**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-KSB**

(Mark One)
| x      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------------------------------------------------------------------------------------|
|   | For the fiscal year ended  **January 31, 2007**                            |  
[  

]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

For the transition period from [  

] to [  

]

 
Commission file number  **000-4995**

**ARGENTEX MINING CORPORATION**

(Name of small business issuer in its charter)

 

**Nevada**

 

**71-0867623**

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

**1066 West Hastings Street, Suite 2300****Vancouver, BC  Canada**

 

**V6E 3X2**

(Address of principal executive offices)

 

(Zip Code)

Issuer's telephone number  **604-601-8336**

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

Title of each class**Nil**

 

Name of each exchange on which registered**Nil**

Securities registered pursuant to Section 12(g) of the Act:

**Common Shares, par value $0.001**

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [  

]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [   ]

State issuer's revenues for its most recent fiscal year.   Nil

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the *Exchange Act*).

 

Yes x  

No [  

]

 

 

 

 

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State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days.  (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

Note:  If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

**21,052,443 common shares @ $1.215(1) = $25,578,718.25**

(1)  Average of bid and ask closing prices on April 16, 2007.

**(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS)**

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.     Yes [   ]     No [   ]

**(APPLICABLE ONLY TO CORPORATE REGISTRANTS)**

State the number of shares outstanding of each of the issuer's classes of equity stock, as of the latest practicable date.

**21,794,109 common shares issued and outstanding as of April 16, 2007**

**DOCUMENTS INCORPORATED BY REFERENCE**

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format (Check one):  

Yes [  

]  

No x.

 

 

 

 

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**PART I**

**Item 1.**

**Description of Business.**

Note Regarding Forward Looking Statements.

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “ expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels ofactivity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  These risks include, by way of example and not in limitation:

 

**•**

risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;

 

**•**

results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;

 

**•**

mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in production;

 

**•**

the potential for delays in exploration or development activities or the completion of feasibility studies;

 

**•**

risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

 

**•**

risks related to commodity price fluctuations;

 

**•**

the uncertainty of profitability based upon our history of losses;

 

**•**

risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;

 

**•**

risks related to environmental regulation and liability;

 

**•**

risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;

 

**•**

risks related to tax assessments;

 

**•**

political and regulatory risks associated with mining development and exploration; and

 

**•**

other risks and uncertainties related to our prospects, properties and business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.  Because our executive offices are located in Canada, we incur many of our expenses in Canadian dollars.  Except with respect to our financial statements or as otherwise expressed, where in this Form 10-KSB we provide both a dollar amount followed by a 

 

 

 

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Canadian dollar amount in parenthesis, we have converted from Canadian dollars at an exchange rate of $0.8480, which is the rate used by the Bank of Canada at January 31, 2007.

As used in this annual report, the terms "we", "us", "our", and "Argentex" mean Argentex Mining Corporation and our wholly owned subsidiaries SCRN Properties Ltd., a Delaware corporation, and Argentex Mining Corporation, a Delaware corporation, unless the context clearly requires otherwise.

*Corporate Overview*

The address of our principal executive office is Suite 2300, 1066 West Hastings Street, Vancouver, British Columbia, Canada  V6E 3X2.  Our telephone number is (604) 601-8336.

Our common stock is quoted on the OTC Bulletin Board under the symbol "AGXM" and on the Frankfurt Stock Exchange under the symbol “DEB”.

We have two wholly-owned subsidiaries.  One of these is SCRN Properties Ltd., a Delaware corporation, through which we hold our property interests in Argentina.  The other is Argentex Mining Corporation, also a Delaware corporation, which we formed in order to enable us to move our company’s domicile from the state of Nevada to the state of Delaware if we elect to do so in order to pursue a listing on the Canadian TSX Venture stock exchange (see discussion in ‘*Corporate History*’, below)

*Corporate History*

We were incorporated in the State of Nevada on December 21, 2001 under the name "Delbrook Corporation" with authorized capital of 100,000,000 shares of common stock with a par value of $0.001 and 100,000,000 shares of preferred stock with a par value of $0.001.  On March 15, 2004, we changed our name to "Argentex Mining Corporation".  We effected this name change by merging with our wholly owned subsidiary, named “Argentex Mining Corporation”, a Nevada corporation that we formed specifically for this purpose.  Our company was the surviving company in the merger.

We have recently decided to pursue a listing for our company’s common shares on the Canadian TSX Venture Exchange (also known as the “TSX-V”). The TSX-V has recently adopted an internal policy whereby they have refused to accept listing applications from companies incorporated in Nevada unless the applicant either (i) amends its articles of incorporation to conform to certain requirements of TSX-V intended to provide shareholder protections substantially equivalent to the protections provided by the Business Corporation Act (Canada); or (ii) re-domesticates from Nevada to another jurisdiction.  We have commenced informal discussions with TSX-V with respect to this policy, though we have not yet filed a listing application with it.  Depending on the outcome of these discussions, we may ask our shareholders to approve either (a) the re-domestication of our company from Nevada to Delaware or (b)an amendment to our articles of incorporation to include some or all of the clauses requested by TSX-V.  On May 1, 2006, we formed a new Delaware company under the name Argentex Mining Corporation.  If we decide to re-domesticate our company to Delaware, we will ask our shareholders to approve doing so by way of a merger with this wholly-owned Delaware subsidiary. If we decide to pursue either of these options, we intend to prepare and distribute to our shareholders a form of proxy and proxy solicitation material describing our proposal.

*Our Current Business*

We are in the mineral resource business.  This business generally consists of three stages: exploration, development and production.  Mineral resource companies that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged in exploring land in an effort to discover them.  Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage.  Our company is in the exploration stage.

Mineral resource exploration can consist of several stages.  The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not 

 

 

 

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they are or have in the past been extracted.

After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources.  This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease or concession).  After acquisition, exploration would probably begin with a surface examination by a prospector or professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues through un-exposed portions of the property (i.e., underground), possibly trenching in these covered areas to allow sampling of the underlying rock.  Exploration also commonly includes systematic regularly spaced drillingin order to determine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock.  Exploration might culminate in a feasibility study to ascertain if the mining of the minerals would be economic.  A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage.

As discussed in more detail below and in the Description of Property section of this annual report on Form 10-KSB beginning at page 11, below, our current mineral properties consist of five groups of mineral exploration claims.  Four of these groups of claims are located in the Rio Negro and Santa Cruz provinces of Argentina.  All of the mineral exploration licenses with respect to these Argentine claims are registered in the name of our Delaware subsidiary, SCRN Properties Ltd.  Our fifth group of mineral exploration claims is located in the Revelstoke area of British Columbia, Canada.  This fifth group of claims is registered in the name of our company.

There is no assurance that a commercially viable mineral deposit exists on any of our properties.  Further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically and legally feasible to develop or exploit those resources.  Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit would constitute a reserve (a reserve is a commercially viable mineral deposit).  Please refer to the section entitled ‘Risk Factors’, beginning at page 7 of this Annual report on Form 10-KSB, for additional information about the risks of mineral exploration.

*Employees*

As of April 17, 2007, our company did not have any employees, but our subsidiary, SCRN Properties Ltd., employs one person on a full time basis as its legal representative in Argentina.  Our President, our Chief Financial Officer and our part-time bookkeeper all provide services pursuant to consulting contracts.  None of our consultants, including our President and our Chief Financial Officer, are required by the terms of their consulting agreements to spend all of their time on our affairs.

We also engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with our exploration programs.

We retain consultants on the basis of ability and experience.  Except as set forth above, neither we nor any person acting on our behalf has any preliminary agreement or understanding, nor do we contemplate any such, concerning any aspect of our operations pursuant to which any person would be hired, compensated or paid a finder’s fee.

*Competition*

There are numerous mining and exploration companies in Argentina, both big and small.  All of these mining companies are seeking properties of merit.  While we may compete with other exploration companies in our effort to locate and license mineral resource properties, we do not compete with them for the removal or sale of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible.  Readily available markets exist world-wide for the sale of mineral products.  Therefore, we will likely be able to sell any mineral products that we are able to identify and produce.  Our ability to be competitive in the market over the long term is dependent upon the quality and amount of ore discovered, cost of production and proximity to our market.  Due to the large number of companies and variables involved in the mining 

 

 

 

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industry, it is not possible to pinpoint our direct competition.

*Compliance with Government Regulation*

We are committed to complying with and are, to our knowledge, in compliance with, all governmental and environmental regulations applicable to our company and our properties.  Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation.  We do not currently own or operate any mines and are not required to comply with the requirements of these regulatory authorities.  We cannot predict the extent to which these requirements will affect our company or our properties if we identify the existence of minerals in commercially exploitable quantities.  In addition, future legislation and regulation could cause additional expense, capital expenditure, restrictions and delays in the exploration of our properties.

In Argentina, minerals are owned by the provincial governments.  Individual provinces are allowed to impose a maximum 3% royalty on mineral production. Exploration rights are acquired by filing a cateo, which gives exclusive prospecting rights for an area for a period of time, generally three years with the provincial mining authorities. The holder of a cateo has the exclusive right to establish a “manifestacion de descubrimiento”, or “manifestation of discovery”, on that cateo.  Manifestations of discovery can also be set without a cateo on any land not covered by someone else’s cateo.  Manifestations of discovery are filed as either a vein or a disseminated discovery.  A square protection zone can be declared around the discovery of up to 840 hectares for a vein manifestation of discovery or 7,000 hectares for a disseminated manifestation of discovery.  The protection zone grantsthe holder exclusive rights for an indefinite period, during which the holder must provide an annual report presenting a program of exploration work and investments related to the protection zone.

A cateo is an exploration concession that confers priority for the owner to apply for a mining concession (called a “pertenencia”) later.  Cateos are measured in 500 hectare unit areas and cannot exceed a total of 20 units (10,000 hectares).  The length of the cateo tenure is based on its area and starts on the date of awarding the cateo.  Typically, exploration companies acquire cateos in blocks of 5,000 or 10,000 hectares.  330 days after receiving the rights to the cateo, 50% of the area over four units (2,000 hectares) must be dropped.  At 730 days, 50% of the area remaining must be dropped.  Time extensions may be granted to allow for bad weather, difficult access, financial issues, etc.

Applications for cateos may take up to two years to be approved.  In the event that there are multiple applicants for the same area, the priority is based on the initial dates of applications.  The applicant can explore on the land pending formal award of the cateo with the approval of the surface owner of the land.  The time period for reduction of the cateo area does not start until 30 days after a cateo is formally awarded.

The Argentine mining act requires payment of a "canon fee" (tax) of 400 pesos per unit payable upon the application for the cateo.

A “manifestation of discovery” is a block of land similar to a claim in that when the required work and payments are completed, it can be perfected into a “mina”.  A pertenencia or mina is required prior to production.

We filed a Notice of Work (“Muestra de Informe”) with the Dirección de Minería in the Province of Santa Cruz in December 2004 outlining our planned exploration program for 2005 on our Pinguino property.  A Notice of Work does not have to be renewed annually so long as the type of work on the property remains the same during the next year.  As our exploration program for the Pinguino property during 2006 was, and our planned exploration program for the Pinguino property for 2007 should be, substantially similar to our 2005 exploration program we have not been required to renew or re-file a Notice of Work.  No other permits were required for exploration, though we did file a preliminary environmental report on the Pinguino property with the Provincial authorities in December, 2004.

We have not filed any Notice of Work or other plan for any of our other Argentina properties as at the date of filing this annual report on Form 10-KSB.  Our focus has been, and we intend for our focus during 2007 to remain, primarily on our Pinguino property.

In British Columbia, mineral claims are registered using the recently implemented Internet-based Mineral Titles Online system.  This registration system has replaced the previous method, in which free miners acquired title to mineral properties by staking their claims on the ground.  Using the current system, free miners register mineral titles 

 

 

 

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online.  In addition, free miners now use the online system to register work and payments necessary to maintain their claims and leases, transfer their titles to another free miner, change the expiry date (anniversary date) of a claim, amalgamate two or more claims, and make other changes to their registered claims.

A registered holder holds a British Columbia mineral claim for one year after it is initially registered.  After the first year, registered holders may hold the claim from year to year by (a) doing exploration and development and registering a statement of the exploration and development online, or making payments instead of exploration and development, and (b) registering a revised expiry date.

A person, other than the government, must be a free miner to register a claim or lease or to register exploration and development.  A free miner is a person (including artificial persons such as partnerships and corporations) resident in Canada that holds a free miner’s certificate.  Our company, which has registered to do business in British Columbia (the corporate equivalent of residency) holds a free miner’s certificate.

Our Revelstoke claims were registered with the Province of British Columbia on March 27, 2006.  We were required to perform exploration or development work or make payments in lieu of such work on or before March 27, 2007 in order to preserve these claims.  On March 25, 2007, 2007, we elected to make payments in lieu of work to preserve these claims.  At the time of renewal, we elected to reduce the acreage covered by these claims, as well, though the claim numbers are otherwise unaffected.******We do not currently have any plan to explore these mineral claims.

We are prepared to engage professionals, if necessary, to ensure regulatory compliance but in the near term we expect that our activities will require minimal regulatory oversight.  If we expand the scope of our activities in the future it is reasonable to expect that our compliance costs may increase accordingly.

*Intellectual Property*

We do not own, either legally or beneficially, any patent or trademark.

**RISK FACTORS**

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.

**RISKS ASSOCIATED WITH MINING**

*All of our properties are in the exploration stage.  There is no assurance that we can establish the existence of any mineral resource on any of our properties in commercially exploitable quantities.  Until we can do so, we cannot earn any revenues from operations and if we do not do so we will lose all of the funds that we expend on exploration.  If we do not discover any mineral resource in a commercially exploitable quantity, our business could fail.*

Despite exploration work on our mineral properties, we have not established that any of them contain any mineral reserve, nor can there be any assurance that we will be able to do so.  If we do not, our business could fail.

A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.  The probability of an individual prospect ever having a "reserve" that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any 'reserve' and any funds that we spend on exploration will probably be lost.

Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources.  Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.

 

 

 

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The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices.  Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.

*Mineral operations are subject to applicable law and government regulation.  Even if we discover a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral resource.  If we cannot exploit any mineral resource that we might discover on our properties, our business may fail.*

Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.  There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs.  If we cannot accomplish these objectives, our business could fail.

We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance.  Current laws and regulations could be amended and we might not be able to comply with them, as amended.  Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms.  To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.

*If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to develop the property into a producing mine.  If we cannot raise this additional capital, we will not be able to exploit the resource, and our business could fail.*

If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure.  Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis.  If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.

*Mineral exploration and development is subject to extraordinary operating risks.  We do not currently insure against these risks.  In the event of a cave-in or similar occurrence, our liability may exceed our resources, which would have an adverse impact on our company.*

Mineral exploration, development and production involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  Our operations will be subject to all the hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure.  Any such event could result in work stoppages and damage to property, including damage to the environment.  We do not currently maintain any insurance coverage against these operating hazards.  The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.

*Mineral prices are subject to dramatic and unpredictable fluctuations.*

We expect to derive revenues, if any, either from the sale of our mineral resource properties or from the extraction and sale of precious and base metals such as gold, silver, copper, lead, zinc and indium.  The price of those 

 

 

 

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commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods.  The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.

*The mining industry is highly competitive and there is no assurance that we will continue to be successful in acquiring mineral claims.  If we cannot continue to acquire properties to explore for mineral resources, we may be required to reduce or cease operations.*

The mineral exploration, development, and production industry is largely unintegrated.  We compete with other exploration companies looking for mineral resource properties.  While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible.  Readily available markets exist worldwide for the sale of mineral products.  Therefore, we will likely be able to sell any mineral products that we identify and produce. 

In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities.  This competition could adversely affect our ability to acquire suitable prospects for exploration in the future.  Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.

