UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10KSB



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 PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934




For the transition period from _________ to ____________



Commission File No. 000-49996



AMERICAN GOLDFIELDS INC.

(Exact name of Registrant as specified in its charter)



Nevada
(State or other jurisdiction ofincorporation or organization)
        71-0867612
(I.R.S. Employer Identification Number)






200-4170 Still Creek Drive Burnaby, B.C., Canada
(Address of principal executive offices)
        V5C 6C6
(Zip Code)




Registrants telephone number, including area code:
        (604) 299-6600




Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12 (g) of the Act:Common Stock, par value $0.001 per share



Check whether the issuer (l) has 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. [X] Yes [   ] 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.x



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

[
        ] Yes
        xNo




Revenues for fiscal year ended January 31, 2007 were0.



The aggregate market value of the 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 price of such common equity, as of April 27, 2007 (a date within the past 60 days) was $23,539,738.



The number of shares of the issuers Common Stock outstanding as of April 27, 2007 is 20,292,878.



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Documents Incorporated By Reference:  None



Transitional Small Business Disclosure Format (check one):  Yes [
        ]
        No [X ]




2



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PART I



ITEM 1.
        DESCRIPTION OF BUSINESS




General



American Goldfields Inc. (the Company or we), f/k/a Baymont Corporation, is a natural resource exploration stage company engaged in the acquisition and exploration of properties for deposits of gold or silver. We were incorporated on December 21, 2001 under the laws of the State of Nevada. Since then, we have engaged primarily in the acquisition and exploration of mining interests in properties that may potentially have deposits of gold and silver. To date, we have not earned any revenues.



In December 2001, we caused the incorporation of our wholly owned subsidiary, Baymont Explorations Inc., under the laws of British Columbia. Through this subsidiary we acquired a 75% undivided interest in a group of mineral claims known as the Bor Claims, being four mineral claims covering a total area of 247 acres located in the Omineca Mining Division of the Province of British Columbia, Canada. The interest was purchased from Lorne B. Warren of Smithers, British Columbia, the beneficial owner of the claims, for US$2,500. In April 2004 we terminated our interest in this property.



On various dates in 2004 and 2005, we entered into separate agreements with MinQuest Inc. (MinQuest) granting us an option to purchase 100% of MinQuests mining interests in six different properties located in various parts of the State of Nevada, which we plan to explore for the purpose of determining whether there are any commercially exploitable deposits of gold or silver. None of the properties presently has any mineral deposits. The properties are undeveloped and do not contain any open-pit or underground mines. There is no mining plant or equipment located on the properties, and there is no power supply to the properties. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Further exploration of all of our mineral claims is required before a final determination as to their viability can be made. No commercially viable mineral deposit may exist on our mineral claims. Our plan of operations is to carry out exploration work on these claims in order to ascertain whether they possess deposits of gold or silver. We can provide no assurance to investors that our mineral claims contain a commercially viable mineral deposit until appropriate exploratory work is done and an evaluation based on that work concludes further work programs are justified. At this time, we definitely have no reserves on our mineral claims.



Corporate History

From the date of its incorporation until February 5, 2004, the Company was controlled by Mr. Alfredo De Lucrezia, who was its sole officer and director and had legal and beneficial ownership of 6,000,000 (pre-forward split) shares of the Companys common stock, or 66.8% of the issued and outstanding share capital of the Company.  On February 5, 2004 Mr. Lucrezia appointed Donald Neal and Gregory Crowe to the Board and resigned as the Companys sole officer. Mr. Neal was duly appointed as the Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary of the Company. Mr. Neals appointment to the Board became



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effective on February 5, 2004, and Mr. Crowe became a member of the Board on February 23, 2004, ten days after the mailing of the Information Statement regarding such changes. On such date, Mr. Lucrezia resigned as a director of the Company.



