | -
| |                                                       |   |          |   |   |          |   |   |          |  
| |                                                       |   | 34.87%   |   |   | 35.62%   |   |   | 37.62%   |  
| |                                                       |   |          |   |   |          |   |   |          |  
| | Income tax benefit computed at Canadian               |   |          |   |   |          |   |   |          |  
| | statutory rates                                       | $ | 539,246  |   | $ | 703,817  |   | $ | 472,507  |  
| | Foreign tax rates different from statutory
      rate |   | 1,907    |   |   | (14,902  | ) |   | (440     | )
| | Stock based compensation                              |   | (229,321 | ) |   | (241,372 | ) |   | (219,094 | )
| | Other differences                                     |   | 46,166   |   |   | 63,245   |   |   | (30,252  | )
| | Future income tax recovery on renounced               |   |          |   |   |          |   |   |          |  
| | exploration expenditures                              |   | (760,060 | ) |   | -        |   |   | -        |  
| | Unrecognized tax losses                               |   | (357,998 | ) |   | (510,788 | ) |   | (222,721 | )
| |                                                       |   |          |   |   |          |   |   |          |  
| |                                                       | $ | (760,060 | ) | $ | -        |   | $ | -        |  

Future income tax assets and liabilities
  are recognized for temporary differences between the carrying amount of the
  balance sheet items and their corresponding tax values as well as for the benefit
  of losses available to be carried forward to future years for tax purposes that
  are likely to be realized. Significant components of the Companys future
  tax assets and liabilities, after applying enacted corporate income tax rates,
  are as follows:

| |                                      | 2005        | 2004      | 2003     
| | ------------------------------------ | ----------- | --------- | ---------
| |                                      |             |           |          
| | Future income tax assets             |             |           |          
| | Temporary differences in property    |             |           |          
| | and equipment                        | $ 10,632    | $ 5,248   | $ 100,412
| | Net tax losses carried forward       | 1,352,926   | 928,240   | 341,406  
| |                                      |             |           |          
| |                                      | 1,363,558   | 933,488   | 441,418  
| | Valuation allowance for
      future |             |           |          
| | income tax assets                    | (1,054,120) | (933,488) | (441,418)
| |                                      |             |           |          
| | Net future income tax assets         | 309,438     | -         | -        
| | Future income tax liability          |             |           |          
| | Temporary differences in mineral     |             |           |          
| | properties                           | (309,438)   | -         | -        
| |                                      |             |           |          
| | Future income tax assets, net        | $ -         | $ -       | $ -      

F-35

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|12. | INCOME TAX (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Flow-through expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Flow-through shares entitle a company that
        incurs certain resource expenditures in Canada to renounce them for tax
        purposes allowing the expenditures to be deducted for income tax purposes
        by the investors who purchased the shares. A future income tax liability
        arises from the renunciation of mineral exploration costs to investors
        of flow-through shares.                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Funds raised through the issuance of flow-through
        shares are required to be expended on qualified Canadian mineral exploration
        expenditures, as defined pursuant to Canadian income tax legislation.
        In December, 2004 the Company raised $2,135,000 from the issuance of flow-
        through shares. The proceeds were to be expended in 2005 on the Hushamu
        and Redstone properties, which were sold to Lumco pursuant to the reorganization
        (Note 1). The proceeds from the flow-through funds were transferred to
        Lumco. As at December 31, 2005, all of the funds had been spent on qualified
        mineral exploration expenditures.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company renounced $2,135,000 of its mineral
        expenditures to flow-through shareholders in 2005. The resultant loss
        of future income tax assets, which is treated as a cost of issuing flow-
        through shares, gives rise to a future tax liability in the amount of
        $760,060. This liability has been offset by the Companys recognition
        of future income tax assets that have been previously written-down by
        a valuation allowance.                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|13. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company has various financial instruments
        including cash, receivables, and payables and accruals. The fair value
        of all financial instruments approximates their recorded amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | These consolidated financial statements have
        been prepared in accordance with Canadian GAAP, which differ from those
        principles and practices that the Company would have followed had its
        financial statements been prepared in accordance with accounting principles
        and practices accepted in the United States of America (U.S. GAAP),
        as described below.                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-36