**RISKS RELATED TO OUR COMPANY**

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

Although we have been in the business of exploring mineral resource properties since 2002, we have not yet located any mineral reserve.  As a result, we have never had any revenues from our operations.  In addition, our operating history has been restricted to the acquisition and exploration of our mineral properties and this does not provide a meaningful basis for an evaluation of our prospects if we ever determine that we have a mineral reserve and commence the construction and operation of a mine.  We have no way to evaluate the likelihood of whether our mineral properties contain any mineral reserve or, if they do, that we will be able to build or operate a mine successfully.  We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are exploring our properties.  During the 12 month period ending April 30, 2008, we expect to spend approximately$800,000 on the maintenance and exploration of our mineral properties, the operation of our company and obtaining a listing for our common shares on the TSX Venture Exchange, a Canadian stock exchange.  We therefore expect to continue to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate significant revenues from mining operations and any dispositions of our properties, we will not be able to earn profits or continue operations.  At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development.  We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition.  There is no history upon which to base any assumption as to the likelihood that we will prove successful and we can provideinvestors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

*The fact that we have not earned any operating revenues since our incorporation raises substantial doubt about our ability to continue to explore our mineral properties as a going concern.*

We have not generated any revenue from operations since our incorporation.  From inception through January 31, 2007, we suffered losses of $6,204,485.  We anticipate that we will continue to incur operating expenses without revenues unless and until we are able to sell one or more of our resource properties or identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and build and operate a mine.  We had cash in the amount of $901,549 as of January 31, 2007.  During February, March and April of 2007 we raised $311,260 through the sale of our capital stock and the exercise of share purchase options.  As at January 31, 2007, we had a working capital deficit of approximately $1,125,492.  We estimate our average monthly operating expenses 

 

 

 

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to be approximately $66,000 each month, including exploration, general and administrative expense and investor relations expenses.  Cash on hand as of the date of filing of this annual report on Form 10-KSB is not sufficient to fund our currently budgeted operating requirements for the next 12 months.  In addition, our budget could increase in response to field conditions, drill results and other matters that cannot be currently anticipated.  Also, we may be required to repay currently outstanding convertible debt.  We will probably need to raise additional funds.  As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources.  We have traditionally raised our operating capital from sales of equity and debt securities, but there can be no assurance that we will continueto be able to do so.  If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities.  If any of these were to occur, there is a substantial risk that our business would fail.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors' report on our consolidated financial statements for the year ended January 31, 2007, which are included with this annual report on Form 10-KSB.  Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business.

*Although our primary exploration property is titled in our name, our rights to that property are subject to a written option agreement.  If we materially breach the terms of that option agreement, our rights in the property could be forfeit.*

We entered into a Mineral Property Acquisition Agreement dated February 24, 2004 with Christopher Dyakowski, an ex-director and ex-officer of our company, whereby we agreed to make periodic option payments in cash in exchange for an option to purchase up to 100% of the mineral rights in the parcel of claims that we refer to as the Pinguino property, located in the Santa Cruz province of Argentina.  If we fail to make these payments on time, our option on the Pinguino property could lapse and our interest in the Pinguino property could be forfeit.  If this were to happen, our business would be harmed.

**Risks Associated with Our Common Stock**

*Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.*

Our common stock is quoted on the OTC Bulletin Board service of the National Association of Securities Dealers.  Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects.  This volatility could depress the market price of our common stock for reasons unrelated to operating performance.  Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like the American Stock Exchange.  Accordingly, our shareholders may have difficulty reselling any of their shares.

*Our stock is a penny stock.  Trading of our stock may be restricted by the SEC’s penny stock regulations and the NASD’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.*

Our stock is a penny stock.  The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”.  The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardizedrisk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements 

 

 

 

- 11 -

 

 

showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability ofbroker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the National Association of Securities Dealers has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.  Under interpretations of these rules, the National Association of Securities Dealers believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.  The National Association of Securities Dealers’ requirements make it more difficult forbroker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock. 

***Other Risks***

*Because all of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against them for misconduct and you may not be able to enforce judgement and civil liabilities against our officers, directors, experts and agents.*

All of our directors and officers are nationals and/or residents of countries other than the United States and all or a substantial portion of their assets are located outside the United States.  As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

*Trends, Risks and Uncertainties*

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.  Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.

**Item 2.**

**Description of Property.**

*Executive Offices*

Our principal offices are located at Suite 2300, 1066 West Hastings Street, Vancouver, British Columbia, Canada  V6E 3X2.  Our telephone number at our principal office is (604) 601-8366.  Our fax number is (604) 408-8893.  We lease our office space at this location on a month-to-month basis at a rental rate of approximately $1,000 per month.  We believe that our office space and facilities are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.

In addition to our principal offices in Vancouver, British Columbia, our wholly-owned subsidiary, SCRN Properties Ltd. maintains an office c/o Orlando Rionda, Radio Santiago del Estero 3051, Salta, Argentina, CP4400 Argentina.  Our subsidiary’s telephone number in Argentina is 0054-387-424-8651.  Our subsidiary does not have a fax number in Argentina.

 

 

 

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*Mineral Properties*

Our wholly-owned subsidiary company, SCRN Properties Ltd., owns interests in three mineral properties located in the Rio Negro and Santa Cruz provinces of Argentina and has agreed to purchase an option to acquire a fourth mineral property in Santa Cruz province.  In addition, our company owns interests in a fifth mineral property located near the City of Revelstoke, in British Columbia, Canada.  To date, we have concentrated the bulk of our exploration efforts and expenditures on the Pinguino property, which is the property located in the Santa Cruz province of Argentina on which we have agreed to purchase an option.  During the next 12 months, we intend to continue to focus our efforts primarily on this property.

There is no assurance that a commercially viable mineral deposit exists on any of our properties, including the Pinguino Property, or that we will be able to identify any mineral resource on any of these properties that can be developed profitably.  Even if we do discover commercially exploitable levels of mineral resources on any of our properties, which is unlikely, there can be no assurance that we will be able to enter into commercial production of our mineral properties.

The following is a brief description of each of our mineral properties:

***Pinguino***

Acquisition:

We agreed to purchase an option to purchase the Pinguino property in a mineral property option agreement dated February 24, 2004 between our company and Christopher Dyakowski, who was then our President, Secretary, Treasurer and a member of our board of directors.  The purchase price for the option was approximately $393,500 ($450,000 CAD) payable in five installments as follows:

 

**•**

approximately $43,710 (CAD$50,000), paid on July 1, 2004;

 

**•**

approximately $65,565 (CAD$75,000), paid September 9, 2005;

 

**•**

approximately $87,420 (CAD$100,000), paid on July 1, 2006;

 

**•**

approximately $87,420 (CAD$100,000) due on or before July 1, 2007; and

 

**•**

approximately $109,275 (CAD$125,000) due on or before July 1, 2008.

When we have finished paying all of these installments, the option will be deemed to have been exercised and we will own the Pinguino property subject to a 2% net smelter returns royalty in favor of Mr. Dyakowski.  We will have the right to purchase one half of Mr. Dyakowski’s net smelter returns royalty from the Pinguino property for the sum of approximately $874,200 (CAD$1,000,000) and all of it for the sum of approximately $1,748,400 (CAD$2,000,000).  For administrative convenience, title to all of the claims comprising the Pinguino property has been transferred to our subsidiary, SCRN Properties Ltd.  In addition, during the term of the option agreement, our company has the sole and exclusive right to possess, explore and exploit the Pinguino property.  During this period, we also have the obligation to maintain the mineral claims comprising the Pinguino property in good standing.

Location:

The Pinguino property is located in southern Argentina in the north-central part of the Province of Santa Cruz, centered at longitude 68o 34’ West and latitude 48o 00’ South.

Description of Mineral Claims:

The Pinguino Property consists of one cateo that covers a total of 10,000 hectares.  The cateo overlaps 30 vein pertenencias and one “Manifestacion de Descubrimiento”, extending 36 kilometers east-west and 19 kilometers north-south.  These mineral interests are as follows:

 

 

 

 

- 13 -

 

 

 

**Property  Name**

**Expediente  No. (File No.)**

**Registered  Holder**

**Claim  Type**

**Size****(Hectares)**

Pinguino

406.876/03

SCRN Properties Ltd.

Cateo

10,000

Pinguino

414.409/CID/00

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,500

Pertinencias 1 to 30

Described by Gauss Kruger Coordinates

SCRN Properties Ltd.

Pertinencias

180

There are no maintenance fees to be paid on a cateo or on a Manifestacion de Descubrimiento, but there are fees charged semi-annually (i.e., every six months) to maintain a pertinencia.  We are current in payment of any maintenance fees on our Pinguino property.

Prior Work:

The only historical exploration at the Pinguino property was done by Minera Mincorp between 1994 and 1996 in essentially the same area called the Cerro Léon Project.  We are advised that their work included a reconnaissance geochemical lag samples, 196 kilometers2 of geological mapping, excavation and sampling of 155 trenches totaling 1,543 meters along the silicified veins.  In addition, 18 HQ diamond drill holes (1,032 m total) drilled along the principal vein on the property (known as the “Marta vein”) and other veins returned values somewhat lower than the surface results and with higher silver values locally.  Minera Mincorp ceased work on the project in 1996.  The data and core are at the Cerro Vanguardia minesite, which we do not own or have any right to, and have not been made available to our company.

Christopher Dyakowski acquired the Pinguino property in 1998****and, in 2000, optioned it to High American Gold Inc., a junior exploration company operating in Argentina.  High American Gold conducted a short property exam and approached Minera Mincorp to negotiate a joint venture and in return acquired copies of the work carried out on the Pinguino Property by Minera Mincorp.  High American subsequently defaulted on its option payments to Mr. Dyakowski and returned the Pinguino property to him, together with copies of all their data.

Our Work on the Pinguino Property to Date:

During 2004 we engaged in preliminary exploration activities at our Pinguino property.  These preliminary exploration activities consisted primarily of prospecting, soil sampling, trenching and trench sampling and IP geophysics.  In early 2005, we initiated our first drill program on the best known vein system on the property, known as the Marta vein.  This drill program consisted of 45 short drill holes for a total of 3,010 meters, testing the near-surface targets that were largely determined by previous trenching results.

We focused our drilling efforts on selected areas along the Marta vein based upon anomalous results from surface trenching.  Analytical results returned a number of intervals of anomalous silver-gold mineralization contained in epithermal veins hosted by sedimentary rocks of the Roca Blanca formation. With an average length of approximately 75 meters, many of these holes tested the oxidized portion of the vein systems.  The estimated depth of oxidation appears to be approximately 35-40 meters below surface.  

In March 2006, we undertook a second drill program on the Pinguino property.  We continued to focus on the Marta vein system, much of which remained untested from the previous drilling.  The method of drill target definition in this drilling was different than previous drilling in that geophysical anomalies along the Marta trend were tested.  Again, a number of mineralized silver-gold intervals were discovered in the northern part of the Marta vein but, in the southern portion, two drill holes intersected into a substructure of the main Marta vein that revealed high base metal, silver, gold and indium values.  Other drill holes in the adjacent Yvonne vein also showed a high sulphide content and anomalous base, precious and indium values over significant widths.

A followup drill program, consisting of 30 holes for a total of 3000 meters was completed in mid-January 2007.  We focused on the central part of the Marta vein system, in which approximately 500 meters of the approximate 700 meter mapped strike length was tested by shallow drill holes. A small number of holes were also drilled in Yvonne.  We announced the analytical results for this 30 hole drilling program on April 16 and April 23, 2007.  The Marta 

 

 

 

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Centro results show increased metal grades and thickness at depth, while the Yvonne results show higher gold and copper values than previous drilling in that area.

The use of IP geophysics and specific chargeability anomalies has proved to be a much better targeting method than previously thought when the initial geological impression was of a low-sulphidation epithermal model.  The high concentrations of sulphides in a central core zone surrounded by disseminated and veinlet mineralization provides an excellent target for this type of geophysical method.

Mapping has indicated approximately 60 kilometers of epithermal veins and vein-breccias on the property.  Very few of these have been sufficiently tested and sampled with work completed to date. The geophysical coverage completed on the Marta vein in 2004 is currently being supplemented by additional grid coverage on new veins.

There can be no assurance that future exploration will reveal any significant amounts of gold or other minerals in quantities sufficient to justify development of a mine or the conduct of mining operations.

Regional Geology

The Pinguino property is located in the Patagonia region of southern Argentina in a physiographic province referred to as the Deseado Massif.  This area is in part underlain by continental Jurassic felsic ignimbrites, megabreccias, pyroclastic flows, tuffs and volcanic flows. Local stratigraphy is comprised of Roca Blanca (Lower Jurassic) and Bajo Pobre (Mid-Jurassic).

The mineralization discovered to date on the Pinguino Property can be classified into two models of epithermal mineralization.  In the northern part of the Marta vein, quartz-adularia-sericite gold-silver epithermal mineralization in a strongly northwest trending structural zone conforms in many respects to the model for a low-sulphidation precious metal occurrence.  In the southern part of the Pinguino property, specifically in Marta Centro and Yvonne, the high sulphide base metal mineralization and the numerous occurrences of vein and sulphide brecciation appear to indicate a mineralizing system driven from below by a possible intrusive source within that same northwest trending structural zone.  Within the property boundaries oblong airborne magnetic anomalies, seen in Santa Cruz provincial airborne magnetic data, in the vicinity of high sulphide mineralization drill intersections appear to support that theory.

Property Geology

The main Pinguino vein system is an argillic altered, silicified system that is moderately resistant to weathering and is exposed up to 10 meters, relative to the flat surrounding land.  Silicification and disseminated-veinlet mineralization can also be tens of meters in width.  In total, the main Marta vein is exposed over a strike length of six kilometers but numerous subsidiary parallel and conjugate veins are known and total approximately 60 kilometers in combined strike length.  Rusty weathering gossan or hematite is found in conjunction with some sections of the mineralized system.  As well, colloform, banded silica and open space fillings are exposed in surface trenches and weathered insitu.

Physiography

The property is located in the Sub-Andean Patagonia geographical region, which lies south of Rio Colorado, east of the Andes Mountains to the Atlantic Ocean, and south to the Straits of Magellan in southern Argentina.  Patagonia includes the provinces of Neuquén, Rio Negro, Chubut, and Santa Cruz.

The topography is flat to undulating plateaus cut by small, frequently dry streams and dotted with closed basins holding temporary lakes and springs.  The average elevation of the property is approximately 400 meters above mean sea level.

Vegetation is typically stunted with hardy shrubs, low trees, and hardy grasses suited for the semi-desert climate.  Animals include herds of guanco (an American camel), flocks of ñandu (an American ostrich), mountain lion, rabbit or hare, red fox, several flightless birds, and a variety of migrant birds.

 

 

 

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Accessibility

National Route 3 is the major paved provincial highway in southeastern Argentina.  It parallels the Atlantic coast and connects the major regional centers Comodoro Rivadavia and Rio Gallegos.  Both centers are served by daily flights from Buenos Aires.  The nearest city to the property, Puerto San Julian is located on the Atlantic coast 160 kilometers southeast of the property.  It is 250 kilometers south of Comodoro Rivadavia and 400 kilometers north of Rio Gallegos along National Route 3.

Vehicle access to the property is via National Route 3 to the village of Tres Cerros, which is about 140 kilometers north of Puerto San Julian. The graveled (ripio) Provincial Route 87 goes west from Tres Cerros for 40 kilometers where it meets Provincial Route 75 that heads northwest for 21 kilometers.  The local road turns north for 16 kilometers to the estancia El Piche.  A single lane gravel road continues another 12 kilometers west to give access to the project area.  Within the property, gravel and dirt roads provide good access to most areas of the property.  In winter or during infrequent rainstorms, four-wheel drive is necessary.

The property covers several estancias (sheep ranches), some abandoned, located in the central part of Santa Cruz Province, particularly El Piche.

Infrastructure

There are no nearby power lines or telecommunication lines.  A natural gas transmission line is located within 65 kilometers east of the property, passing just west of Puerto San Julian.  The main economic activity is sheep farming.  The Cerro Vanguardia gold and silver mine and mill site, operated by a subsidiary of Anglo Gold, is located approximately 48 kilometers southeast from the center of the Pinguino property.  The technical college at Puerto San Julian has introduced technical training for the mining industry to increase the capacity of the local workforce.

Budget

We estimate that our proposed exploration program on the Pinguino property will cost approximately $422,000 over the 12 month period ending February 28, 2008, including the option payment due on or before July 7, 2007.  Our goal during this period will be the expansion of geophysical coverage on the property and continued drill testing of geophysical anomalies along the Marta vein and subsidiary veins.  Our success to date in correlating geophysical anomalies with high sulphide base metal mineralization is encouraging as we plan future exploration work.

There are no known reserves on the Pinguino property and any proposed program by us is exploratory in nature. We have not conducted any significant exploration activities on the Pinguino property.  We plan to review these mineral claims and, if warranted, undertake further exploration activities.  We are presently in the exploration stage and there is no assurance that a commercially viable mineral deposit, a reserve, exists in the Pinguino property until further exploration is done and a comprehensive evaluation concludes economic and legal feasibility.