On February 10, 2004, Mr. Lucrezia sold 3,000,000 shares of Common Stock to each of Donald Neal and Gregory Crowe pursuant to a Purchase and Sale Agreement dated as of such date.  The purchase price for each share of common stock was $0.035, amounting in the aggregate to $105,000 for each of Messrs. Crowe and Neal. Mr. Lucrezia no longer holds any shares of capital stock or other equity in the Company.



On February 10, 2004, Messrs. Neal and Crowe entered into a Shareholders Agreement dated as of such date. The agreement provided that for so long as the person holds any of the 3,000,000 shares which he received from Alfredo De Lucrezia, the directors shall vote such shares to maintain two persons on our board, or such number as the shareholders agree. Upon any vote to appoint representatives to the Board, each shareholder agreed that he shall vote his shares for the other shareholder. If one of the shareholders is no longer a shareholder, or if the Board or our shareholders decided to remove one of the Board members, or the shareholder no longer holds any of the 3,000,000 shares which he received from Mr. Lucrezia, then the other shareholder agreed to vote his shares to either maintain the number of Board members as one or to nominate a second Board member. The agreement also provided that
for all other matters in which shares are voted, the two shareholders shall vote their 3,000,000 shares together as determined by the unanimous decision of the shareholders.  Each of the shareholders also agreed that he would not, directly or indirectly, sell, pledge, gift or in any other way dispose of any of the 3,000,000 shares which he received from Mr. Lucrezia. This transfer restriction shall apply to such shares in all situations during all times that such individual holds any of the 3,000,000 shares.



On February 23, 2004, the Company approved a 6:1 forward stock split. As a result of the stock split, an additional 44,928,565 shares of common stock were issued. The par value of the common stock remained unchanged at $0.001 per common share but the authorized number of common stock increased to 600,000,000 from 100,000,000.



On February 24, 2004, the Company and a majority of the Companys stockholders authorized the changing of the Companys name to American Goldfields Inc. The name change became effective March 31, 2004.



On March 31, 2004, each of Messrs. Neal and Crowe returned 15,000,000 shares (such number reflects the 6:1 stock split) of common stock to treasury for no proceeds. The Company did not record a gain or loss as a result of this transaction. Since it is customary for a mining exploration company to acquire properties  with the  issuance  of stock, this is an option which Messrs. Neal and Crowe  considered not only feasible and reasonable, but the only  practicable  method for the  company to acquire  property in light of the Companys current financial condition. The  stockholders/directors determined that they would prefer to dilute their personal equity interests in the Company now rather than have the stockholders incur significant  dilution in the future when,  and if, a potential seller feels that the directors of the company have too significant of an equity interest.



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On May 26, 2004, Mr. Richard Kern joined the Board of Directors of the Company. Mr. Kern is also the President of MinQuest Inc. All of the Companys current mineral properties have been optioned from MinQuest. In addition, MinQuest has been engaged by the Company as its principal exploration contractor for all exploration performed on the Companys current properties. As a result, a significant portion of the Companys expenses have been the result of activities performed directly by Mr. Kern or by subcontractors managed by Mr. Kern or MinQuest.



On January 11, 2006 the Company's Board of Directors elected Dr. David Gladwell as a member of the Board of Directors of the Company.



On July 12, 2006, the Company granted stock options to Mr. Neal.  Pursuant to such agreement, Mr. Neal was granted 200,000 options, with each option entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.



On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Companys stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.



On July 14, 2006 Mr. Crowe resigned as a Director of the Company.  In connection with his resignation, the Company and Mr. Crowe entered into a Redemption Agreement, dated July 14, 2006, pursuant to which Mr. Crowe agreed to sell the 3,000,000 common shares of the Company owned by Mr. Crowe to the Company at a price of $0.01 per share.  The Company paid Mr. Crowe $30,000 and returned the shares to treasury for cancellation.



On September 15, 2006, the Company's Board of Directors elected Mr. Jared Beebe as a member of the Board of Directors of the Company.