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES (continued)
|--- | ----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                 
|    | (b)                                                                                                             
|    |                                                                                                                 
|    |                                                                                                                 
|    |                                                                                                                 
|    | (c)                                                                                                             
|    |                                                                                                                 
|    |                                                                                                                 
|    |                                                                                                                 
|    | (d)                                                                                                             
|    |                                                                                                                 
|    |                                                                                                                 
|    |                                                                                                                 
|    | (e)                                                                                                             
|    |                                                                                                                 
|    |                                                                                                                 
|    |                                                                                                                 
|    |                                                                                                                 

F-37

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES AND PRACTICES (continued)
|--- | ----------------------------------------------------------------------------------------------------------------

In March, 2004, the Canadian Institute
  of Chartered Accountants (CICA) released EIC 146 Flow-Through
  Shares, which requires the future income tax liability resulting from
  the timing differences on exploration expenditures renounced to investors be
  recognized upon renunciation. Any draw down of previously unrecognized future
  tax assets from tax losses utilized to offset such future income tax liability
  should be recorded as a credit to income upon renunciation of the exploration
  expenditures by the Company. EIC  146 is effective for all flow-through
  share transactions initiated after March 19, 2004.

Canadian GAAP does not require a separate
  allocation of the amount of funds received by the Company attributable to the
  flow-through feature at the time of issue. Also, in the absence of a specific
  restriction or requirement for the funds to be held in a separate bank account,
  Canadian GAAP permits funds which are to be spent within the current period
  to be included with cash and cash equivalents for purposes of classification
  on the balance sheet and statement of cash flows. Adequate disclosure of the
  commitment to incur qualifying expenditures and renounce the related tax deductions
  is required under Canadian GAAP.

U.S. GAAP requires the premium or discount
  from the market trading price at the time an irrevocable agreement to issue
  the flow-through shares exists, to be accounted for separately on the balance
  sheet. At the time the expenditures are renounced, the previously recorded premium
  or discount is reversed and offset against the tax provision on the income statement,
  and the deferred income tax liability on the balance sheet recorded. Also notwithstanding
  whether there is a specific requirement to segregate the funds, the flow-through
  share funds which are unexpended at the balance sheet date are considered to
  be restricted and are not considered to be cash or cash equivalents under United
  States GAAP.

Had the Company followed U.S. GAAP, the
  effect on its financial statements of the foregoing differences are set out
  below.

| | Consolidated Balance Sheets                              |   | December 31, |   |   | December 31, |  
| | -------------------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                                          |   | 2005         |   |   | 2004         |  
| | Assets under Canadian GAAP                               | $ | 18,316,879   |   | $ | 20,670,379   |  
| | Amortization of mineral interests under U.S. GAAP        |   | (201         | ) |   | (237,985     | )
| | Mineral exploration costs expensed under U.S. GAAP       |   | (11,627,753  | ) |   | (9,216,837   | )
| |                                                          |   |              |   |   |              |  
| | Assets under U.S. GAAP                                   | $ | 6,688,925    |   | $ | 11,215,557   |  
| |                                                          |   |              |   |   |              |  
| | Liabilities under Canadian GAAP                          | $ | 648,703      |   | $ | 504,103      |  
| | Flow-through income
      tax liability                  |   | -            |   |   | 272,450      |  
| |                                                          |   |              |   |   |              |  
| | Liabilities under
      U.S. GAAP                        | $ | 648,703      |   | $ | 776,553      |  
| |                                                          |   |              |   |   |              |  
| | Shareholders equity, under Canadian GAAP                | $ | 17,668,176   |   | $ | 20,166,276   |  
| | Amortization of mineral interests
      under U.S. GAAP  |   | (201         | ) |   | (237,985     | )
| | Mineral exploration costs expensed under U.S.
      GAAP |   | (11,627,753  | ) |   | (9,216,837   | )
| | Flow-through income tax liability                        |   | -            |   |   | (272,450     | )
| |                                                          |   |              |   |   |              |  
| | Shareholders equity, under U.S. GAAP                    | $ | 6,040,222    |   | $ | 10,439,004   |  