**Santa Cruz Properties**

Acquisition

We own interests in 15 additional mineral claims in the Santa Cruz Province of Argentina that form two groups, or properties.  We refer to one of these groups of mineral claims, consisting of 10 claims, as the “Santa Cruz” properties.  We refer to the remaining five mineral claims as the “El Condor” property.  These claims collectively cover approximately 55,027 hectares.

The Santa Cruz Properties are described as follows:

**Property Name**   

 

**Expediente  No.**   

**(File  No.)**   

**Registered  Holder**   

  

**Claim  Type**   

  

**Size**   

**(Hectares)**   

Diamante 1 

407.929/03  

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,900  

 

 

 

 

- 16 -

 

 

 

Diamante 2 

407.928/03  

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,850  

CV Norte  

407.935/03  

SCRN Properties Ltd. 

Cateo

6,355  

CV 1  

407.931/03  

SCRN Properties Ltd.

Manifestacion de Descubrimiento

3,000  

CV2  

407.930/03  

SCRN Properties Ltd.

Manifestacion de Descubrimiento

3,000  

CV 3  

407.932/03  

SCRN Properties Ltd.

Manifestacion de Descubrimiento

3,000  

La Leona  

407.220/03 

SCRN Properties Ltd.

Cateo

6,800  

Cerro Contreras  

407.182/03 

SCRN Properties Ltd.

Cateo

9,750  

Nuevo Oro 1  

407.933/03 

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,903  

Nuevo Oro 2  

407.934/03 

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,951  

The Diamante 2, CV Norte, CV 1, CV 3, La Leona, Cerro Contreras, and Nuevo Oro 1 and Nuevo Oro 2 were acquired by us pursuant to the terms of a mineral property acquisition agreement dated February 24, 2004 between us and Christopher Dyakowski, our former President, Chief Executive Officer, Chief Financial Officer, Secretary and a former director.  We refer to this group of claims as the “Dyakowski property”.

As consideration for the Dyakowski property, we issued to Mr. Dyakowski, subject to escrow and return to treasury conditions, a total of 833,333 shares of our common stock.  As the result of a March 15, 2004 share dividend, these 833,333 shares were increased to 2,499,999 shares.  Under the agreement, these shares were to be returned to treasury if we did not commence work on the Dyakowski property, the Pinguino property and a third property (see discussion of the SCRN property, below) on or before April 30, 2004.  As we commenced our work program prior to April 30, 2004, these 2,499,999 shares were not returned to treasury at that time.  Under the agreement, these shares were to continue to be held in escrow and released to Mr. Dyakowski, if at all, in installments over a period of time and upon the occurrence of certain events.  These escrow provisions were subsequently deleted, and the number of shares tobe released to Mr. Dyakowski was reduced, pursuant to the terms of a Restated Amendment to Mineral Property Acquisition Agreements dated as of August 8, 2005.  This Restated Amendment is described below, at page 19.

We acquired the Diamante 1 and CV2 Manifestacions de Descubrimiento pursuant to a mineral property acquisition agreement dated February 20, 2004 with Storm Cat Energy Corp., whereby we also acquired three additional manifestations of discovery located in the Rio Negro Province of Argentina and discussed at page 48, below, under the heading “*Rio Negro Properties*”.  We paid to Storm Cat Energy Corp. the sum of approximately $7,528 for all of these manifestations of discovery.  At the time of this acquisition in February, 2004, Storm Cat Energy Corp. was an affiliate of Christopher Dyakowski, our former President, Chief Executive Officer, Chief Financial Officer, Secretary and director.

Our El Condor property is described as follows:

 

**Property Name**  

**Expediente No.**  

**Registered Holder**  

**Claim Type**  

**Size**  

  

**(File No.)**  

  

  

**(Hectares)**  

El Condor  

406877/CID/03

SCRN Properties Ltd. 

Cateo

10,000  

Condor Manifestacion de Descubrimiento (1)  

414.085/Palacios/00

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,500  

Condor Pertinencia 1 (2)  

N/A 

SCRN Properties Ltd.

Pertinencias

6

Condor Pertinencia 2 (2)  

N/A 

SCRN Properties Ltd.

Pertinencias

6

Condor Pertinencia 3 (2)  

N/A 

SCRN Properties Ltd.

Pertinencias

6

 

(1)      

Contained within the area of the Condor manifestacion de descubrimiento and the El Condor cateo.

(2)      

Contained within the area of the El Condor cateo. 

 

 

 

 

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We acquired the El Condor property pursuant to a mineral property acquisition agreement dated February 20, 2004 between our company and San Telmo Energy Ltd.  As consideration for the Condor property we paid to San Telmo Energy Ltd. the sum of approximately $7,528.  The Condor property is subject to a 2% net smelter returns royalty in favor of San Telmo Energy Ltd.  We have the right to repurchase one half of this royalty for approximately $874,200 (CAD$1,000,000) and all of this royalty for approximately $1,748,000 (CAD$2,000,000).  At the time of this acquisition in February, 2004, San Telmo Energy Ltd. was an affiliate of Christopher Dyakowski, our former President, Chief Executive Officer, Chief Financial Officer, Secretary and director.

There are no maintenance fees to be paid on a cateo or on a manifestation of discovery, but there are semi-annual fees charged to maintain a pertinencia.  We are current in the payment of all maintenance fees on that portion of our El Condor property comprised of pertinencias.

There are no known commercially viable mineral resources (known as a ‘reserve’) on our Santa Cruz property or our El Condor property.  Any proposed program by us is exploratory in nature and we have not conducted any significant exploration activities on these properties.  We plan to review these mineral claims and, if warranted, undertake further exploration activities but we cannot give any assurance that either of these properties will warrant further exploration activities.

Access

Access to our Santa Cruz and El Condor properties can be initiated from Rio Gallegos, the capitol of Santa Cruz province**,** heading north by road for approximately six hours to the community of Tres Cerro.  From there, a moderate amount of off-road travel is required to access the properties.  Relatively gentle terrain allows easy off-road travel.

In May, 2004 we conducted reconnaissance prospecting and limited soil sampling and geophysics on the El Condor property.  Historical results showed indications of visible gold within a small area and the exploration program was directed to expand the area of potential mineralization through geochemical and geophysical means.  The anomalous geochemistry was spotty and did not show a coherent pattern.  Geophysics showed an extension of the resistive material to depth. No further work has been carried out on El Condor.

On the Santa Cruz property, we have focused on reconnaissance prospecting, which we have conducted simultaneously with the drill program on our Pinguino property.  Truck-based prospecting covered a number of properties and rock samples were collected in a number of prospective sites.  A number of these samples have returned anomalous gold values but further work is warranted.  No significant field work has been conducted on these Manifestacions de Descubrimiento.

History

A cateo covering the Condor property was originally registered by Mr. Dyakowski as bare trustee for San Telmo Energy Ltd. in November 1998.  In early 1999 San Telmo Energy Ltd. conducted a minor work program on the property consisting of general prospecting and grab sampling.  In 2000 San Telmo Energy Ltd. filed the Condor manifestacion de descubrimiento and, in 2003, it surveyed and filed the Condor Pertinencias 1, 2 and 3 and re-filed the El Condor cateo.

Regional Geology

Our Santa Cruz properties are located in the Patagonia region of southern Argentina in a physiographic province referred to as the Deseado Massif.  This area is in part underlain by continental Jurassic felsic ignimbrites, megabreccias, pyroclastic flows, tuffs and volcanic flows. Local stratigraphy is comprised of Roca Blanca (Lower Jurassic), Bajo Pobre (Mid-Jurassic) and Chon Aike (Mid-Upper Jurassic).

 

 

 

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Budget

We estimate that preliminary exploration programs on our Santa Cruz properties will cost approximately $22,000 with the goal of determining whether subsequent exploration is warranted.  This proposed preliminary exploration program may include prospecting of northwest-trending lineaments together with geological mapping, soils and magnetometer surveys.

There are no known reserves on our Santa Cruz properties and any proposed program by us is exploratory in nature.  We have not conducted any significant exploration activities on our Santa Cruz properties. We plan to review these mineral claims and, if warranted, undertake exploration activities.  We are presently in the exploration stage and there is no assurance that a commercially viable mineral deposit, a reserve, exists in our Santa Cruz properties until further exploration is done and a comprehensive evaluation concludes economic and legal feasibility.

**Rio Negro Properties**

Acquisition and Location

We own interests in three cateos and 15 manifestations of discovery located in the Los Menucos epithermal gold district of Rio Negro province.  These Rio Negro properties cover 68,799 hectares and are described as follows:

**Property Name**   

**Expediente No.**   

**Registered Holder**   

**Claim Type**   

**Size**   

   

**(File No.)**   

   

   

**(Hectares)**   

Catre 1  

28.020-M-2.003

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,906

Catre 2  

28.030-M-2.003

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,940

Mochas 1  

28.044-03

SCRN Properties Ltd.

Cateo

9,450

Mochas 2  

28.044-03

SCRN Properties Ltd.

Cateo

9,959

Mochas 3  

28.046-03

SCRN Properties Ltd.

Cateo

9,877

Pilquin 1  

28.031-M-2003

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,475

Pilquin 2  

28.032-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

3,000

Pilquin 3  

28.033-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

3,000

Pilquin 4  

28.034-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,950

Pilquin 5  

28.035-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,950

Pilquin 6  

28.036-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,999

Pilquin 7  

28.037-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,880

Pilquin 8  

28.038-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,959

Pilquin 9  

28.039-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,999

Pilquin 10  

28.040-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,730

Pilquin 11  

28.041-03

SCRN Properties Ltd.

Manifestacion de Descubrimiento

1,840

Pilquin 12  

28.042-M-2003

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,920

Pilquin 13  

28.043-M-2003

SCRN Properties Ltd.

Manifestacion de Descubrimiento

2,965

The Catre 1 and Catre 2, Pilquin 2 and 3, and Pilquin 4 through 11 Manifestacion de Descubrimiento and the Mochas Cateos, which we have sometimes referred to collectively as the “SCRN property”, belong to SCRN Properties Ltd.  We acquired all of the issued and outstanding shares of SCRN Properties Ltd., pursuant to the terms of a share purchase agreement dated February 24, 2004 with Christopher Dyakowski, our former President, Chief 

 

 

 

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Executive Officer, Chief Financial Officer, Secretary and director.  Under this share purchase agreement, Mr. Dyakowski sold to our company all of the issued and outstanding shares of SCRN Properties Ltd. in exchange for a total of 833,333 shares of our common stock, which we issued to Mr. Dyakowski subject to escrow and return-to-treasury conditions.  As the result of a March 15, 2004 share dividend, these 833,333 shares were increased to 2,499,999 shares.  Under the agreement, these shares were to be returned to treasury if we did not commence work on the Dyakowski property, the Pinguino property or the SCRN property on or before April 30, 2004.  As we commenced our work program prior to April 30, 2004, these 2,499,999 shares were not returned to treasury at that time.  Under the agreement, these shares were to continue to be held in escrow and released to Mr. Dyakowski, if at all, in installments over aperiod of time and upon the occurrence of certain events.  These escrow provisions were subsequently deleted, and the number of shares to be released to Mr. Dyakowski was reduced, pursuant to the terms of a Restated Amendment to Mineral Property Acquisition Agreements dated as of August 8, 2005.

On June 30, 2005, we entered into an amending agreement with Christopher Dyakowski whereby we amended the mineral property acquisition agreement dated as of February 24, 2004 pertaining to the Dyakowski properties, the share purchase agreement dated as of February 24, 2004 pertaining to the acquisition of all of the issued and outstanding shares of SCRN Properties Ltd., and an Escrow Agreement dated as of March 4, 2004.  This amending agreement was restated August 8, 2005.  In the restated amending agreement we agreed to release the 4,999,998 common shares of our company that were being held in escrow pursuant to the SCRN share purchase agreement and the Dyakowski mineral property acquisition agreement (each as to 2,499,999 common shares).  Under the terms of the release, 4,749,998 of these shares were released to our company for cancellation, and the balance of 250,000 shares were released to Mr.Dyakowski as payment in full for the transfer of the Dyakowski property mineral claims and the shares of SCRN Properties Ltd.  Under the amending agreement, Mr. Dyakowski continued to be responsible to complete the registration of legal title to all of the mineral properties in the name of our wholly-owned subsidiary, SCRN Properties Ltd.

The Pilquin 1, 12 and 13 manifestations of discovery were acquired pursuant to our mineral property acquisition agreement dated February 20, 2004 with Storm Cat Energy Corp., discussed above at page 16, in which we also acquired two additional manifestations of discovery located in Santa Cruz province.

The cateos and manifestations of discovery comprising our Rio Negro properties are registered in the name of our wholly-owned subsidiary, SCRN Properties Ltd.  There are no maintenance fees to be paid on a cateo or on a manifestation of discovery.

There are no known reserves on our Rio Negro properties and any proposed program by us is exploratory in nature.

Access

Our Rio Negro properties can be accessed from Viedma, the capitol of the Rio Negro province, which is approximately 450 kilometers to the east or from Neuquen, approximately 300 kilometers to the north. Well-maintained provincial highways access the community of Los Menucos, which is located in the heart of our Rio Negro properties.

Our Work on the Rio Negro Properties to Date

During regional prospecting of our SCRN property, we discovered two new epithermal-style veins located on the claim described as Pilquin 9, with each being 1,640 feet (500 meters) in length.  Quartz vein breccia, crustiform quartz layers and chalcedonic quartz were evident.  One vein had a  strike length of approximately 1.5 kilometers and seven grab meters with samples were taken over that distance to test the vein.  Gold values ranged from a low of 3.3 ppb to a high of 58.5 parts per billion (ppb) silver. Silver values ranged from a low of 259 ppb to a high of 1401 parts per billion.  The second vein had a strike length of approximately 870 meters with six samples collected over that distance. Gold values within these samples ranged from a low of 8.7 parts per billion to a high of 71.2 parts per billion. Silver values ranged from 583 parts per billion to a high of 6656 parts per billion.

We have conducted a preliminary property examination of the Rio Negro properties, carrying out reconnaissance prospecting and sampling on a large part of the claim group.  This was likely the first concerted ground-based 

 

 

 

- 20 -

 

 

exploration program on the properties and was largely truck-based prospecting because of the large distances involved. Significantly, a large area of hydrothermal alteration was discovered using this method and anomalous gold values were found in rock grab samples of vein material in place.

Follow-up prospecting and mapping expanded the area of anomalous gold values to another distinct zone and an extensive system of epithermal quartz veins was mapped out.  A program of detailed soil sampling was carried out over an area covering the know mineralization and extending into other areas of overburden cover.  A number of anomalous zones were discovered but have yet to be followed up.

Regional Geology

The Los Menucos district has significant concentrations of advanced argillic-altered Choiyoy-age ignimbrites and rhyolites.  The most favourable rocks for mineralization in the Somuncura Massif region of Rio Negro appear to be the PermoTriassic Choiyoy Formation and equivalents, which are intruded by younger plutons that are Tertiary and likely Miocene in age. In addition to the epithermal targets, the Choiyoy volcanic rocks have the potential to host porphyry copper-gold mineralization.

Numerous kaolin deposits in the Los Menucos area which are being exploited for ceramic quality “china” clay, are believed to be related to a strong northeast trend seen on remote sensing images. Much of this alteration may be related to the intrusion of Permian rhyolite domes or other intrusive bodies below the altered areas.

Budget

We estimate that preliminary exploration programs on our Rio Negro property will cost approximately $10,000 with the goal of determining whether subsequent exploration is warranted.  This proposed preliminary exploration program may include prospecting of northwest trending lineaments together with geological mapping, soils and magnetometer surveys and is currently being deferred pending results of our exploration work on the Pinguino property.

There are no known reserves on our Rio Negro property and any proposed program by us is exploratory in nature. We have not conducted any significant exploration activities on our Rio Negro property. We plan to review these mineral claims and, if warranted, undertake exploration activities. We are presently in the exploration stage and there is no assurance that a commercially viable mineral deposit, a reserve, exists in our Rio Negro property until further exploration is done and a comprehensive evaluation concludes economic and legal feasibility.

**British Columbia Properties:**

On March 31, 2006, we acquired five mineral tenures located near the headwaters of Ruddock Creek in the Revelstoke area of British Columbia for the sum of approximately $920 (CAD$1,053).  The headwaters of Ruddock Creek are located in the Scrip Range of the Monashee Mountains in southeast British Columbia, approximately 100 kilometers north northwest of Revelstoke.  Our five mineral tenures originally covered approximately 2,501.089 hectares, or 6,180 acres, of extremely mountainous terrain.  We have not yet defined an exploration program for this property.  On March 25, 2007, we extended the initial one-year tenure of these five mineral claims for an additional year and we reduced the overall area covered to approximately 100 hectares, or 247 acres.