Since May 2004, the Company has focused its exploration activity in the State of Nevada and the Companys subsidiary, Baymont Explorations Inc. has been inactive. As a result, during the year ended January 31, 2007, Baymont Exploration Inc. was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia.  Baymont Explorations Inc. had no assets and its sole liability was to its Parent Company.



Competition



The mineral exploration industry, in general, is intensively competitive and even if commercial quantities of ore are discovered, a ready market may not exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested



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capital.



Compliance with Government Regulation



We are required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the United States. The federal government and various state and local governments have adopted laws and regulations regarding the protection of natural resources, human health and the environment. We will be required to conduct all exploration activities in accordance with all applicable laws and regulations. These may include requiring working permits for any exploration work that results in physical disturbances to the land and locating claims, posting claims and reporting work performed on the mineral claims. The laws and regulations may tell us how and where we can explore for natural resources, as well as environmental matters relating to exploration and development.  Because these laws and regulations change frequently, the costs of compliance with
existing and future environmental regulations cannot be predicted with certainty.



Any exploration or production on United States Federal land will have to comply with the Federal Land Management Planning Act which has the effect generally of protecting the environment. Any exploration or production on private property, whether owned or leased, will have to comply with the Endangered Species Act and the Clean Water Act. The costs of complying with environmental concerns under any of these acts vary on a case by case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.



There are no costs to us at the present time in connection with compliance with environmental laws other than the reclamation bonding requirements of the Bureau of Land Management. However, since we do anticipate engaging in natural resource projects, these costs could occur at any time. Costs could extend into the millions of dollars for which we could be liable. In the event of liability, we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability is limited to our percentage share, any significant liability would wipe out our assets and resources.



Employees



We have no employees as of the date of this report other than Mr. Donald Neal, our sole officer. Our sole officer and four directors (one of which is Mr. Neal) provide planning and organizational services for us on a part-time basis.



Any other services required will be conducted largely through consultants and other third parties.



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Research and Development Expenditures



We have not incurred any research or development expenditures since our incorporation.



Subsidiaries



We previously incorporated a wholly-owned British Columbia subsidiary, Baymont Explorations Inc.   Since May 2004, the Company has focused its exploration activity in the State of Nevada and the Companys subsidiary, Baymont Explorations Inc. has been inactive. As a result, during the year ended January 31, 2007, Baymont Exploration Inc. was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia.  Baymont Explorations Inc. had no assets and its sole liability was to its Parent Company.



Patents and Trademarks



We do not own any patents or trademarks.



Factors that May Affect Future Results



1. We will require additional funds to achieve our current business strategy and our inability to obtain funding will cause our business to fail.



Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the acquisition and exploration of natural resource properties. We will need to raise additional funds through public or private debt or equity sales in order to fund our operations and fulfill our contractual obligations. These financings may not be available when needed. Even if these financings are available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current exploration in Nevada, and as a result, could require us to diminish or suspend our operations and possibly cease our existence. Obtaining additional financing would be
subject to a number of factors, including the market prices for the mineral property and silver and copper. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.



2. If we do not complete the required option payments and capital expenditure requirements mandated in our respective agreements with MinQuest, we will lose our interest in that respective property and our business may fail.



If we do not make all of the property payments to MinQuest or incur the required expenditures in accordance with the respective property option agreements we will lose our option to purchase the respective property for which we have not made the payments and may not be able to continue to execute our business objectives if we are unable to find an alternate exploration interest. Since our payment obligations are non-refundable, if we do not make any payments, we will lose any payments previously made and all our rights to the properties.



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3. Because all of our mineral properties have been optioned from MinQuest and one of the Directors of the Company is also a Director of MinQuest, potential conflicts of interest could impact our business.