F-38

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES AND PRACTICES (continued)
|--- | ----------------------------------------------------------------------------------------------------------------

| |                                          |   | For the Period |   |   |              |   |   |              |   |   |              |  
| | ---------------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                          |   | from Inception |   |   |              |   |   |              |   |   |              |  
| |                                          |   | (October 3,    |   |   | For the      |   |   | For the      |   |   | For the      |  
| |                                          |   | 2001) to       |   |   | Year Ended   |   |   | Year Ended   |   |   | Year Ended   |  
| | Consolidated Statements Of               |   | December 31,   |   |   | December 31, |   |   | December 31, |   |   | December 31, |  
| | Operations                               |   | 2005           |   |   | 2005         |   |   | 2004         |   |   | 2003         |  
| | Loss for the period, under               |   |                |   |   |              |   |   |              |   |   |              |  
| | Canadian GAAP                            | $ | (8,135,760     | ) | $ | (1,546,448   | ) | $ | (1,975,903   | ) | $ | (1,256,574   | )
| | (Amortization) Recovery of mineral       |   |                |   |   |              |   |   |              |   |   |              |  
| | interests under U.S. GAAP                |   | (201           | ) |   | 237,784      |   |   | -            |   |   | (200,110     | )
| | Recognition of deferred tax recovery     |   | (272,450       | ) |   | (272,450     | ) |   | -            |   |   | -            |  
| | Mineral exploration costs expensed       |   |                |   |   |              |   |   |              |   |   |              |  
| | under U.S. GAAP                          |   | (13,228,016    | ) |   | (4,011,179   | ) |   | (8,747,304   | ) |   | (469,533     | )
| | Gain on sale of mineral
      properties |   | 1,600,263      |   |   | 1,600,263    |   |   | -            |   |   | -            |  
| |                                          |   |                |   |   |              |   |   |              |   |   |              |  
| | Loss for the period, under U.S. GAAP     | $ | (20,036,164    | ) | $ | (3,992,030   | ) | $ | (10,723,207  | ) | $ | (1,926,217   | )

| |                                          |   | For the Period |   |   |              |   |   |              |   |   |              |  
| | ---------------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                          |   | from Inception |   |   |              |   |   |              |   |   |              |  
| |                                          |   | (October 3,    |   |   | For the      |   |   | For the      |   |   | For the      |  
| |                                          |   | 2001) to       |   |   | Year Ended   |   |   | Year Ended   |   |   | Year Ended   |  
| | Consolidated Statements Of               |   | December 31,   |   |   | December 31, |   |   | December 31, |   |   | December 31, |  
| | Cash Flows                               |   | 2005           |   |   | 2005         |   |   | 2004         |   |   | 2003         |  
| | Cash flows used in operating activities, |   |                |   |   |              |   |   |              |   |   |              |  
| | under Canadian GAAP                      | $ | (3,671,992     | ) | $ | (1,982,515   | ) | $ | (1,128,284   | ) | $ | (564,425     | )
| | Increased loss due to mineral            |   |                |   |   |              |   |   |              |   |   |              |  
| | exploration costs expensed under         |   |                |   |   |              |   |   |              |   |   |              |  
| | U.S. GAAP                                |   | (13,228,016    | ) |   | (4,011,179   | ) |   | (8,747,304   | ) |   | (469,533     | )
| | Reclassification of funds to be expended |   |                |   |   |              |   |   |              |   |   |              |  
| | on mineral exploration                   |   | (2,135,000     | ) |   | -            |   |   | (2,135,000   | ) |   | -            |  
| |                                          |   |                |   |   |              |   |   |              |   |   |              |  
| | Cash flows used in operating activities, |   |                |   |   |              |   |   |              |   |   |              |  
| | under U.S. GAAP                          | $ | (19,035,008    | ) | $ | (5,993,694   | ) | $ | (12,010,588  | ) | $ | (1,033,958   | )
| |                                          |   |                |   |   |              |   |   |              |   |   |              |  
| | Cash flows from financing activities,    |   |                |   |   |              |   |   |              |   |   |              |  
| | under Canadian and U.S. GAAP             | $ | 36,110,063     |   | $ | 19,301,211   |   | $ | 11,613,771   |   | $ | 2,482,455    |  
| |                                          |   |                |   |   |              |   |   |              |   |   |              |  
| | Cash flows used in investing activities, |   |                |   |   |              |   |   |              |   |   |              |  
| | under Canadian GAAP                      | $ | (30,999,412    | ) | $ | (17,036,257  | ) | $ | (12,862,821  | ) | $ | (728,272     | )
| | Mineral exploration
      costs expensed |   |                |   |   |              |   |   |              |   |   |              |  
| | under U.S. GAAP                          |   | 13,228,016     |   |   | 4,011,179    |   |   | 8,747,304    |   |   | 469,533      |  
| | Funds to be expended on                  |   |                |   |   |              |   |   |              |   |   |              |  
| | mineral exploration                      |   | 2,135,000      |   |   | -            |   |   | 2,135,000    |   |   | -            |  
| |                                          |   |                |   |   |              |   |   |              |   |   |              |  
| | Cash flows used in investing activities, |   |                |   |   |              |   |   |              |   |   |              |  
| | under U.S. GAAP                          | $ | (15,636,396    | ) | $ | (13,025,078  | ) | $ | (1,980,517   | ) | $ | (258,739     | )