During the 12 months ending April 30, 2008, we intend to focus our exploration activities almost entirely on our Pinguino property.  We will require a minimum of approximately $800,000 to proceed with our plan of operation over the next 12 months, exclusive of any acquisition or development costs but including administrative and exploration costs.  In addition, we may have to repay up to $1,523,000 in principal and interest that we owe during the next 12 months.  We had cash in the amount of $901,549 and a working capital deficit in the amount of $1,125,492 as of January 31, 2007.  Since January 31, 2007, we have raised $311,260 and we have repaid one promissory note in the amount of $94,185, including principal and interest.  Cash on hand as of the date of filing of this annual report on Form 10-KSB is not sufficient to fund our currently budgeted operating requirements for the next 12 months.  Inaddition, our budget could increase in response to field conditions, drill results and other matters that cannot be currently anticipated.  Also, we may be required to repay the currently outstanding principal and 

 

 

 

- 21 -

 

 

interest referred to above.  We will probably need to raise additional funds.  We plan to raise any required funds through private placement sales of our common stock but we do not currently have any arrangements in place for the completion of any private placement financings and there can be no assurance that we will be successful in completing any private placement financings.

*Other Mineral Properties*

We have not found any other mineral properties either for staking or purchasing but will seek other mineral properties during the next year so to diversify our holdings.  Any staking and/or purchasing of mineral properties may involve the issuance of substantial blocks of our shares.  We have no intentions of purchasing for cash or other considerations any mineral properties from our officers and/or directors.

**Item 3.**

**Legal Proceedings.**

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

**Item 4.**

**Submissions of Matters to a Vote of Security Holders.**

None.

**PART II**

**Item 5.**

**Market for Common Equity and Related Stockholder Matters.**

The principal market on which our common stock is quoted is the OTC Bulletin Board under the Symbol "AGXM".  On March 17, 2004 our shares were also listed for trading on the Frankfurt Stock Exchange under the Symbol “DEB”.

The following table reflects the high and low bid information for our common stock obtained from Yahoo! Finance and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

The high and low bid prices of our common stock for the periods indicated below are as follows:

**Quarter Ended(1)**

**High**

**Low**

January 31, 2005

$0.75

$0.46

April 30, 2005

$0.74

$0.40

July 31, 2005

$0.65

$0.30

October 31, 2005

$0.51

$0.30

January 31, 2006

$0.65

$0.17

April 30, 2006

$1.75

$0.54

July 31, 2006

$1.68

$0.92

October 31, 2006

$1.38

$1.11

January 31, 2007

$1.81

$1.23

(1)     The quotations above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

 

 

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On April 16, 2007, the closing price for one share of our common stock as reported by the OTC Bulletin Board was $1.22.  This closing price reflects an inter-dealer price, without retail mark-up, mark-down or commission, and may not represent an actual transaction.

As of April 16, 2007, there were 68 holders of record of our common stock.  As of such date, 21,794,109 common shares were issued and outstanding.  

Our common shares are issued in registered form.  Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone:  775.322.0626; Facsimile:  775.322.5623) is the registrar and transfer agent for our common shares.

*Dividend Policy*

On March 17, 2004, we declared a two-for-one stock dividend of our common stock.  We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. Although there are no restrictions that limit our ability to pay dividends on our common stock, we intend to retain future earnings for use in our operations and the expansion of our business.

*Recent Sales of Unregistered Securities*

On March 21, 2006, we issued two $500,000 8% convertible debentures, one to each of two non-U.S. investors.  All or any portion of the amounts due under these debentures, which mature on August 21, 2007, may be converted at any time, at the option of the holder, into common shares of our company at a conversion price of $0.40 per share.  The issuance of the convertible debentures was exempt from the registration requirements of the United States Securities Act of 1933, as amended (the “Securities Act”) pursuant to Regulation S promulgated thereunder.

On April 28, 2006, the holder of a convertible debenture that we issued, in the original principal amount of $500,000, converted half of the principal amount outstanding under the convertible debenture into 833,333 common shares of our company at a conversion price of $0.30.  Accordingly, on April 27, 2006, we issued 833,333 common shares to this offshore investor.  The issuance of these shares was exempt from the registration requirements of the Securities Act under Regulation S and/or section 3(a)(9) of the Securities Act.

On June 28, 2006, we issued an unsecured simple promissory note in the amount of US$100,000, pursuant to which the principal amount, plus interest in the fixed amount of $5,000, this promissory note was repayable in full on August 28, 2006.

On July 1, 2006, we issued and unsecured simple promissory note in the amount of CAD$100,000, pursuant to which the principal amount, plus interest calculated at a rate of six percent (6%) per annum, will be repayable in full upon demand.

On October 2, 2006, we issued 105,000 Units at a purchase price of $1.00 per Unit to five (5) non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $105,000. Each Unit consisted of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing. The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On October 6, 2006, we issued 145,000 Units at a purchase price of $1.00 per Unit to three (3) non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $145,000. Each Unit consisted of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing. The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On November 15, 2006, we issued 348,400 Units at a purchase price of $1.00 per Unit to nine (9) non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of 

 

 

 

- 23 -

 

 

$348,400. Each Unit consists of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing. The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On November 23, 2006, we issued 500,000 Units at a purchase price of $1.00 per Unit to one (1) non U.S. person (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $500,000. Each Unit consists of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing. The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On December 5, 2006, we issued 28,000 Units at a purchase price of $1.00 per Unit to three (3) non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $28,000. Each Unit consisted of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing. The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On December 7, 2006, we issued 15,000 common shares to each of two consultants of our company (for an aggregate total of 30,000 shares). These consultants are non-U.S. persons that work for our company in Argentina and the shares were issued as an incentive bonus for services rendered at a deemed price of $1.53 per share. The price per share was determined by reference to the closing price (last sale of the day) of our shares on the Over-The-Counter Bulletin Board on December 6, 2006. In issuing these shares, we relied on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On January 12, 2007, we issued 408,100 Units at a purchase price of $1.00 per Unit to eleven (11) non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $408,100.  Each Unit consisted of one common share and one-half of one common share purchase warrant.  Each common share purchase warrant is exercisable into one common share at a price of $1.75 per warrant share for a period of 24 months from closing.  The Units were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On February 27, 2007, we issued 126,000 Units at a purchase price of $1.20 per Unit to 12 non U.S. persons (as that term is defined in Regulation S promulgated under the Securities Act of 1933) for gross proceeds of $151,200.  Each Unit consisted of one common share and one-half of one common share purchase warrant.  Each common share purchase warrant is exercisable into one common share at a price of $1.85 per warrant share for a period of 24 months from closing.  Investors in this offering were introduced to our company by two finders to whom we paid a fee consisting of cash and agent’s share purchase warrants.  One of the finders converted the cash portion of its fee into a subscription for units, and we issued to this finder an additional 4,720 Units (consisting of 4,720 common shares and 2,360 common share purchase warrants).  We issued an aggregate of 8,277 agent’s share purchase warrants toboth finders.  Each of these finders is a non-U.S. person and all of the activities with respect to this offering took place outside of the United States.  All of the Units and the agent’s share purchase warrants issued in this offering were issued in an offshore transaction in which we relied on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On March 12, 2007, our President exercised 418,395 options to purchase common shares and, accordingly, we issued 418,395 common shares to the President of our company, who is not a U.S. person (as that term is defined in Regulation S promulgated under the Securities Act of 1933). The stock options all had an exercise price of $0.25 per share. Payment for the exercise of 376,739 of these options was made by applying the outstanding balance of a debt due from our company to our President evidenced by a promissory note made by our company on July 1, 2007. At the date of exercise, we owed our president principal and accrued interest of approximately $94,184.93 (CDN$104,175.34). This promissory note has now been canceled. 

Payment for the balance of these options was made by applying $10,414 due to our president for reimbursable expenses. In issuing the shares, we relied on Regulation S and/or Section 4(2) of the Securities Act of 1933.

 

 

 

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On April 2, 2007, our President exercised 248,271 options to purchase common shares and, accordingly, we issued 248,271 common shares to the President of our company, who is not a U.S. person (as that term is defined in Regulation S promulgated under the Securities Act of 1933). Of the 248,271 stock options 48,271 had an exercise price of $0.25 per share and 200,000 had an exercise price of $0.49 per share. In issuing the shares, we relied on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On April 13, 2007, we issued 900,000 share purchase warrants to our President, Ken Hicks in connection with a consulting agreement dated April 13, 2007. Each share purchase warrant is exercisable into one common share at an exercise price of $1.25 until April 13, 2012.

Upon exercise, the common shares will be issued in reliance on Regulation S and/or Section 4(2) of the Securities Act of 1933.

*Equity Compensation Plan Information*

On February 16, 2005 our board of directors approved our 2005 Incentive Stock Plan, or 2005 Incentive Plan.  Under the 2005 Incentive Plan, options may be granted only to our directors, officers, employees and consultants as determined by our board of directors.  Pursuant to the Plan, we reserved for issuance 2,500,000 shares of our common stock.  As at January 31, 2007, there were 160,000 shares of our common stock still available for future grant under the plan.

The following table summarizes certain information regarding our equity compensation plan as at April 16, 2007:

 

**Plan Category**

**Number of  Securities to be Issued Upon Exercise of Outstanding Options, Warrants and  Rights**

**Weighted-Average  Exercise Price of Outstanding Options, Warrants and Rights**

**Number of  Securities Remaining Available for Future Issuance Under Equity Compensation  Plans (Excluding Securities Reflected in Column)**

Equity compensation plans approved by security holders

N/A

$

N/A

N/A

Equity compensation plans not approved by security holders

1,473,334

 

0.39

160,000

Total

1,473,334

$

0.39

160,000

 
**Item 6.**

**Plan of Operation.**

 
*Overview*

You should read the following discussion of our financial condition and results of operations together with the consolidated audited financial statements and the notes to consolidated audited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States.  This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those anticipated in these forward-looking statements.

***Plan of Operation***

We are a junior exploration stage company that has not yet generated or realized any revenues from our business operations.  We currently hold interests in mineral properties located in the Rio Negro and Santa Cruz provinces of Argentina.  One of the properties located in the Santa Cruz province consists of a group of claims that we refer to as the Pinguino property.  We have concentrated our recent exploration efforts on the Pinguino Property and we intend to focus primarily on this property over the 12 month period ending April 30, 2008.

 

 

 

- 25 -

 

 

There is no assurance that a commercially viable mineral deposit exists on any of our properties, including the Pinguino property, or that we will be able to identify any mineral resource on any of these properties that can be developed profitably.  Even if we do discover commercially exploitable levels of mineral resources on any of our properties, which is unlikely, there can be no assurance that we will be able to enter into commercial production of our mineral properties.  Our recent activities have focused on our Pinguino property and it is our intent to continue to focus our exploration efforts on that property during the next 12 months.

*Purchase of Significant Equipment*

We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.

*Personnel Plan*

We do not anticipate any significant changes in the number of employees during the next 12 months.

*Off-Balance Sheet Arrangements*

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

***Financial Condition, Liquidity and Capital Resources***

Our principal capital resource has been the sale of convertible debt instruments and common stock, although we have in the past and may in the future use shareholder loans, advances from related parties, or borrowing to meet future needs.

At January 31, 2007, we had a working capital deficiency of $1,125,492 compared to $1,076,985 at January 31, 2006.

At January 31, 2007, our total current assets were $901,835, consisting of cash and cash equivalents of $901,549 and prepaid expenses of $286, compared to total current assets of $62,933 at January 31, 2006.

At January 31, 2007, our total current liabilities were $2,027,327, compared to total current liabilities of $1,139,918 at January 31, 2006.

For the year ended January 31, 2007, we incurred a loss of $2,331,509 compared to $1,478,308 in 2006.  At January 31, 2007, we had incurred a loss since inception of $6,204,485.  Mineral property interests expense was $1,056,045 in fiscal year 2007 compared to $534,797 in fiscal year 2006.  The increase was due to an expended drilling program on the Pinguino property.  Consulting fees were $268,143 in fiscal year 2007 compared to $135,080 in fiscal year 2006.  The increase was primarily due to fees paid to one or more investor relations consultants during fiscal 2007.  Professional fees were $195,624 in fiscal year 2007 compared to $114,221 in fiscal year 2006.  The increase was due primarily to legal fees incurred in connection with the preparation and filing of a registration statement with the Securities and Exchange Commission and the preparation of a listing application for the TSX Venture Exchange.Stock-based compensation was $527,092 in fiscal year 2007 compared to $164,521 in fiscal year 2006.  The increase was due to the fair value of stock options vesting and to the fair value attributed to 30,000 shares that we issued as an incentive bonus to two of our consultants working on our resource properties in Argentina.

Operating expenses for the year ended January 31, 2007 were $2,200,197 compared to $1,081,234 in 2006.

At January 31, 2007, we had cash on hand of $901,549 compared to $62,647 as at January 31, 2006.  During the year ended January 31, 2007, we raised $1,505,750 through the sale of our equity securities.

*Cash Requirements*

Over the next 12 months we intend to expand our exploration programs.  We anticipate that we will incur the 

 

 

 

- 26 -

 

 

following operating expenses during this period:

 

**Estimated Funding Required During the Next 12 Months**

**Expense**

**Amount**

Mineral exploration expenses and holding costs

$376,000

Professional fees

$153,000

Investor relations 

$42,000

Rent, utilities and insurance

$22,000

Other general administrative expenses

$204,000

**Total**

**$797,000**

**Repayment of promissory notes and interest(1)**

**1,523,000**

**Cash on hand, April 30, 2007, estimated**

**(564,000)**

**Estimated excess of minimum cash requirements over cash resources**

**$1,756,000**

**(1)**We currently owe an aggregate principal amount of $1,350,000 pursuant to three convertible debentures and one simple promissory note.  Two of the convertible debentures, on which we owe an aggregate principal amount of $1,000,000 ($500,000 as to each), bear interest at eight percent (8%) and mature on August 21, 2007.  The third convertible debenture, on which we owe principal of $250,000, bears interest at 10% and is due on demand but demand cannot be made by the holder until on or after October 18, 2007.  We have accrued interest on these three convertible debentures and will continue to accrue interest until payment of principal.  For the calculation above we have assumed accrual of interest through payment at maturity.  The balance of this debt is evidenced by a simple promissory note in the principal amount of $100,000 upon which fixedinterest of $5,000 is to be paid.  We have assumed that this promissory note will be repaid on February 29, 2008.  We can give no assurance that these assumptions will prove to be accurate.

We believe that we will require additional funds to implement our growth strategy in exploration operations.  These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.  There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock.  Further, we may continue to be unprofitable.

*Going Concern*

Due to our being an exploration stage company and not having generated revenues, and to the circumstances described above, in their Notes to our financial statements for the year ended January 31, 2007, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.

We have historically incurred losses since inception.  From inception through January 31, 2007, we incurred losses of $6,204,485.  Because of these historical losses, we may require additional working capital to develop our business operations in the future.  We intend to raise any additional working capital required through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.  We do not currently have any arrangements for any such financing in place.

The continuation of our business is dependent upon obtaining further financing and achieving a break-even or profitable level of operations.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. 

There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash-flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not be able to continue our 

 

 

 

- 27 -

 

 

operations. 

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. 

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Actual results could differ from those estimates.

For purposes of the cash-flow statements, we consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

Resource property costs represent the acquisition costs and capitalized expenditures related to the acquisition, exploration and development of interests in resource properties.  Mineral property costs include initial acquisition costs and related option payments, which are recorded when paid.  Exploration and development costs are capitalized until properties are brought into production, at which time costs are amortized on a unit of production basis over economically recoverable reserves. Option payments are credited against mineral property costs when received. No gain or loss on disposition of a partial interest is recorded until all carrying costs of the interest have been offset by proceeds of sale or option payments received.

We account for income taxes under the asset and liability method.  The asset and liability method of accounting for income taxes recognizes future tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases.  Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.  A reduction in respect of the benefit of a future tax asset (evaluation allowance) is recorded against any future tax asset if it is not likely to be realized.  The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that the tax rate changes.

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding during the year.  Shares held in escrow are excluded from the calculation of the weighted average number of common shares outstanding.

*Recently Issued Accounting Standards*

In February 2007, the Financial Accounting Standards Board ( the “FASB”) issued Statement of Accounting Standard No. 159 (“FAS No. 159”), “*The Fair Value Option for Financial Assets and Financial Liabilities*”. This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not expect the implementation of SFAS No. 159 will have any material impact on its financial position and results of operations.