Mr. Kern joined the Board of Directors of the Company on May 26, 2004. Mr. Kern is also the president of MinQuest. All of the Companys mineral properties have been optioned from MinQuest. As a result, MinQuest and Mr. Kern are related parties to the Company and both MinQuest and Mr. Kern receive substantial payments from the Company. In addition, the Company has agreed to use Mr. Kern as the primary contractor on exploration undertaken to date on all of its properties. The potential exists for conflicts of interest to occur from time to time that could adversely affect the Companys ability conduct its business. Also, Mr. Kern is the most knowledgeable person regarding the historical and current state of exploration on the mineral properties currently optioned by the Company. If Mr. Kern were to terminate his relationship with the Company, the Company would be
adversely affected while we found a suitable replacement.  To date, there have not been any conflicts of interest between the Company and MinQuest or Mr. Kern.



4. Because our Directors serve as Officers and Directors of other companies engaged in mineral exploration, a potential conflict of interest could negatively impact our ability to acquire properties to explore and to run our business.



All of our Directors and Officers work for other mining and mineral exploration companies.  Due to time demands placed on our Directors and Officers, and due to the competitive nature of the exploration business, the potential exists for conflicts of interest to occur from time to time that could adversely affect our ability to conduct our business. The Officers and Directors full-time employment with other entities limits the amount of time they can dedicate to us as a director or officer. Also, our Directors and Officers may have a conflict of interest in helping us identify and obtain the rights to mineral properties because they may also be considering the same properties. To mitigate these risks, we contract several geologists in order to ensure that we are not overly reliant on any one of our Directors to provide us with geological services.  However, we cannot be certain that a conflict of
interest will not arise in the future.  To date, there have not been any conflicts of interest between any of our Directors or Officers and the Company.



5. Because of the speculative nature of exploration and development, there is a substantial risk that our business will fail.



The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the property we have optioned in Nevada contains commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.



6. Because our sole executive officer does not have formal training specific to the technicalities of mineral exploration, there is a higher risk our business will fail



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Mr. Neal, our sole executive officer, does not have formal training as a geologist or in the technical aspects of management of a mineral exploration company. Our management lacks technical training and experience with exploring for, starting, and operating a mine. With no direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to managements lack of experience in this industry.



7. Because we have not commenced business operations, we face a high risk of business failure due to our inability to predict the success of our business



We are in the initial stages of exploration of our mineral claims, and thus have no way to evaluate the likelihood that we will be able to operate the business successfully. We were incorporated on December 21, 2001 and to date have been involved primarily in organizational activities, and the acquisition and exploration of the mineral claims. We have not earned any revenues as of the date of this report.



8. Because of the unique difficulties and uncertainties inherent in mineral exploration and the mining business, we face a high risk of business failure



Potential investors should be aware of the difficulties normally encountered by early-stage mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.



9. Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability



Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.



10. Because of the speculative nature of exploration of mineral properties, there is substantial risk that no mineral deposits will be found and this business will fail



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The search for valuable minerals as a business is extremely risky. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us in the exploration of the mineral claims may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.



11. Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business



The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.



12. Because access to our mineral claims may be restricted by inclement weather, we may be delayed in our exploration



Access to our mineral properties may be restricted through some of the year due to weather in the area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations.



13. Because our President has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail



Mr. Neal, our sole officer, provides his management services to a number of companies. Because we are in the early stages of our business, Mr. Neal will not be spending a significant amount of time working for the Company. Mr. Neal expects to expend approximately five hours per week on our business. Later, if the demands of our business require the full business time of Mr. Neal, he is prepared to adjust his timetable to devote more time to our business. However, it still may not be possible for Mr. Neal to devote sufficient time to the management of our business, as and when needed, especially if the demands of Mr. Neals other interests increase. Competing demands on Mr. Neals time may lead to a divergence between his interests and the interests of other shareholders.



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Risks Related To Legal Uncertainty and Regulations



14. As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program



There are several governmental regulations that materially restrict mineral exploration. We will be subject to the federal, state and local laws of the United States and Nevada as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out exploration program.