F-39

---

|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES AND PRACTICES (continued)
|--- | ----------------------------------------------------------------------------------------------------------------

Recent accounting pronouncements

In March 2004, the Emerging Issues Task
  Force (EITF) issued EITF 04-3, Mining Assets: Impairment and
  Business Combinations. EITF 04-3 requires mining companies to consider
  cash flows related to the economic value of mining assets (including mineral
  properties and rights) beyond those assets proven and probable reserves, as
  well as anticipated market price fluctuations, when assigning value in a business
  combination in accordance with SFAS 141, Business Combinations, and when testing
  the mining assets for impairment in accordance with SFAS 144. The consensus
  is effective for fiscal periods beginning after March 31, 2004. The adoption
  of EITF 04-3 had no impact on the Companys financial position or results
  of operations.

On December 16, 2004, the Financial Accounting
  Standards Board (FASB) issued FASB Statement No. 123 (revised 2004),
  Share-Based Payment (SFAS 123(R)), which is a revision of FASB Statement No.
  123, Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion
  No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement
  No. 95, Statement of Cash Flows. Generally, the approach in SFAS 123(R) is similar
  to the approach described in Statement 123. However, SFAS 123(R) requires all
  share-based payments to employees, including grants of employee stock options,
  to be recognized in the income statement based on their fair values. Pro forma
  disclosure is no longer an alternative. As the Company currently uses the fair
  value method to account for all stock option grants, SFAS 123(R) will have no
  effect on the Companys financial statements as presented herein.

In June 2004, the FASB issued an interpretation
  of SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS
  No.143). This interpretation clarifies the scope and timing of liability
  recognition for conditional asset retirement obligations under SFAS No. 143
  and is effective no later than the end of fiscal 2005. The Company has determined
  that this interpretation, and the adoption of SFAS No. 143, do not have a material
  impact on the Companys condensed consolidated results of operations, financial
  position or cash flows.

In December 2004, the FASB issued SFAS
  153. This statement addresses the measurement of exchanges of nonmonetary assets.
  The guidance in APB No. 29, Accounting for Nonmonetary Transactions,
  is based on the principle that exchanges of nonmonetary 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. This statement amends
  APB No. 29 to eliminate the exception for nonmonetary exchanges of similar productive
  assets and replaces it with a general exception for exchanges of nonmonetary
  assets that do not have commercial substance. A nonmonetary exchange has commercial
  substance if the future cash flows of the entity are expected to change significantly
  as a result of the exchange. This statement will be effective for the Companys
  2006 fiscal year. Earlier application is permitted for nonmonetary asset exchanges
  incurred during fiscal years beginning after the date this statement is issued.
  Management believes this statement will have no impact on the financial statements
  of the Company once adopted.