In September 2006, the FASB issued Statement of Accounting Standard (“FAS No. 158”), “*Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans*.” This Statement requires an employer to recognize the over funded or under funded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in 

 

 

 

- 28 -

 

 

which the changes occur through comprehensive income. SFAS No. 158 is effective for fiscal years ending after December 15, 2006. The Company does not expect the implementation of SFAS No. 158 will have any material impact on its financial position and results of operations.

In June 2006 – the FASB issued Interpretation No. 48 (“FIN 48”), “*Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109*.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB No. 109, “*Accounting for Income Taxes.*” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. TheCompany does not expect the implementation of Statement No. 158 will have any material impact on its financial position and results of operations.

**Item 7.**

**Financial Statements.**

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

The following consolidated financial statements are filed as part of this annual report:

Report of Independent Registered Public Accounting Firm, dated May 8, 2007

Consolidated Balance Sheets 

Consolidated Statements of Operations 

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Stockholders' Deficiency

Notes to the Consolidated Financial Statements

 

 

- F1 -

 

 

 

 

 

 

 

 

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

 

**CONSOLIDATED FINANCIAL STATEMENTS**

 

**JANUARY 31, 2007 AND 2006**

**(Stated in U.S. Dollars)**

 

- F2 -

 

 

 

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Stockholders and Directors of

Argentex Mining Corporation

(An exploration stage company)

 

We have audited the accompanying consolidated balance sheets of Argentex Mining Corporation (an exploration stage company) as of January 31, 2007 and 2006 and the related consolidated statements of operations, cash flows and stockholders’ equity for each of the two years in the period ended January 31, 2007 and 2006 and for the cumulative period from inception, December 21, 2001 to January 31, 2007.  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).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2007 and 2006 and the results of its operations and its cash flows for each of the years ended January 31, 2007 and 2006 and the period from inception, December 21, 2001, to January 31, 2007 in conformity with accounting principles generally accepted in the United States of America..

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.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company incurred a net loss of $2,331,509 for 2007 and has suffered recurring losses from operations in the total amount of $6,204,485 since inception.  At January 31, 2007, the Company had a working capital deficiency of $1,125,492 and total liabilities exceeded total assets by $1,122,729.  Further, the Company has not attained profitable operations and is dependent upon obtaining adequate financing to fulfill its exploration activities.  These factors raise substantial doubt that the Company will be able to continue as a going concern.  Management’s plans in regard to these matters are also discussed in Note 1.  The financial statements do not include any adjustments relating to the recoverability andclassification of record assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue existence.

Vancouver, Canada

“Morgan & Company”

 

April 26, 2006

Chartered Accountants

 

 

 

- F3 -

 

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**CONSOLIDATED BALANCE SHEETS**

**(Stated in U.S. Dollars)**

 

Nature of operations (Note 1) 

 

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

 

 

- F4 -

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Stated in U.S. Dollars)**

 

 

 

 

 

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

 

 

- F5 -

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Stated in U.S. Dollars)**

 

 

 

 

 

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

 

- F6 -

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

**JANUARY 31, 2007**

**(Stated in U.S. Dollars)**

 

-continued-

 

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

 

 

- F7 -

 

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY 

**JANUARY 31, 2006**

**(Stated in U.S. Dollars)**

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

 

- F8 -

 

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**1.**

**NATURE OF OPERATIONS**

**Organization**

The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.  The Company’s name was changed to Argentex Mining Corporation on March 15, 2004.

**Exploration Stage Activities**

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties in Argentina. Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.

**Going Concern**

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  This contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business.

As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $2,331,509 for the year ended January 31, 2007 and $6,204,485 for the period from December 21, 2001 (inception) to January 31, 2007, and has no source of revenue.  At January 31, 2007, the Company had a working capital deficiency of $1,125,492 and total liabilities exceeded total assets by $1,122,729.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management has plans to seek additional capital through a private placement and public offering of its capital stock.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  Although there are no assurances that management’s plans will be realized, managementbelieves that the Company will be able to continue operations in the future.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

**2.**

**SIGNIFICANT ACCOUNTING POLICIES**

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of consolidated financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.

The consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

**Basis of Presentation**

These consolidated financial statements include the accounts of the Company, its wholly owned United States subsidiary, SCRN Properties Ltd..  All inter-company transactions have been eliminated.

In prior years the annual consolidated financial statements included the accounts of the Company’s wholly-owned Canadian subsidiary, Delbrook Mining Corp. (“Delbrook”).  Since January 2004, the Company’s activities have been focused its exploration activities in Argentina, as a result Delbrook has been inactive. As a result, during the year ended January 31, 2007, Delbrook was dissolved.  Delbrook had no assets and its sole liability was to its Parent Company.  

In accordance with generally accepted accounting principles in the United States financial statements for years prior to the dissolution of Delbrook are to be restated to eliminate the effect of Delbrook.  Since Delbrook had no assets and its sole liability and its equity were eliminated on consolidation there is no effect on prior years’ financial statements.

 

 

F-9

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**2.**

**SIGNIFICANT ACCOUNTING POLICIES (Continued)**

**Cash and Cash Equivalents**

Cash equivalents comprise certain highly liquid instruments with an original maturity of three months or less when purchased.  As at January 31, 2007 and 2006, cash and cash equivalents consist of cash only.

**Mineral Claim Payments and Exploration Expenditures**

The Company expenses all costs related to the acquisition, maintenance and exploration of its unproven mineral properties to which it has secured exploration rights.  If and when proven and probable reserves are determined for a property and a feasibility study prepared with respect to the property, then subsequent development costs of the property will be capitalized.  To date the Company has not established the commercial feasibility of its exploration prospects, therefore all costs have been expensed.

**Use of Estimates**

The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions of future events that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period.   Actual results could differ materially from those reported.

**Foreign Currency Translation**

The Company’s functional currency is the U.S. dollar.  Transactions in foreign currency are translated into U.S. dollars as follows:

 

i)

monetary items at the rate prevailing at the balance sheet date;

 

ii)

non-monetary items at the historical exchange rate;

 

iii)

revenue and expense at the average rate in effect during the applicable accounting period.

Exchange gains or losses arising on translation are included in income (loss) for the year. 

**Environmental Costs**

Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations.   Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.

**Capital Assets**

Web-site development, including upgrades that extend the useful life of the web-site, is recorded at cost.  Web-site development costs are amortized on a straight-line basis over their estimated useful life of three years.  

**Income Taxes**

The Company follows Statement of Financial Accounting Standards No. 109 – “Accounting for Income taxes” (SFAS 109).  Pursuant to SFAS No. 109, deferred income tax assets and liabilities are computed for differences between the financial statement carrying amounts and the respective tax bases.  Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the periods in which those differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.  Potential benefits of net operating losses have not been recognized in the financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

 

 

F-10

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**2.**

**SIGNIFICANT ACCOUNTING POLICIES (Continued)**

**Stock-Based Compensation**

Effective February 1, 2006, the Company adopted the provisions of SFAS No. 123(R) “Share Based Payment” (SFAS No. 123(R)).  SFAS No. 123(R) requires employee equity awards to be accounted for under the fair value method.  Accordingly, share-based compensation is measured at grant date based on the fair value of the award.  No stock options were granted to employees during the year ended January 31, 2007, therefore no compensation expense is required to be recognized under provisions of SFAS No. 123(R).

Prior to February 1, 2006, the company accounted for awards granted to employees under its equity incentive plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended.   No stock options were granted to employees during the year ended January 31, 2006 and accordingly, no compensation expense was recognized under APB No. 25 and no compensation expense was required to be recognized under provisions of SFAS No. 123(R) with respect to employees.

Under the modified prospective method of adoption for SFAS No. 123(R), the compensation cost recognized by the company beginning on February 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of February 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to February 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R).  The company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assetsfor options and restricted stock units with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the company followed the alternative transition method discussed in FASB Staff Position No. 123(R)-3. 

**Impairment and Disposal of Long-Lived Assets**

The carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment, in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.  For assets that are to be held and used, an impairment loss is recognized when the estimated undiscounted future cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.

**Comprehensive Income (Loss)**

The Company follows SFAS No. 130, “Reporting Comprehensive Income”, which establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in financial statements.  The Company has no items that represent comprehensive income (loss).

**Financial Instruments**

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities, convertible promissory notes, promissory notes and promissory note to related party.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, or credit risks arising from these financial instruments.  The fair values of these financial instruments approximate their carrying values.

 

 

F-11

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**2.**

**SIGNIFICANT ACCOUNTING POLICIES (Continued)**

**Financial Instruments (continued)**

The Company operates outside of the United States of America and is exposed to foreign currency risk due to the fluctuation between the currency in which the Company operates in and the United States Dollars.

**Accounting for Derivative Instruments and Hedging Activities**

The Company has adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, which requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value.  If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction.  For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

The Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes.  The adoption of this pronouncement does not have an impact on the Company’s financial statements.

**Earnings (Loss) Per Share**

The Company computes net income (loss) per share in accordance with SFAS No. 128, “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.  Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Because the Company does not have any potentially dilutive securities only basic lossper share is presented in the accompanying financial statements.  

At January 31, 2006 potential common shares of 833,333 (January 31, 2006 - 1,666,667 common shares) related to a convertible promissory note were excluded from the computation of diluted loss per share since their effect is anti-dilutive.

**Asset Retirement Obligations**

The Company follows SFAS No. 143, “Accounting for Asset Retirement Obligations”, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.

SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.

 

 

F-12

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**2.**

**SIGNIFICANT ACCOUNTING POLICIES (Continued)**

**Recent Accounting Pronouncements**

In June 2006, the FASB issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken in a tax return. This interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The evaluation of a tax position in accordance with this interpretation is a two-step process. In the first step, recognition, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step addressesmeasurement of a tax position that meets the more-likely-than-not criteria. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in a) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, b) a reduction in a deferred tax asset or an increase in a deferred tax liability or c) both a and b. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax 

positions that no longer meet the more-likely-than-not recognition threshold should be de-recognized in the first subsequent financial reporting period in which that threshold is no longer met. Use of a valuation allowance as described in FAS 109 is not an appropriate substitute for the de-recognition of a tax position. The requirement to assess the need for a valuation allowance for deferred tax assets based on sufficiency of future taxable income is unchanged by this interpretation. This Interpretation is effective for fiscal years beginning after December 15, 2006. 

 

In September 2006, FASB issued Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 are effective for fiscal years beginning after November 15, 2007. 

The Company will adopt these policies when required.  The implementation of these new standards is not expected to have a material effect on the Company’s financial statements.

 

 

 

F-13

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**3.** **EQUIPMENT**

**4.**

**MINERAL PROPETY INTERESTS**

 

a)

Pinguino Property

Pursuant to the terms of a mineral property option agreement, dated February 24, 2004, between the Company and a director, the Company acquired an option to acquire a 100% interest in and to certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the “Pinguino Property” totaling 24,710 acres.

The agreement requires the following payments in order to acquire the property: CAD$50,000 on or before July 1, 2004 (paid); CAD$75,000 on or before July 1, 2005 (paid); CAD$100,000 on or before July 1, 2006 (paid); CAD$100,000 on or before July 1, 2007; and CAD$125,000 on or before July 1, 2008.  The agreement is subject to a 2% net smelter royalty.  The Company has the right at any time up to 60 days after commencement of commercial production to repurchase either one-half of the royalty for $1,000,000 or all of the royalty for $2,000,000.  

The Agreement also provides for an “area of interest” such that, in the event that the optionor records any property claims within five (5) kilometers of the boundaries of the property, such claims will become subject to the mineral property option agreement.

 

b)

Dyakowski Property

 

(i)

Pursuant to the terms of a Mineral Property Acquisition Agreement, dated February 24, 2004, between the Company and a director of the Company, the Company acquired certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the “Dyakowski Property” for total consideration of 833,333 common shares of the Company.  The shares have been issued and are subject to an Escrow Agreement whereby the shares will be released to the Vendor or returned to treasury as follows:  the Company incurring exploration expenditures of at least $100,000 – release of 166,666 common shares; additional expenditures of at least $400,000 – release of an additional 166,667 common shares; additional expenditures of at least $500,000 – release of an additional 166,667 common shares;Company’s geologist recommends further exploration – release of the

 

 

F-14

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**4.**

**MINERAL PROPETY INTERESTS (Continued)**

 

b)

Dyakowski Property (continued)

remaining 333,333 common shares.  At the time of each release to the Vendor, if the Company’s geologist determines the Property no longer has merit all common shares remaining in escrow shall be returned to the treasury of the Company and title to the Property shall be transferred to the Company 

 

(ii)

In addition, pursuant to the terms of a Share Purchase Agreement, dated February 24, 2004, between the Company and a director of the Company, the Company acquired a 100% interest in SCRN Properties Ltd. (“SCRN”), a Delaware corporation, the sole asset of which consisted of certain mineral claims located in the Rio Negro Province of the Republic of Argentina, known as the “SCRN Property”, for total consideration of 833,333 common shares of the Company.  The shares have been issued and are subject to an Escrow Agreement identical to the terms of the escrow agreement related to the Mineral Property Acquisition Agreement for the “Dyakowski Property”, disclosed immediately above 

The Dyakowski Property and the SCRN Property total 128,964 acres.

The Mineral Property Acquisition Agreement and the Share Purchase agreement also provide for an “area of interest” such that, in the event that the Vendor records any property claims within five (5) kilometres of the boundaries of either the Dyakowski Property or the SCRN Property, such claims will become subject to the respective Agreements.

 

c)

Condor Property

Pursuant to the terms of a mineral property acquisition agreement, dated February 20, 2004, between the Company and an affiliate of a director, the Company acquired 100% interest in and to certain mineral claims located in the Santa Cruz Province of the Republic of Argentina, known as the “Condor Property” totalling 24,710 acres, subject to a 2% net smelter returns royalty in favour of a director.  As consideration for the Condor Property the Company paid to the vendor CAD$10,000.  The Company has the right to repurchase either one-half of the royalty for CAD$1,000,000 or all of the royalty for CAD$2,000,000.

 

d)

Storm Cat Property

Pursuant to the terms of a mineral property acquisition agreement, dated February 20, 2004, between the Company and an affiliate of a director, the Company acquired 100% interest in and to certain mineral claims located in the Santa Cruz and Rio Negro Provinces of the Republic of Argentina, known as the “Storm Cat Property” totalling 32,766 acres.  As consideration for the Storm Cat Property the Company paid to the vendor the CAD$10,000.

 

 

 

F-15

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**4.** **MINERAL PROPERTY INTERESTS (Continued)**

Claims acquired have been accounted for on a geographic basis as follows: 

 

 

 

F-16

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**5.**   **CONVERTIBLE PROMISSORY NOTES**

Convertible promissory notes are unsecured and are comprised of the following individual amounts:

The 10% convertible promissory note is payable on demand and is convertible into common shares, at the note holder’s option, at a conversion price of $0.90 per share (“Conversion Price”) or lesser adjusted amount determined as follows:

 

a)

If the Company issues securities for a per share or conversion or exercise price which is less than the Conversion Price, then the Conversion Price shall be reduced to that lower price, or

 

b)

If the Company ceases to devote the majority of its resources to the exploration and development of its Argentinean mineral properties or fails to make the required payments with respect to its Pinguino property, then the conversion price shall become the lower of the Conversion Price or 75% of the average trailing five day bid price of the Company’s common stock on the Over-The-Counter Bulletin Board.

The Company may repay the note at anytime.  The full principal amount of the note is due upon default under the terms of the note.  Following a private placement in June 2005, the conversion price was reduced to $0.30.  At the time of the reduction of the conversion price, the Company’s shares were trading at approximately $0.50 per share resulting in a benefit to the note holder.  In accordance with Financial Accounting Standards Board’s Emerging Issues Task Force Issue Number 00-27 – Application of Issue No. 98-5 to Certain Convertible Instruments, a calculated benefit in the amount of $333,333  was included in interest expense for the year ended January 31, 2006.

In March 2006, $250,000 of the principal amount was converted to 833,333 common shares and the terms of repayment for the balance of the note were amended to be payable on demand but not before October 18, 2007.

The 8% convertible promissory notes issued March 21, 2006 may be prepaid at anytime without penalty. Upon 90 days notice by the holder, the notes are convertible into common shares of the Company at a conversion price of $0.40 per share. The promissory notes are due on demand, but the holder has agreed that it cannot make demand until August 27, 2007.  