ITEM 2.
        DESCRIPTION OF PROPERTIES




We currently maintain our corporate office at 200-4170 Still Creek Drive, Burnaby, B.C., Canada, at a cost of $400 per month. This rental is on a month-to-month basis without a written contract.



We have interests in the following real properties:



GILMAN PROPERTY



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Map of Gilman Property located in western Nevada.



On May 7, 2004, the Company completed the formal agreement with MinQuest for an option to acquire a 100% interest in a property known as the Gilman Property.  The agreement requires minimum annual property option payments with a total of $85,000 required to be paid by May 15, 2009. The agreement also requires minimum annual exploration expenditures with a grand total of $450,000 in expenditures required to be incurred on the property by May 15, 2009. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased. The Company is not required to use MinQuest for exploration undertaken on the Gilman Property. However, at its discretion, the Company has engaged MinQuest as the principal contractor for exploration performed to date.

On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement. As a result of the amendment, the Companys obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009.  On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007.  The result is that the Company is now required to spend



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approximately $153,000 by May 15, 2007.  All other terms and commitments of the original agreement remain unchanged.

To January 31, 2007, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 option payments due in May 2006 and 2005.  In addition the Company has incurred approximately $22,000 in exploration expenditures on the property. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



Description and Location of the Gilman Property



The Gilman Property is located in Lander County, Nevada approximately 28 kilometers south of the town of Austin, 282 kilometers east of Reno. The property consists of 19 contiguous, unpatented mineral claims covering an approximate 390 acre area over the eastern flank of the Toiyabe Range on the North Toiyabe Peak and Kingston US Geological Survey 7 1⁄2 quadrangle mapsheets. The property is accessed from Austin by following State Highway 376 for 16 kilometers. A gravel road leads west 3.5 kilometers to the main area of interest on the property.



Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) and Department of Agriculture, Forest Service (USFS) under the Federal Land Policy and Management Act of 1976. The Gilman claims cover portions of Sections 7, 8, 17, and 18 in Township 16 North, Range 44 East in Lander County, Nevada. None of the claims have been legally surveyed. All of the claims are on USFS administered lands, while the access to the property is across BLM land.



Three of the claims on the Gilman Property are registered in the name of Mr. Herb Duerr. Under a Letter Agreement dated July 25, 2002, MinQuest leased the three claims. The Letter Agreement permits MinQuest to assign the property and terms of the agreement to third parties. This agreement covers an approximate 1.6 kilometer area. MinQuest located an additional 16 claims which all fall within the area of interest covered by the agreement MinQuest has with Mr. Duerr. Mr. Duerr subsequently granted to MinQuest the rights necessary to allow MinQuest to enter into agreements with third parties for the additional 16 claims. To maintain the claims in good standing, maintenance fees totaling $135 per claim are payable to the BLM on or before September 1 of each year. Recording fees of approximately $15 per claim are required by Lander County each year.



All of the Gilman Property is within the Toiyabe National Forest, administered by the USFS. Exploration within national forest lands must be permitted by the USFS. Prior to undertaking exploration activities a Plan of Operations must be submitted to the USFS for review. An environmental assessment and public input is required necessitating an approximate four month lead time before undertaking any disturbance. A reclamation bond to cover costs of such disturbances is required to be posted with the USFS. Access to the Gilman Property is across BLM administered land. As there are existing roads and tracks in place, no permit is required to cross these lands. No permits have been applied for or are currently issued for the Gilman Property.



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Exploration History of the Gilman Property



There is no known production or history data from the Gilman Property, but several pits and two adits are evidence of prior exploration activities. Numerous companies conducted property reviews and sampled the showings in the area, which have locally returned high concentrations of gold.