F-40

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|REGALITO COPPER CORP.                     
|------------------------------------------
|(formerly Lumina Copper Corp.)            
|(A Development Stage Enterprise)          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005
      and 2004          

|14. | DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES AND PRACTICES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In March 2005, the EITF issued EITF 04-6, Accounting
        for Stripping Costs in the Mining Industry. The consensus indicated
        that costs of removing overburden and waste materials (stripping
        costs) after production begins, represent variable production costs
        and should be considered a component of mineral inventory cost subject
        to the guidance in Chapter 4 of Accounting Research Bulletin No. 43, Restatement
        and Revision of Accounting Research Bulletins. EITF 04-6 is effective
        for fiscal years beginning after December 15, 2005 and upon adoption,
        can be applied by either retroactively restating prior periods or using
        a cumulative catch-up adjustment. The Company believes this statement
        will have no impact on the financial statements of the Company once adopted.                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In June 2005, the FASB issued Statement of Financial
        Accounting Standards No. 154, Accounting Changes and Error Corrections
         a replacement of APB Opinions No. 20 and FASB Statement No. 3
        (SFAS 154). SFAS 154 requires retrospective application to
        prior periods financial statements of a change in accounting principle
        unless it is impracticable to do so. This is a change from the existing
        practice that requires most accounting changes to be accounted for by
        including in net income in the period of the change the cumulative effect
        of changing to the new accounting principle. SFAS 154 will be effective
        for accounting changes and corrections of errors made in fiscal years
        beginning after December 15, 2005. The impact of SFAS 154 cannot be determined
        until which time the Company makes a change in accounting policy.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|15. | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On March 13, 2006 the Company entered into an agreement
        with Pan Pacific Copper Co., Ltd. (PPC) under which PPC has
        agreed to make a take-over bid for all of the Companys outstanding
        common shares for consideration of US $6 per share payable in cash. The
        Offer is subject to certain terms and conditions being met including,
        but not limited to, a minimum of 66 2/3% of the outstanding shares, on
        a fully diluted basis, being tendered under the Offer and obtaining regulatory
        approvals.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Offer is expected to be open for acceptance for
        45 calendar days from the delivery date of the offering documents to the
        Companys shareholders, which time period may be extended by PPC,
        subject to certain terms and conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In the event the Offer is not completed due to certain
        events or actions described under the terms of the agreement, the Company
        must pay a non-completion fee of 3% of the maximum cash value of the Offer
        in cash and in certain circumstances, is required to pay US $2,000,000
        as reimbursement of expenses, payable in cash or shares of the Company,
        depending on the reasons for the non- completion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | During fiscal 2005, the Company had retained two financial
        advisors with respect to exploring the possible sale of the Company. Pursuant
        to agreements entered into with these advisors, fees in the aggregate
        of US $1,950,000 will be payable upon consummation of the Offer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-41

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ITEM 18.     FINANCIAL
STATEMENTS

The Company has elected to report under Item 17.

ITEM 19.      EXHIBITS

|3.1. | Memorandum and Articles of Incorporation (Note
  1)                                                                                                                                                                                 
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                     
|10.1 | Altered Memorandum re Change of Name (Note 1)                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                     
|10.2 | Option Agreement dated July 15, 2002 between CRS and
      Great Basin Gold Ltd. regarding the Casino Property (Note 1)                                                                                                             
|     |                                                                                                                                                                                                                                     
|10.3 | Option Agreement dated September 24, 2002 between CRS and
      Redstone Resources, Inc., a company controlled by Newmont Mining
      Corporation regarding the Redstone Property (Note 1)                                         
|     |                                                                                                                                                                                                                                     
|10.4 | Agreement dated August 21, 2002 between CRS and iTech
      Capital Corp. (formerly Jordex Resources Ltd.) regarding the Acquisition
      of 100% of Moraga Resources Corp., which in turn owns the Hushamu Property
      (Note 1)
|     |                                                                                                                                                                                                                                     
|10.5 | Stock Option Plan (Note 1)                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                     
|23.1 | Consent of Auditors (Note 1)                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                     
|23.2 | Consent of Andrew Gourlay (Note
1)                                                                                                                                                                                                  