 

 

F-17

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**6.** **PROMISSORY NOTES**

Promissory notes are unsecured and are comprised of the following amounts:

**7.**

**SHARE CAPITAL**

**Issued Shares**

On February 24, 2004, pursuant to a Mineral Property Option Agreement and a Share Purchase Agreement, both dated February 24, 2004, between the Company and a future officer and director, the Company issued 1,666,666 common shares (increased to 4,999,998 by subsequent stock dividend) to this officer and director, subject to certain escrow and return to treasury provisions (see Note 5(b) for details of the escrow and return to treasury provisions).  In August 2005 the parties agreed to the immediate cancellation of 4,749,998 of the shares and release from escrow of the balance (250,000 common shares).

On March 17, 2004 in connection with a change in control of the Company, its former president returned 4,600,000 common shares to the Company’s treasury for cancellation, for no consideration, prior to the stock dividend issued March 17, 2004.

On March 15, 2004 the Company issued a stock dividend of two common shares for every one common share outstanding as of March 15, 2004.

In March and April 2004 the Company issued 2,000 non-voting Series A convertible preferred shares at a price of $1,000 per share.  Each Series A convertible preferred share was convertible, at any time by the holder into common shares of the Company at a Conversion Price of $0.90 per share, subject to downward price adjustments.  In April 2005 the 2000 non-voting Series A convertible preferred shares were converted into 1,472,223 common shares

In April 2005, 2,000 non-voting Series A convertible preferred shares were converted into 2,222.223 common shares.  

In June 2005, the Company issued 666,667 share purchase units at a price of $0.30 per unit for total proceeds of $200,000.  The units also included rights to purchase an additional  666,667 common shares at $0.40 per share until June 30, 2007.

In August 2005, 4,749,998 escrowed shares were returned to the treasury pursuant to an agreement between the Company and Dyakowski whereby concurrent with the return to treasury there was an immediate release from escrow of the remaining 250,000 escrow shares.  The return and cancellation was accounted for as a reduction of the acquisition of the related mineral properties.

 

 

F-18

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**7.**

**SHARE CAPITAL (continued)**

**Issued Shares (continued)**

In March 2006, the Company issued 833,333 common shares upon the conversion of $250,000 of the principal of convertible promissory notes.

In July 2006, the Company issued 200,000 common shares for proceeds of $50,000 on the exercise of stock options.

On October 2 2006, the Company completed a private placement and issued 105,000 units for gross proceeds of $105,000.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before October 2, 2008.

On October 6, 2006, the Company completed a private placement and issued 145,000 units for gross proceeds of $145,000.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before October 6, 2008.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.75 for a period of 24 months from the closing date; provided, however, that if at any time the average closing price for shares of the Company’s common stock on either the TSX Venture Exchange in Canada or the OTC-Bulletin Board in the United States exceeds U.S. $2.25 for a period of 20 trading days or more, the Company shall have the right, upon written notice to the subscriber, to reduce the exerciseperiod of the warrants to a period of 30 days beginning on the date of the written notice. The Company incurred expenses of $17,432 in the form of finder’s fees for net proceeds of $282,547 for both private placements.

On November 20, 2006, the Company completed a private placement and issued 348,400 units for gross proceeds of $348,400.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before November 20, 2008.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.75 for a period of 24 months from the closing date; provided, however, that if at any time the average closing price for shares of the Company’s common stock on either the TSX Venture Exchange in Canada or the OTC-Bulletin Board in the United States exceeds U.S. $2.25 for a period of 20 trading days or more, the Company shall have the right, upon written notice to the subscriber, to reduce theexercise period of the warrants to a period of 30 days beginning on the date of the written notice. 

On November 28, 2006, the Company completed a private placement and issued 500,000 units for gross proceeds of $500,000.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before November 28, 2008.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.75 for a period of 24 months from the closing date; provided, however, that if at any time the average closing price for shares of the Company’s common stock on either the TSX Venture Exchange in Canada or the OTC-Bulletin Board in the United States exceeds U.S. $2.25 for a period of 20 trading days or more, the Company shall have the right, upon written notice to the subscriber, to reduce theexercise period of the warrants to a period of 30 days beginning on the date of the written notice. The Company incurred expenses of $42,750 in the form of finder’s fees for net proceeds of $427,250 for both private placements.

On December 13, 2006, the Company issued 30,000 common share to two employees as a bonus.  The fair value of the shares at the date of issue was $49,500.

 

 

F-19

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**7.**

**SHARE CAPITAL (continued)**

**Issued Shares (continued)**

On December 13, 2006, the Company completed a private placement and issued 28,000 units for gross proceeds of $28,000.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before December 13,  2008.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.75 for a period of 24 months from the closing date; provided, however, that if at any time the average closing price for shares of the Company’s common stock on either the TSX Venture Exchange in Canada or the OTC-Bulletin Board in the United States exceeds U.S. $2.25 for a period of 20 trading days or more, the Company shall have the right, upon written notice to the subscriber, to reduce theexercise period of the warrants to a period of 30 days beginning on the date of the written notice. 

On January 18, 2007, the Company completed a private placement and issued 408,100 units for gross proceeds of $408,100.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before January 18, 2009.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.75 for a period of 24 months from the closing date; provided, however, that if at any time the average closing price for shares of the Company’s common stock on either the TSX Venture Exchange in Canada or the OTC-Bulletin Board in the United States exceeds U.S. $2.25 for a period of 20 trading days or more, the Company shall have the right, upon written notice to the subscriber, to reduce theexercise period of the warrants to a period of 30 days beginning on the date of the written notice. 

 

**Share purchase warrants**

Share purchase warrant transactions are summarized as follows:

 

 

F-20

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**7.**

**SHARE CAPITAL  (continued)**

**Share purchase warrants (continued)**

As at January 31, 2007, the following share purchase warrants were outstanding and exercisable:

**Stock Options**

 

On February 16, 2005, the Company adopted its 2005 Incentive Stock Plan (the "2005 Plan") to grant options to directors, officers, employees and consultants.  Under the 2005 Plan, the Company may grant options to acquire up to 2,500,000 common shares of the Company.  

Stock option transactions are summarized as follows:

The number of stock options exercisable at January 31, 2007 was 1,685,166 (2006 – 542,000).

 

 

 

F-21

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**7.**

**SHARE CAPITAL  (continued)**

**Stock Options (continued)**

As at January 31, 2007, the following stock options were outstanding and exercisable:

 

**Stock-based compensation**

The fair value of stock options granted during the year ended January 31, 2006 was $Nil (2006 - $318,673) which is being recognized over the options vesting periods.  Total stock-based compensation recognized from the vesting of stock options  during the year ended January 31, 2007 was $477,592 (2006 - $164,521) which has been recorded in the consolidated statements of operations as stock-based compensation with corresponding additional paid-in capital recorded in stockholders' equity.  In December 2006, 30,000 shares with a fair value of $49,500 were issued to tow employees as a bonus (Note X). The fair value of these shares has been recorded in the consolidated statements of operations as stock-based compensation with corresponding additional paid-in capital recorded in stockholders' equity.  

The following weighted average assumptions were used for the Black-Scholes valuations of stock options granted:

 

 

 

F-22

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

 

**8.**

**RELATED PARTY TRANSACTIONS**

Effective February 11, 2004, the Company entered into a management agreement with a director and officer for a period of one year at $4,900 per month  During the year ended January 31, 2007, the Company paid consulting fees of $95,086 (2006 - $91,791) relating to this management agreement.  

Effective November 1, 2005, the Company entered into a management agreement with an officer for a period of 14 months at C$2,500 per month.  During the year ended January 31, 2007, the Company paid consulting fees of $26,413 (2006 - $4,284) relating to this management agreement.

 

In July 2006, a director an officer advanced C$100,000 to the Company, secured by a promissory note. (Note 6)

 

**9.**

**SEGMENT INFORMATION**

As at January 31, 2007, the Company and its subsidiary operate in one reportable segment, being the exploration for and the development of mining properties in Argentina.  Identifiable assets, revenues and net loss in each geographic area are as follows:

 

 

 

 

F-23

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**10.****INCOME TAX**

Tax effects of temporary differences that give rise to deferred tax assets at January 31, 2007 and 2006 are as follows:

At January 31, 2007, the Company had losses carried forward totaling $5,194,777 available to reduce future years’ income tax for income tax purposes which expire in various years to 2026.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate of 34% (2006 – 34%) to net loss for the year.  The sources and tax effect of the differences are as follows:

**11.**

**SUBSEQUENT EVENTS**

Subsequent to January 31, 2007, the Company:

 

a)

Iissued 126,000 units for gross proceeds of $151,200.  Each unit consisted of one common share and one half of one share purchase warrant.  Each whole warrant entitles the holder to acquire one additional common share at $1.75 per share on or before November 28, 2008.   In the case of each private placement, each whole warrant will entitle the holder to purchase one additional common at a purchase price of $1.85 for a period of 24 months from the closing date. The Company incurred a finders’ fee consisting of cash and agent’s share purchase warrants. The Company issued an aggregate of 8,277 agent’s share purchase warrants, exercisable at $1.37 for a period of 24 months from closing.

 

b)

Issued 418,395 common shares upon the exercise of options. The stock options all had an exercise price of $0.25 per share.  Payment for 376,739 of these options was made by applying the outstanding balance of a promissory note including accrued interest in the aggregate amount of $94,185.

 

c)

Issued 248,271 common shares upon the exercise of options for gross proceeds of $160,060.  Of the 248,271 options, 48,271 had an exercise price of $0.25 per share, and 200,000 had an exercise price of $0.49 per share.

 

 

F-24

**ARGENTEX MINING CORPORATION**

**(An Exploration Stage Company)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JANUARY 31, 2007 and 2006**

**(Stated in U.S. Dollars)**

 

 

**11.****SUBSEQUENT EVENTS  (Continued)**

 

d)

Entered into a management agreement with Frontera Geological Services Ltd. (“Frontera”) whereby Frontera will provide the services of Mr. Ken Hicks who will provide services consistent with those ordinarily provided by a chief executive officer.  The contact is for a term of 24 months expiring April 13, 2009 for a monthly fee of C$9,000 plus 900,000 share purchase warrants.  The share purchase warrants are exercisable at any time up To the expiry date of April 13, 2012 at an exercise price of $1.25.  An incentive bonus of 250,000 shares shall be issued if either of the following events occurs: (a) during the period beginning April 13, 2007 and expiring April 13, 2008, the Company has income equal to or greater than $5,000,000 from all sources or (b) during the period beginning on April 13, 2007 andexpiring on April 13, 2009, the average  price of the Company’s common shares on any single market for 20 consecutive trading-days equals or exceeds $3.00.

 

 

 

 

 

- 27 -

 

 

 

**Item 8.**

**Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.**

None.

**Item 8A.**

**Disclosure Controls and Procedures**

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures as of the end of the period covered by this annual report, being January 31, 2007.  This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and chief financial officer.  Based upon that evaluation, our company's president and chief financial officer concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report.  There have been no changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures  designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.

**PART III**

**Item 9.**

**Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.**

*Directors and Executive Officers, Promoters and Control Persons*

As at April 16, 2007, our directors and executive officers, their ages, positions held, and duration of such, are as follows: 

**Name**

**Position Held with our Company**

**Age**

**Date First****Elected or Appointed**

Kenneth Hicks

Director and President

47

February 11, 2004

Dr. Colin Godwin

Director

68

June 1, 2005

Jenna Hardy

Director

54

February 7, 2006

Richard Thibault

Director

51

February 9, 2006

Hamish Malkin

Chief Financial Officer

60

December 13, 2005

Orlando Rionda(1)

Legal Representative

41

June 1 2005

(1)Mr. Rionda is not technically a director or executive officer of our company but the nature of his position as our legal representative in Argentina charges him with responsibility for interaction with government officials, drilling companies, our local lawyers and others, which frequently requires that he exercise judgment and make decisions that might usually be considered and decided by executive level officers.  For this reason, we believe that he is deemed to be an executive officer of our company and we have included disclosure about him in this discussion rather than in the discussion of ‘key employees’, below.

 

 

 

- 28 -

 

 

*Business Experience*

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he was employed.

***Kenneth E. Hicks, President and Director***

Mr. Hicks was our Vice President (Exploration) from February 11, 2004 until May 26, 2005, at which date he was appointed President of our company.  He is a graduate of the University of British Columbia, holding a B.Sc. (Honours) Geology Degree.  Since graduating in 1982, Mr. Hicks has practiced his profession as a geologist throughout North and South America for major mining companies such as Falconbridge Limited, mid-tier copper-gold producers such as Imperial Metals Corporation, as well as junior exploration companies.  Since 1996 Mr. Hicks has worked extensively in South America, focusing primarily on Argentina, where he has consulted for a number of junior companies.

Mr. Hicks is a registered member of the Association of Professional Engineers and Geoscientists of British Columbia, as well as the Society of Economic Geologists and the Association for Mineral Exploration BC.  Mr. Hicks recently resigned from the board of directors of Prominex Resource Corp., a TSX Venture Exchange listed junior resource company with properties in Newfoundland, Canada.

Mr. Hicks does not have family relationships with any director, executive officer, or other person nominated to become a director or officer of our company.  In addition, Mr. Hicks does not have, and has not had, a direct or indirect material interest in any transaction or proposed transaction in the past two (2) years to which we were or are to be a party, with the exception of (i) a written consulting agreement dated February 11, 2005, pursuant to which we pay to Mr. Hicks a monthly consulting fee of approximately $7,684 (CAD$9,000); and (ii) Mr. Hicks made a loan to our company on July 1, 2006, which is evidenced by a demand promissory note bearing simple interest at six percent (6%).  These transactions are discussed in more detail in the section of this annual report on Form 10-KSB entitled “Certain Relationships and Related Transactions” beginning at page 51.

***Dr. Colin Godwin, Director***

Dr. Godwin is Professor Emeritus at The University of British Columbia, where he taught the exploration and geology of mineral deposits from 1975 until he retired in 1999.  Since June 1, 2000, Dr. Godwin has been a director of Rome Resources Ltd. (TSX-V: RMR), and he has been its President since May 2002.  He has published more than one hundred papers, approximately thirty-five of which were professionally adjudicated.  Dr. Godwin was a founding director of International Geosystems Ltd. and became involved in the development of the GEOLOG System, one of the first computer based schemes for capturing and using data from exploration-development work, especially drill holes.

Recently, Dr. Godwin has conducted: (i) exploration programs in Mexico, Argentina, Yukon, Nevada, Nicaragua, Honduras and Costa Rica, (ii) drilling projects in Nevada and Mexico, and (iii) property examinations in Argentina, Mexico, Northwest Territories, Nevada, Costa Rica, Ecuador and India.  

Dr. Godwin is a registered P. Eng and P. Geo the Association of Professional Engineers and Geoscientists of British Columbia.

Dr. Godwin does not have family relationships with any director, executive officer, or other person nominated to become a director or officer of our company.  In addition, Dr. Godwin does not have, and has not had, a direct or indirect material interest in any transaction or proposed transaction in the past two (2) years to which we were or are to be a party.

***Jenna Hardy, Director*******

Ms. Hardy is an accomplished mining professional with extensive experience in project management, corporate due diligence and governance, property exploration and evaluation as well as environmental compliance.

 

 

 

- 29 -

 

 

From 1996 through 2004, Ms. Hardy served as the Manager of Health Safety Environment with Pan American Silver Corp. where she was responsible for corporate oversight of health, safety and environmental issues at operating subsidiaries in Peru, Mexico and Bolivia, as well as development projects in Argentina, Canada and the USA.  In 2004, Ms. Hardy reactivated a consulting company that she founded in 1986 and currently provides environmental, corporate development and corporate governance services to clients consisting primarily of junior natural resource companies working in Mexico and Canada.  Since late 2004, she has been a member of Capstone Mining Corp.’s technical advisory board, providing guidance with respect to regulatory and environmental compliance in connection with the expansion of the San Roberto mine in Zacatecas, Mexico.  Since 2005, she has been consulting with Belcourt Saxon Coal limitedpartnership as Director Environment Regulatory.  Belcourt Saxon Coal is developing coal projects in British Columbia, Canada. 

She holds an Executive MBA from Simon Fraser University, and an M.Sc. (Economic Geology) and a B.Sc. (Geology) both from the University of Toronto.  Ms. Hardy is a member of the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC).

Ms. Hardy does not have a family relationship with any director, executive officer, or other person nominated to become a director or officer of our company.  In addition, Ms. Hardy does not have, and has not had, a direct or indirect material interest in any transaction or proposed transaction in the past two (2) years to which we were or are to be a party.  Ms. Hardy is not a member of the board of directors of any other publicly traded company.