Geology of the Gilman Mineral Claims



The geology of the property is described in a December, 2002 report by Geoffrey N. Goodall, President of Global Geological Consultants Ltd., a private consulting firm. Mineralization on the Gilman Property is associated with a steep, easterly dipping and northerly trending range front fault. Jasperoid and massive quartz veining have developed along the fault zone and local east trending faults offset the jasperoid. Sulphide rich quartz veining occurs at the base of the silicified fault zone. Sulphides identified at Gilman include pyrite, arsenopyrite, galena, chalcopyrite and sphalerite. The primary focus of exploration at the Gilman Property is for structurally hosted high-grade gold/silver mineralization. Mineralization at Gilman consists of a gossanous shear zone and quartz veins along the base of a range front fault zone. Gold, silver, and copper associated with the fault system have been located in the area.



Current State of Exploration



The Gilman claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Geological Exploration Program



Evaluation of the Gilman claims to date has consisted of the preparation of a topographic base map, and surface and underground geochemical sampling. In addition, as part of the permitting process the Company undertook an archeological review of the property.  The Company has not yet applied for the final drilling permit.  Significant gold and silver values obtained in surface and underground sampling have been found associated with the range front quartz vein.  Future exploration will include drilling of the range front fault.   The Company does not currently have any plans to undertake any significant exploration on the Gilman Property for the remainder of calendar 2007.



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IMPERIAL PROPERTY







Map of Imperial Property located in western Nevada.



On June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in a property known as the Imperial Property.  The Company made the first scheduled option payment of $60,000 upon signing the agreement. The agreement requires certain additional minimum annual property option payments with a total of $80,000 required to be paid by July 1, 2008. The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by July 1, 2009. The property option agreement is subject to a 3% royalty payable to MinQuest. The Company is required to use MinQuest for exploration conducted on the Imperial Property.

To January 31, 2007, the Company had made the initial option payment of $60,000 upon signing the agreement as well as the $20,000 option payments due in July 2006 and 2005.  In addition the Company has incurred approximately $273,700 in exploration expenditures on the property which satisfies the Companys expenditure requirements to July 1, 2007.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



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Description and Location of the Imperial Property



The Imperial Property is located in Esmeralda County, Nevada, approximately 60 kilometres southwest of Tonopah and 300 kilometers northwest of Las Vegas in the Railroad Springs Mining District. The property consists of 24 mineral claims elongated in an east-west direction, covering approximately 450 acres located in Railroad Pass between the Montezuma Range to the northeast and the Silver Peak Range to the southwest. The property covers portions of two adjacent US Geological Survey 7 1⁄2 quadrangle map sheets:  Lida Wash, Nevada and Montezuma Peak, SW Nevada. The center of the property is situated at approximately 117o 31 43 West longitude and 37o 33 North latitude.



Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) under the Federal Land Policy and Management Act of 1976. The Imperial claims cover portions of Sections 34, 35, and 36 in Township 4S, Range 40 East in Esmeralda County, Nevada. None of the claims have been legally surveyed. The property is most easily accessed from the community of Silver Peak, Nevada by following US route 95 west from Tonopah for a distance of 35 kilometers and turning south onto paved State Highway 295 for 21 kilometers and then west on a secondary gravel road for 500 meters to the eastern claim boundary.



MinQuest is the registered owner of 14 of the claims that make up the Imperial Property. Ten of the claims (Lida 1 to Lida 10) are registered to Richard Kern, Michael Forth, and James Motter. Under the terms of a Letter Agreement, the Lida claims have been leased to MinQuest for a period of 20 years. The lease allows MinQuest to transfer title to third parties providing all conditions of the original agreement are met. To maintain the claims in good standing, maintenance fees totaling $135 per claim are payable to the BLM on or before September 1 of each year. Recording fees of approximately $15 per claim are required by Lander County each year.