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|23.3   | Consent of C.M. Rebagliati (Note 1)                                                                                                                                                                                  
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                      
|23.4   | Consent of Ross Banner C.M. Rebagliati (Note 1)                                                                                                                                                                      
|       |                                                                                                                                                                                                                      
|23.5   | Consent of David Pawliuk (Note 1)                                                                                                                                                                                    
|       |                                                                                                                                                                                                                      
|23.6   | Consent of Steven Blower (Note 1)                                                                                                                                                                                    
|       |                                                                                                                                                                                                                      
|23.7   | Consent of Diane Nicolson (Note 1)                                                                                                                                                                                   
|       |                                                                                                                                                                                                                      
|23.8   | Consent of N.C. Carter (Note 1)                                                                                                                                                                                      
|       |                                                                                                                                                                                                                      
|23.9   | Agreement dated October 2002 between CRS and Corriente
      Resources Ltd. regarding the Taca Taca Property (Note 1)                                                                                                
|       |                                                                                                                                                                                                                      
|23.10A | Agreement dated June 9, 2003 between the Company and Las
      Asuncion Negociacion Minera S.A.C. regarding the El Galeno Property (Note
      1)                                                                    
|       |                                                                                                                                                                                                                      
|23.10B | Amendment to Agreement dated June 9, 2003 between the
      Company and Las Asuncion Negociacion Minera S.A.C. regarding the El Galeno
      Property (Note 1)                                                       
|       |                                                                                                                                                                                                                      
|23.11  | Agreement dated October 2003 between the Company and La
      Compañia Minera Caserones and Sociedad Minera California Una de la Sierra
      de Peña Negra to acquire 100% of the Regalito Copper property. (Note 2)
|       |                                                                                                                                                                                                                      
|23.12  | Agreement dated October 28, 2003 between the Company and
      Northern Orion Resources Inc. regarding the San Jorge Property (Note 2)                                                                               
|       |                                                                                                                                                                                                                      
|23.13  | Agreement dated October 29, 2003 between the Company and
      General Minerals Corporation regarding the Vizcachitas Property (Note 2)                                                                              
|       |                                                                                                                                                                                                                      
|23.14  | Agreement dated December 17, 2003 between the Company and
      Andes Pacific Development S.A. regarding the Relincho Property (Note 3)                                                                              
|       |                                                                                                                                                                                                                      
|23.15  | Agreement dated April 30, 2004 between the Company and
      New Inca Goldmines Limited regarding the El Molino mining concession (Note
      4)                                                                     
|       |                                                                                                                                                                                                                      
|11.1   | Code of Ethics (Note 4)                                                                                                                                                                                              
|       |                                                                                                                                                                                                                      
|12.1   | Certification of CEO required by Rule 13a-14(a) or Rule
      15d-14(a) (Note 4)                                                                                                                                     
|       |                                                                                                                                                                                                                      
|12.2   | Certification of CFO required by Rule 13a-14(a) or Rule
      15d-14(a) (Note 4)                                                                                                                                     
|       |                                                                                                                                                                                                                      
|13.1   | Certification of CEO pursuant to 18 U.S.C. Section 1350
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Note
      4)                                                                    
|       |                                                                                                                                                                                                                      
|13.2   | Certification of CFO pursuant to 18 U.S.C. Section 1350
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Note
      4)                                                                    
|       |                                                                                                                                                                                                                      
|23.16  | Agreement dated February 7, 2005 between the Company and
      Electra Gold Ltd. regarding the Apple Bay Property (Note 5)                                                                                           
|       |                                                                                                                                                                                                                      
|3.2    | New Articles of Incorporation (Note 5)                                                                                                                                                                               
|       |                                                                                                                                                                                                                      
|23.17  | Employment Agreement dated October, 27,2003
      between the Company and David Strang (Note 5)                                                                                                                      