***Rick Thibault, Director***

Mr. Thibault is a registered P. Eng. with the Association of Professional Engineers, Geologists and Geophysicists of Alberta.  Mr. Thibault has 28 years of operations, management and consulting experience in North and South America, including nine years in Argentina.

Over the past six years, Mr. Thibault has been providing mining engineering services to international clients active in Argentina, Chile and throughout Latin America.  Before becoming a consultant, Mr. Thibault was the Managing Director of an operating industrial minerals mine in northwestern Argentina.

Mr. Thibault holds a B.A.Sc. (Honors) in Mining Engineering from Queen’s University (Kingston, Ontario, Canada) and is fluent in English, Spanish and French.  Mr. Thibault is the Chairman of the Industrial Minerals Society of the Canadian Institute of Mining, Metallurgy and Petroleum and is also a member of the board of directors and Vice President, Minerals of Daleco Resources Corporation, an international resources company with holdings in oil, natural gas, minerals and environmental remediation technologies.  Daleco Resources Corporation is listed for trading on the Over-the-Counter Bulletin Board under the symbol “DLOV”.

Mr. Thibault is a member of the Association of Professional Engineers and Geoscientists of Alberta and Chairman of the Industrial Minerals Society of the Canadian Institute of Mining, Metallurgy and Petroleum.

Mr. Thibault does not have family relationships with any director, executive officer, or other person nominated to become a director or officer of our company.  In addition, Mr. Thibault does not have, and has not had, a direct or indirect material interest in any transaction or proposed transaction in the past two (2) years to which we were or are to be a party.

***Hamish Malkin, Chief Financial Officer***

Mr. Malkin has been self employed since April, 2003, providing chief financial officer services on a contract basis.  Prior to being self employed Mr. Malkin was the CFO of Trivalence Mining Corporation from January 1997 to March 2003.  Mr. Malkin is a Chartered Accountant and a member of the Canadian Institute of Chartered Accountants and the Institute for Chartered Accountants of British Columbia.  Prior to 1997, Mr. Malkin held senior financial positions in the entertainment and commercial real estate industries.  Mr. Malkin is also currently the chief financial officer of Entrée Gold Inc. (TSX: ETG; AMEX: EGI; Frankfurt: EKR), a Canadian company reporting in both the United States and Canada, the chief financial officer of UC Resources Ltd. (TSXV: UC), a Canadian reporting company, and  the chief financial officer of Yellowcake Mining Inc. (YCKM:OTCBB), a United States reporting company.

 

 

 

- 30 -

 

 

Mr. Malkin does not have, and has not had, a direct or indirect material interest in any transaction or proposed transaction in the past two (2) years to which we were or are to be a party, with the exception of a written consulting agreement dated effective November 1, 2005, pursuant to which we pay to Mr. Malkin a monthly consulting fee of approximately $2,120 (CAD$2,500).

***Orlando Rionda, Legal Representative***

Mr. Rionda began working with our company as our project coordinator and field manager in Argentina in March of 2004.  He is currently our ‘legal representative’ in Argentina, and is responsible for many of the day-to-day decisions that our company must make at a local level about our presence in Argentina.  From 2002 until March of 2004, he worked as an independent contractor on various hydrological projects in Argentina and Chile.  From January 1999 through December, 2001, he served as a logistical supervisor for Falcon Drilling Ltd. in Argentina for various diamond drilling projects, including Gualcamayo, Diabillios, San Simon and Mina La Mejicana.  Mr. Rionda has completed various post-secondary courses in hydrochemistry.

**Significant Employees**

Our significant employees, their ages and positions held are as follows:

 

**Name**

**Position Held with****the Company**

**Age**

Diego Guido

Senior Technical Advisor

34

Diego Guido, Senior Technical Advisor

Dr. Guido serves as our Senior Technical Advisor in Argentina.  Dr. Guido supervises the geological aspects of data compilation, interpretation and design of exploration programs for detail mapping, reconnaissance exploration and drill targeting on an ‘as-required’ basis.

In 2002, Dr. Guido received his PhD. in Natural Science (Geology) from the Natural Science and Museum Faculty of the  La Plata National University in La Plata, Argentina.  His dissertation was on the *Geology and metallogeny of eastern Deseado Massif region, Santa Cruz province*.  Dr. Guido also received his P.Geo from the La Plata National University (1996).  Dr. Guido holds a B.A. in Economic Orientation from the Antonio Mentruyt Institute in Argentina (1990).  Dr. Guido is a researcher at the Argentinean National Commission of Scientific and Technical Research (CONICET) in Argentina and is a lecturer in Ore Deposits Geology at the Natural Science and Museum Faculty of La Plata National University.

*Audit Committee and Audit Committee Financial Expert*

Effective March 31, 2006, our board of directors created an audit committee and adopted an audit committee charter.  On that same date we appointed Jenna Hardy, Richard Thibault and Colin Godwin as members of our Audit Committee.  However, our board of directors has determined that we do not have a member of our audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B.  All of the members of our audit committee are "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.  We believe that the members of our audit committee are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  Having been formed in March 2006, our audit committee did not meet during the year ended January 31, 2007.  OurAudit committee convened their first meeting on April 26, 2007.

*Other Committees of the Board*

*Compensation Committee*

Effective March 31, 2006, our board of directors created a compensation committee.  Our board of directors adopted a compensation committee charter and appointed Richard Thibault and Jenna Hardy as members of our compensation committee.

 

 

 

- 31 -

 

 

*Nominating Committee*

Effective March 31, 2006, our board of directors created a nominating  committee.  Our board of directors adopted a nominating committee charter and appointed Jenna Hardy and Richard Thibault as members of our compensation committee.

*Family Relationships*

There are no family relationships between any director or executive officer.

*Involvement in Certain Legal Proceedings*

None of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years:

1.  any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.  any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

3.  being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.  being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

*Code of Ethics*

Our board of directors has established a Code of Ethics and Business Conduct of Officers, Directors and Employees which applies to all of our officers, directors and employees.  The Code of Ethics is intended to meet the requirements for a code of ethics under the Sarbanes-Oxley Act of 2002, or “SOX”, and the TSX Venture Exchange requirements, and is specifically applicable to our principal executive officer, principal financial and accounting officer and controller or persons performing similar functions.  Among other matters, the Code of Ethics is designed to deter wrongdoing and to promote:

 

**•**

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

**•**

ethical and fair dealing with our financial institutions, suppliers, vendors, competitors, agents and employees;

 

**•**

full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;

 

**•**

compliance with applicable governmental laws, rules and regulations;

 

**•**

lawful and ethical conduct when dealing with public officials and government entities;

 

**•**

prompt internal reporting of violations of the Corporate Code of Conduct to appropriate persons identified in the code; and

 

**•**

accountability for adherence to the Code of Ethics.

 

 

 

- 32 -

 

 

Waivers to the Code of Ethics may be granted only by our full board of directors.  In the event that our board of directors of directors grants any waiver of the elements listed above to any of our directors or officers, we expect to announce the waiver within four business days on the corporate governance section of our website at *www.argentexmining.com.*

*Disclosure Policy and Disclosure Committee.*  Our board of directors has also established our Disclosure Policy and Disclosure Committee in connection with the officer certifications required under Section 302 of SOX.  The Disclosure Policy facilitates our compliance with SEC disclosure requirements regarding disclosure made by us to our stockholders and the investment community.  The disclosure committee assists us in ensuring that all of the disclosures made by us to our stockholders, the investment community and the SEC are made in compliance with all relevant laws, rules and regulations and consistent with the Disclosure Policy.  The members of the disclosure committee are Mr. Hicks and Ms. Hardy.

*Public Availability of Corporate Governance Documents.*  Our key corporate governance documents, including our Code of Ethics and the charters of our audit committee, compensation committee and nominating committee are:

 

**•**

available on our corporate website;

 

**•**

available in print to any stockholder who requests them from our corporate secretary; and

 

**•**

certain of them are or will be filed as exhibits to our securities filings with the SEC.

*Section 16(a) Beneficial Ownership Compliance*

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.  Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended January 31, 2007, all filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with, with the exception of the following:

 

**Name**

**Number  of Late Reports**

**Number  of Transactions Not****Reported on a Timely Basis**

**Failure  to File****Requested Forms**

Kenneth Hicks

1(1)

2(1)

Nil

Richard Thibault

1(2)

1(2)

Nil

Orlando Rionda

2(2)

3(1)

Nil
 
(1)

The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 4 – Statement in Changes of Beneficial Ownership.
  
(2)

The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 3 - Initial Statement of Beneficial Ownership of Securities.
 
**Item 10.**

**Executive Compensation.**

The particulars of compensation paid to the following persons:

**•**

our principal executive officer;

**•**

each of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended January 31, 2007 who had total compensation exceeding $100,000; and

**•**

up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year,

 

 

 

- 33 -

 

 

who we will collectively refer to as the named executive officers, of our years ended January, 31, 2007, 2006 and 2005, are set out in the following summary compensation table: 

 

**SUMMARY COMPENSATION TABLE**

**Name****and Principal Position**

**Year**

**Salary****($)**

**Bonus****($)**

**Stock Awards****($)**

**Option Awards****($)**

**Non-Equity Incentive Plan Compensa-tion****($)**

**Change in Pension****Value and Nonqualified Deferred Compensation Earnings****($)**

**All****Other Compensa-tion****($)**

**Total****($)**

Kenneth Hicks*Chairman of the Board, President, Secretary and Treasurer*

20072006

NilNil

NilNil

NilNil

120,797,117,0501)(1)(2)

NilNil

NilNil

95,08691,791

215,883208,841

 

(1)

Mr. Hicks was granted 200,000 options on February 7, 2006 at an exercise price of $0.49 expiring on February 7, 2011.  The options vest as to 25% on February 7, 2006, and 25% every ninety days thereafter.  Mr. Hicks exercised all of the 200,000 options on April 2, 2007.

 

(2)

Mr. Hicks was granted 500,000 options on July 5, 2005 at an exercise price of $0.10 expiring on June 26, 2015.  On December 31, 2005, the board of directors approved an amendment to the exercise price for these options from $0.10 to $0.25.  The options were fully vested on December 31, 2005.  On March 12, 2007, Mr. Hicks exercised 200,000 of the options on May 5, 2006 and 300,000 of the options on March 12, 2007.

 

(3)

Mr. Hicks was granted 500,000 options on July 5, 2005 at an exercise price of $0.50 expiring on June 26, 2015. On December 31, 2005, the board of directors approved an amendment to the exercise price for these options from $0.10 to $0.25.  The options will become exercisable in 4 equal annual instalments of 25% of the shares covered by the options.  The first instalment of the options will be exercisable on the 6 month anniversary of the date the options were granted.  An additional 25% of such options will become exercisable on each of the 3 successive 12 month periods following the initial vesting date.  The instalments are cumulative (i.e., the options may be exercised, as to any or all shares covered by an instalment, at any time or times after an instalment becomes exercisable and until expiration or termination of theoptions).  On March 12, 2007 Mr. Hicks exercised 118,395 options and on April 2, 2007 Mr. Hicks exercised 48,271 options.

*Employment/Consulting Agreements*

On April 13, 2007, we entered into a Consulting Agreement with Frontera Geological Services Ltd., a company that is wholly-owned by our president, Ken Hicks.  Under the agreement, Frontera Geological Services Ltd. has agreed to make Mr. Hicks available to our company on a substantially full-time basis (approximately 80% of his working hours) to serve as our company’s president for a term of two years from the date of the agreement.  In exchange, we agreed to pay a fee to Frontera Geological Services Ltd. consisting of cash in the amount of CDN$9,000 per month and we agreed to issue to Mr. Hicks 900,000 share purchase warrants.  Each share purchase warrant may be exercised into one common share of our company at an exercise price of $1.25 until they expire on April 13, 2012.  If (a) during the period beginning on April 13, 2007 and expiring on April 13, 2008, our company has income equal to or greaterthan $5,000,000 (U.S.) from all sources (including revenue from operations, sale of properties or any interest therein, sale of equity and similar income but excluding income from the sale of debt securities), or (b) during the period beginning on April 13, 2007 and expiring on April 13, 2009, the average price for one of our common shares on any single market for 20 consecutive trading-days equals or exceeds $3.00 (U.S.) then, in either of such events, we have agreed to issue to Mr. Hicks, as an incentive bonus, 250,000 of our common shares.  The term of this agreement commenced on April 13, 2007 and expires April 13, 2009.

In March of 2006, we entered into a written consulting agreement with Hamish Malkin dated as of November 1, 2005.  This written agreement confirmed the terms of our oral agreement with Mr. Malkin dated on or about November 1, 2005, whereby he agreed to act as our Chief Financial Officer and we agreed to pay him a consulting fee of approximately $1,024 (CAD $1,200) per month during the months of November and December of 2005 and a consulting fee of approximately $2,120 (CAD $2,500) per month for each month during calendar year 2006.  In this agreement, we also agreed to grant to grant to Mr. Malkin option to purchase an aggregate of 200,000 shares of our common stock at an exercise price of $0.25 per share.

 

 

 

- 34 -

 

 

We have an oral agreement with our bookkeeper, Jie Fang, pursuant to which Ms. Fang keeps our accounting records on an as-needed basis at an hourly rate of approximately $26 (CAD $30) per hour

We also have an oral consulting agreement with Diego Guido, a geologist who serves as our Senior Technical Advisor in Argentina.  He supervises the geological aspects of data compilation, interpretation and design of exploration programs for detail mapping, reconnaissance exploration and drill targeting on an ‘as-required’ basis.  We pay our Senior Technical Advisor at a daily rate for time spent.

Our subsidiary, SCRN Properties Ltd., employs Orlando Rionda, as its full-time legal representative in Argentina. Mr. Rionda performs administrative tasks on a full-time basis and looks after our local claims management, accounting, field logistical support, legal administration, field staffing and other matters in Argentina.  Our subsidiary pays Mr. Rionda at a rate of $75 per day for each day worked in the office and $150 per day for each work day spent in the field.

Other than as set out in this annual report on Form 10-KSB, we have not entered into any employment or consulting agreements with any of our current officers, directors or employees.

*Long-Term Incentive Plans*

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

*Stock Option Plan*

On February 16, 2005 our board of directors approved the 2005 Incentive Stock Plan, or 2005 Incentive Plan.  The purpose of the 2005 Incentive Plan is to (i) retain the services of valued key employees and consultants and to encourage them to acquire a greater proprietary interest in us, thereby strengthening their incentive to achieve the objectives of our stockholders and (ii) serve as an aid and inducement in the hiring of new employees.  The 2005 Incentive Plan is administered by our board of directors, provided however, that our board of directors may delegate such administration to the compensation committee. 

Stock options become exercisable at dates determined by our board of directors at the time of granting the option and have initial terms of between five and ten years.  Options may be granted only to our directors, officers, employees and consultants as determined by our board of directors.  Subject to the terms of the 2005 Incentive Plan, a director, officer, employee or consultant who has been granted an option may, if he or she is otherwise eligible, be granted an additional option. 

To provide a flexible and competitive program, the 2005 Incentive Plan awards non-qualified stock options or incentive stock options.  We do not receive consideration for the granting of options under this plan, except to the extent that options or shares are granted in return for services as permitted by the 2005 Incentive Plan.  The awards are not transferable except by will, by the laws of descent and distribution.

The 2005 Incentive Plan provides for the granting of options for an aggregate of 2,500,000 shares of common stock.  Authorized but unissued shares and treasury shares may be made available for issuance under the 2005 Option Plan.  In the event of changes affecting our common stock such as the payment of a stock dividend, the declaration of a stock split, combination of shares, recapitalization, merger, consolidation, or other corporate reorganization in which we are the surviving company, our board of directors will make adjustments to awards and shares under the 2005 Incentive Plan. 

 

 

 

- 35 -

 

 

The exercise price of shares subject to any option must be at least 100% of the fair market value of the shares on the date of grant.  The maximum term of any stock option is 10 years from the date the option is granted.  The 2005 Incentive Plan shall terminate on February 16, 2015.  In the event of a dissolution or liquidation of our company or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which we are not the surviving corporation or, if so provided by our board of directors with respect to a particular option in the event of a change of control, all options previously granted and still outstanding, regardless of their terms, will become exercisable.

The following table sets forth for each of the named executive officers certain information concerning unexercised options, stock that has not vested; and equity incentive plan awards outstanding as at the year ended January 31, 2007.  

 

**OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END**

 

**Option Awards**

**Stock Awards**

**Name**

**Number****of****Securities****Underlying****Unexercised****Options****(#)****Exercisable**

**Number****of****Securities****Underlying****Unexercised****Options****(#)****Unexercisable**

**Equity****Incentive****Plan****Awards:****Number****of****Securities****Underlying****Unexercised****Unearned****Options****(#)**

**Option****Exercise****Price****($)**

**Option****Expiration****Date**

**Number****of****Shares****or****Units****of****Stock****That****Have****Not****Vested****(#)**

**Market****Value****of****Shares****or****Units****of****Stock****That****Have Not****Vested****($)**

**Equity****Incentive****Plan****Awards:****Number of****Unearned****Shares,****Units or****Other****Rights That****Have Not****Vested****(#)**

**Equity****Incentive****Plan****Awards:****Market or****Payout****Value of****Unearned****Shares,****Units or****Other****Rights****That Have****Not Vested****($)**

Kenneth Hicks

500,000(1)

Nil

Nil

$0.25

Jun. 26, 2015

Nil

Nil

Nil

Nil

Kenneth Hicks

166,666(2)

333,334

Nil

$0.25

Jun. 26, 2015

Nil

Nil

Nil

Nil

Kenneth Hicks

200,000(3)

Nil

Nil

$0.49

Feb. 7, 2011

Nil

Nil

Nil

Nil

 

(1)

Mr. Hicks was granted 500,000 options on July 5, 2005 at an exercise price of $0.10 expiring on June 26, 2015.  On December 31, 2005, the board of directors approved an amendment to the exercise price for these options from $0.10 to $0.25.  The options were fully vested on December 31, 2005.  On March 12, 2007, Mr. Hicks exercised 200,000 of the options on May 5, 2006 and 300,000 of the options on March 12, 2007.

 

(2)

Mr. Hicks was granted 500,000 options on July 5, 2005 at an exercise price of $0.50 expiring on June 26, 2015. On December 31, 2005, the board of directors approved an amendment to the exercise price for these options from $0.10 to $0.25.  The options will become exercisable in 4 equal annual instalments of 25% of the shares covered by the options.  The first instalment of the options will be exercisable on the 6 month anniversary of the date the options were granted.  An additional 25% of such options will become exercisable on each of the 3 successive 12 month periods following the initial vesting date.  The instalments are cumulative (i.e., the options may be exercised, as to any or all shares covered by an instalment, at any time or times after an instalment becomes exercisable and until expiration or termination of theoptions).  On March 12, 2007 Mr. Hicks exercised 118,395 options and on April 2, 2007 Mr. Hicks exercised 48,271 options.

 

(3)

Mr. Hicks was granted 200,000 options on February 7, 2006 at an exercise price of $0.49 expiring on February 7, 2011.  The options vest as to 25% on February 7, 2006, and 25% every ninety days thereafter.  Mr. Hicks exercised all of the 200,000 options on April 2, 2007.

 

During the year ended January 31, 2007, 920,000 options were granted, of which 200,000 were granted to named executive officers and 720,000 were granted to directors, employees and consultants.

*Directors Compensation*

 

**DIRECTOR COMPENSATION**

**Name**

**Fees****Earned****or Paid in****Cash****($)**

**Stock****Awards****($)**

**Option****Awards****($)**

**Non-Equity****Incentive****Plan****Compensation****($)**

**Change in Pension****Value and****Nonqualified Deferred****Compensation****Earnings**

**All****Other****Compensation****($)**

**Total****($)**

Colin Godwin

Nil

Nil

92,325

Nil

Nil

Nil

92,3252

Jenna Hardy

Nil

Nil

81780

Nil

Nil

Nil

81780

Richard Thibault

Nil

Nil

96,800

Nil

Nil

Nil

96800

 

 

 

 

- 36 -

 

 

(1)

200,000 Stock Options were granted effective February 7, 2006 at an exercise price of $0.49.

(2)

200,000 Stock Options were granted effective February 7, 2006 at an exercise price of $0.49.

(3)

200,000 Stock Options were granted effective February 9, 2006 at an exercise price of $0.58.

We reimburse our directors for expenses incurred in connection with attending board meetings  We did not pay director's fees or other cash compensation for services rendered as a director in the year ended January 31, 2007.

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established.  Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.  Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.  No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.

**Item 11.**

**Security Ownership of Certain Beneficial Owners and Management.**

As of April 16, 2007, there were 21,794,109 shares of our common stock outstanding.  The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group.  Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock.  The number of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and any shares which the individual has the right to acquire within 60 days of April 16, 2007 through the exercise ofany stock option or other right.  Unless otherwise noted, we believe that each person has sole investment and voting power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table:

 

**Name and Address of Beneficial  Owner**

**Amount and Nature of****Beneficial  Ownership**

**Percentage****of Class**

Kenneth E. Hicksc/o Argentex Mining CorporationSuite 2300 – 1066 West Hastings StreetVancouver, BC, Canada V6E 3X2

1,841,666 common(1)

8.11%

Hamish Malkin1564 Eaglecliff Road  RR1Bowen Island, British Columbia, Canada V0N 1G0

110,000 common(2)

*

Colin Godwin665 Gatensbury StreetCoquitlam, British Columbia, Canada V3J 5G9

255,000 common(3)

1.15%

Jenna Hardy535 East Tenth StreetNorth Vancouver, British Columbia, Canada V7L 2E7

200,000 common(4)

*

Rick ThibaultLa Gioconda 4344, Apt. 152Las Condes, Santiago, Chile

200,000 common(5)

*

Orlando RiondaRadio Santiago del Estero 3051,Salta, Argentina, CP4400

85,000 common(6)

*

**Directors and Executive Officers as a Group (6 people)**

2,491,666

**10.58%**

(1)

Includes 900,000 share purchase warrants which were issued under a consulting agreement and are currently exercisable or exercisable within 60 days.

 

 

 

- 37 -

 

 

(2)

Includes an aggregate of 110,000 stock options currently exercisable or exercisable within 60 days.

(3)

Includes an aggregate of 255,000 stock options currently exercisable or exercisable within 60 days.

(4)

Includes an aggregate of 200,000 stock options currently exercisable or exercisable within 60 days.

(5)

Includes an aggregate of 200,000 stock options currently exercisable or exercisable within 60 days.

(6)

Includes an aggregate of 70,000 stock options currently exercisable or exercisable within 60 days.

*Changes in Control*

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.

**Item 12.**

**Certain Relationships and Related Transactions, and Director Independence.**

Except as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. 

On March 4, 2004, we closed on five separate agreements pursuant to which we acquired interests in certain mineral claims located in the Santa Cruz and Rio Negro Provinces of the Republic of Argentina from Mr. Dyakowski and his affiliates.  The specific agreements are described under the section "Mineral Properties" above.

On April 13, 2007, we entered into a Consulting Agreement with Frontera Geological Services Ltd., a company that is wholly-owned by our president, Ken Hicks.  Under the agreement, Frontera Geological Services Ltd. has agreed to make Mr. Hicks available to our company on a substantially full-time basis (approximately 80% of his working hours) to serve as our company’s president for a term of two years from the date of the agreement.  In exchange, we agreed to pay a fee to Frontera Geological Services Ltd. consisting of cash in the amount of CDN$9,000 per month and we agreed to issue to Mr. Hicks 900,000 share purchase warrants.  Each share purchase warrant may be exercised into one common share of our company at an exercise price of $1.25 until they expire on April 13, 2012.  If (a) during the period beginning on April 13, 2007 and expiring on April 13, 2008, our company has income equal to or greaterthan $5,000,000 (U.S.) from all sources (including revenue from operations, sale of properties or any interest therein, sale of equity and similar income but excluding income from the sale of debt securities), or (b) during the period beginning on April 13, 2007 and expiring on April 13, 2009, the average price for one of our common shares on any single market for 20 consecutive trading-days equals or exceeds $3.00 (U.S.) then, in either of such events, we have agreed to issue to Mr. Hicks, as an incentive bonus, 250,000 of our common shares.  The term of this agreement commenced on April 13, 2007 and expires April 13, 2009.

In March of 2006, we entered into a written consulting agreement with Hamish Malkin dated as of November 1, 2005.  This written agreement confirmed the terms of our oral agreement with Mr. Malkin dated on or about November 1, 2005, whereby he agreed to act as our Chief Financial Officer and we agreed to pay him a consulting fee of approximately $1,024 (CAD $1,200) per month during the months of November and December of 2005 and a consulting fee of approximately $2,120 (CAD $2,500) per month for each month during calendar year 2006.  In this agreement, we also agreed to grant to grant to Mr. Malkin option to purchase an aggregate of 200,000 shares of our common stock at an exercise price of $0.25 per share.

On July 1, 2006, we received a loan in the amount of approximately $90,410 (CAD$100,000) from our president, Kenneth Hicks.  The loan bears an interest rate of six percent (6%) per annum.  This loan was repaid in full on March 12, 2007.

**Corporate Governance**

We currently act with four (4) directors, consisting of Kenneth Hicks, Richard Thibault, Jenna Hardy and Colin Godwin.

We have determined that Richard Thibault, Jenna Hardy and Colin Godwin are independent directors, as that term is used in Rule 4200(a)(15) of the Rules of National Association of Securities Dealers.

 

 

 

- 38 -

 

 

Currently our company has the following committees: 

The following people make up the Audit Committee: Jenna Hardy, Richard Thibault and Colin Godwin.  The Audit Committee is governed by the Audit Committee Charter adopted by the board of directors on March 31, 2006.

The following people make up the Compensation Committee: Jenna Hardy and Richard Thibault.  The Compensation Committee is governed by the Compensation Committee Charter adopted by the board of directors on March 31, 2006.

The following people make up the Nominating Committee: Jenna Hardy and Richard Thibault.  The Nominating Committee is governed by the Nominating Committee Charter adopted by the board of directors on March 31, 2006.

Our board of directors presently does not have a separate stock plan committee.

**Item 13.**

**Exhibits**

*Exhibits required by Item 601 of Regulation S-B*

 

Exhibit No. 

Description

3.1

Articles of Incorporation of the Registrant, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on March 12, 2002 and incorporated herein by reference.

3.2

By-laws of the Registrant, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on March 12, 2002 and incorporated herein by reference.

3.3

Certificate of Designation of Series A Convertible Preferred Stock, filed as an exhibit to the annual report on Form 10-KSB filed with the Commission on April 30, 2004 and incorporated herein by reference.

4.1

10% Convertible Promissory Note, dated December 22, 2004, issued to Chaudion Holdings Ltd., filed as an exhibit to the current report on Form 8-K filed with the Commission on January 13, 2005 and incorporated herein by reference.

10.1

Mineral Property Option Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.

10.2

Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.

10.3

Share Purchase Agreement dated February 24, 2004 between the Registrant and Chris Dyakowski, filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.

10.4

Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and San Telmo Energy Ltd., filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.

10.5

Mineral Property Acquisition Agreement dated February 24, 2004 between the Registrant and Storm Cat Energy Corp., filed as an exhibit to the current report on Form 8-K filed with the Commission on March 4, 2004 and incorporated herein by reference.

 

 

 

 

- 39 -

 

 

 

10.6

Consulting Agreement dated February 12, 2005 between the Registrant and Kenneth Hicks, filed as an exhibit to the annual report on Form 10-KSB, filed with the Commission on May 13, 2005 and incorporated herein by reference.

10.7

Consulting Agreement dated February 25, 2005 between the Registrant and Chris Dyakowski, and Consulting Agreement dated February 12, 2005 between the Registrant and Kenneth Hicks, filed as an exhibit to the annual report on Form 10-KSB, filed with the Commission on May 13, 2005 and incorporated herein by reference.

10.8

Diamond Core Drilling (Surface) Agreement, dated as of January 18, 2005, between the Registrant and Connors Argentina S.A., filed as an exhibit to the current report on Form 8-K filed with the Commission on January 24, 2005 and incorporated herein by reference.

10.9

Amendment to Mineral Property Acquisition Agreement dated June 30, 2005, filed as an exhibit to the current report on Form 8-K filed with the Commission on July 5, 2005 and incorporated herein by reference.

10.10

Restated Amendment to Mineral Property Acquisition Agreement dated August 8, 2005, filed as an exhibit to the current report on Form 8-K, filed with the Commission on August 9, 2005 and incorporated herein by reference.

10.11

Promissory Note dated August 31, 2005 issued to Chaudion Holdings Ltd., filed as an exhibit to the quarterly report on Form 10-QSB filed with the Commission on December 13, 2005, and incorporated herein by reference.

10.12

Promissory Note dated November 1, 2005 issued to Chaudion Holdings Ltd., filed as an exhibit to the quarterly report on Form 10-QSB filed with the Commission on December 13, 2005, and incorporated herein by reference.

10.13

8% Convertible Note dated March 21, 2006 issued by our company to Corin Enterprises Inc., filed as an exhibit to our current report on Form 8-K, filed with the Commission on May 11, 2006 and incorporated herein by reference. 

10.14

8% Convertible Note dated March 21, 2006 issued by our company to Rubix Finance Inc. , filed as an exhibit to our current report on Form 8-K, filed with the Commission on May 11, 2006 and incorporated herein by reference.  

10.15

Amended 10% Convertible Note dated April 18, 2006 issued by our company to Chaudion Holdings Ltd., filed as an exhibit to our current report on Form 8-K, filed with the Commission on May 11, 2006 and incorporated herein by reference.

10.16

Promissory Note with Providence Securities Ltd. dated June 28, 2006 filed as an exhibit to our current report on Form 8-K, filed with the Commission on July 27, 2006 and incorporated herein by reference.

10.17

Promissory Note with Kenneth Hicks dated July 1, 2006 filed as an exhibit to our current report on Form 8-K, filed with the Commission on July 27, 2006 and incorporated herein by reference.

10.18

Consulting Agreement dated April 12, 2007 with Frontera Geological Services Ltd. filed as an exhibit to our current report on Form 8-K, filed with the Commission on April 18, 2007 and incorporated herein by reference.

14.1

Code of Ethics and Business Conduct of Officers, Directors and Employees, filed as an exhibit to the annual report on Form 10-KSB filed with the Commission on April 30, 2004 and incorporated herein by reference.

 

 

 

 

- 40 -

 

 

 

21.1

Subsidiaries of Argentex Mining CorporationSCRN Properties Ltd., a Delaware corporationArgentex Mining Corporation, a Delaware corporation

31.1*

Certification pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended (Chief Executive Officer).

31.2*

Certification pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended (Chief Financial Officer).

32.1*

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).

32.2*

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

 

*Filed herewith

**Item 14.**

**Principal Accountant Fees and Services**

*Audit Fees*

The aggregate fees billed by Morgan & Company for professional services rendered for the audit of our annual financial statements for review of our quarterly interim financial statements and in connection with statutory and regulatory filings were $36,300 for the fiscal year ended January 31, 2007 and $26,500 for the fiscal year ended January 31, 2006.  This category also includes the review of interim financial statements and services in connection with registration statements and other filings with the Securities and Exchange Commission.

*Audit Related Fees*

For the fiscal years ended January 31, 2007 and 2006, Morgan & Company billed $Nil and $Nil, respectively, for fees relating to the performance of the audit of our financial statements which are not reported under the caption “Audit Fees” above.

*Tax Fees*

For the fiscal years ended January 31, 2007 and 2006, Morgan & Company billed $Nil and $Nil, respectively, for fees for tax compliance, tax advice and tax planning services.

We do not use Morgan & Company for financial information system design and implementation.  These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers.  We do not engage Morgan & Company to provide compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Morgan & Company is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

**•**

approved by our audit committee (which consists of our entire board of directors); or

 

**•**

entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management.

The board of directors pre-approves all services provided by our independent auditors.  All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were 

 

 

 

- 41 -

 

 

rendered.

The board of directors has considered the nature and amount of fees billed by Morgan & Company and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Morgan & Company’s independence.

 

 

 

- 42 -

 

 

**SIGNATURES**

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

**ARGENTEX MINING CORPORATION**

By:  /s/ Kenneth Hicks                      

Kenneth Hicks

President and Director

Principal Executive Officer 

Date: May 11, 2007.

By:  /s/ Hamish Malkin                      

Hamish Malkin

Chief Financial Officer

Principal Financial Officer

Date: May 11, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

By:  /s/ Kenneth Hicks                      

Kenneth Hicks

President and Director

Principal Executive Officer 

Date: May 11, 2007

By:  /s/ Clive Godwin                        

Colin Godwin 

Director

Date: May 11, 2007

By:  /s/ Jenna Hardy                          

Jenna Hardy

Director

Date: May 11, 2007

By:  /s/ Richard Thibault                  

Richard Thibault

Director

Date: May 11, 2007

 

 

 

 

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