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|23.18 | Executive Bonus Agreement dated June
        11, 2004 between the Company and David Strang (Note 5)                                                                                                                                                                                                                                                                               
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.19 | Employment Agreement dated April 24,
        2004 between the Company and Leo Hathaway (Note 5)                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.20 | Agreement dated March 24, 2005 between
        the Company and Corriente Resources Inc. regarding the Taca Taca Property
        (Note 5)                                                                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|12.3  | Certification of CEO required by Rule
        13a-14(a) or Rule 15d-14(a) (Note 5)                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|12.4  | Certification of CFO required by Rule
        13a-14(a) or Rule 15d-14(a) (Note 5)                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|13.3  | Certification of CEO pursuant to 18
        U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002 (Note 5)                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|13.4  | Certification of CFO pursuant to 18
        U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002 (Note 5)                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|10.6  | New Stock
        Option and Bonus Plan;                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.21 | Management
        Proxy Circular of the Company dated April 1, 2005 which includes details
        of the Plan of Arrangement.                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.22 | Amending
        Agreement dated May 9, 2005 between the Company and David Strang;                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.23 | Services
        Agreement dated June 1, 2005 between the Company and Sandra Lim;                                                                                                                                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.24 | Agreement
        dated July 22,2005 between Lumina Chile and Don Panchito Primera
        Una de La Quebrada El Pan Chico, Don Panchito Segunda Una del Arroyo Pena
        Negra and Don Panchito Tercera Una de la Quebrada Las Minitas wherein
        Lumina Chile acquired an option to purchase 90 mining exploitation concessions;                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.25 | Agreement
        dated October 13, 2005 between Lumina Chile and Braulio Godoy Latorre,
        Rolando Nolverto Godoy Latorre, Mr. Walterio Arnaldo Godoy Latorre And
        Hugo Bolivar Godoy Latorre, wherein Lumina Chile obtained the right to
        acquire 16,700 hectares of surface rights with corresponding water rights
        located on the Regalito property;
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.26 | Agreement
        dated October 18, 2005 between Lumina Chile and Rafael Vergara, José
        Antonio Vergara Irarrázabal and Sociedad Agrícola San Sebastián
        Limitada, wherein Lumina Chile obtained the right to acquire certain water
        and surface rights located 38 kilometres from the Regalito property;                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.27 | Agreement
        dated October 18, 2005 between Lumina Chile and Andina Obras y Proyectos
        SAC wherein Lumina Chile entered into an agreement to lease a portion
        of the surface rights;                                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.28 | Two agreements
        dated October 26, 2005 between Lumina Chile and Pascuala Latorre Godoy
        and Ricardo Severo Latorre Ralph wherein Lumina Chile entered into two
        agreements to acquire certain surface rights located on the Regalito property;                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|23.29 | Agreement
        date November 14, 2005 between Lumina Chile and Sociedad Agrícola
        Rio Escondido Limitada, wherein Lumina Chile obtained the right to acquire
        water rights from two wells located approximately 70 kilometres from the
        Regalito property;                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|12.3  | Certification of President
        required by Rule 13a-14(a) or Rule 15d-14(a)                                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                   
|12.4  | Certification of CFO required
        by Rule 13a-14(a) or Rule 15d-14(a)                                                                                                                                                                                                                                                                                                         

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|13.3 | Certification of President
        pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                   
|13.4 | Certification of CFO pursuant
        to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002      

|(1) | These exhibits were previously filed with the Companys
      Annual Report on Form 20-F dated June 11, 2003.           
|--- | ------------------------------------------------------------------------------------------------------------------------
|(2) | These exhibits were previously filed with the Companys
      Amended Annual Report on Form 20-F dated November 28, 2003
|(3) | These exhibits were previously filed with the Companys
      Amended Annual Report on Form 20-F dated January 23, 2004.
|(4) | These exhibits were previously filed with the Companys
      Amended Annual Report on Form 20-F dated April 15, 2004.  
|(5) | These exhibits were previously filed with the Companys
      Annual Report on Form 20-F dated April 4, 2005.           

SIGNATURES

The registrant hereby certifies that it meets all of the
requirements for filing on Annual Report and that it has duly caused and
authorized the undersigned to sign this registration report on its behalf.

|Dated: March 20, 2006 | **REGALITO COPPER CORP.**
|--------------------- | -------------------------
|                      |                          
|                      | By:                      
|                      |                          
|                      |                          
|                      |                          

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