Exploration History of the Imperial Property



The Imperial was first developed in the 1920s but apparently had little or no production until the late 1930s. The Imperial Mine produced approximately 10,000 tons of ore and was probably shut down at the beginning of World War II. The mine has two adits, the longest of which has approximately 2,600 feet of drifts and crosscuts. A 200 foot shaft, which is not accessible, is also located on the property.



The property has been explored by Energy Reserves Group, Goldsil Mining, Felmont Oil, and Nevada Star Resource Corporation. Felmont conducted the bulk of the work during 1983  1984 including drilling 19 reverse circulation holes. Five of these holes intercepted significant thickness of oxide gold in Carlin-style mineralization. Six of their holes were drilled on the area that hosted the Imperial Mine. No other holes were drilled on this target that is more than a mile long. Felmont dropped the property partly because they lost the rights to the portion of the claim covering the Imperial Mine and partly because they were taken over by Homestake.



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Nevada Star conducted a soil survey over the non-Imperial Mine claim block in 1987 and partially tested the area around two of the better Felmont holes with shallow, close-spaced grid drilling. This work which defined an area of gold mineralization and confirmed the presence of Carlin-style gold in silty rocks adjacent to northeast trending high angle feeder faults, was to be followed up by drill testing of this and several other targets. However, Nevada Star was unable to raise the capital needed to continue and relinquished the property.



Geology of the Imperial Mineral Claims



The geology of the property is described in a December, 2002 report by Geoffrey N. Goodall, President of Global Geological Consultants Ltd., a private consulting firm. Regionally, the Imperial Property is located within the Walker Lane which hosts several precious metal deposits. Two distinct types of gold mineralization occur on the Imperial Property. The first type is associated with high angle bodies of jasperoid that outcrop along the east-west axis of the property. The second type of mineralization is identified from drill hole data in the eastern part of the property. Here gold mineralization is associated with flat lying bedding and is disseminated throughout highly altered limonite stained decalcified siltstones.



Structurally, two fault sets appear closely related to mineralization. The Imperial Fault and other associated west-northwest structural zones have received the bulk of the exploration within the district. Numerous northeast trending faults, some of which are shown by soil geochemistry, have received little attention as possible feeders. Nearly all gold anomalies from the eastern half of the claims have a northeast trend. These anomalies are thought to be leakage along feeder faults.



Three primary Carlin-type targets are present at Imperial. The first and most important is the Imperial Target that has only one hole on the favourable side of the approximately 1,600 meter long structure. The second target, called the Resource Target is an open-ended 500 meter long gold in soil anomaly along a northeast trending fault system. A final target called the Jasperoid Breccia Target is a large anomaly under cover in the central portion of the claim group. The anomaly is 400 meters long and has gold in soil anomaly at its west end.



Current State of Exploration



The Imperial claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped but does contain two adits, the longest of which has approximately 2,600 feet of drifts and crosscuts. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim.



Exploration of the enargite-bearing high-grade vein system is warranted simultaneously with Carlin-style exploration. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



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Geological Exploration Program



The Company has completed a two phase exploration drill program that focused on the high-grade vein and disseminated gold targets within the Imperial Property. The program included 31 reverse circulation holes for a total of 7,935 feet of drilling.



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The results of the drilling are shown below:



IMPERIAL DRILLING RESULTSHole
        
        
        Vertical
        Total
        From
        To
        Interval
        Gold
        SilverNo.
        Target
        Azimuth
        Angle
        Depth
        (feet)
        (feet)
        (feet)
        (oz/ton)
        (oz/ton)IR-1
        Imperial Fault
        218
        -40
        120
        70
        80
        10
        0.026
        <0.01IR-2
        Imperial Fault
        218
        -72
        300
        
        
        
        <0.01
        <0.01IR-3
        Imperial Fault
        202
        -40
        250
        50
        55
        5
        0.048
        0.03IR-4
        Imperial Fault
        202
        -75
        355
        100
        105
        5
        0.026
        0.02IR-4
        
        
        
        
        105
        115
        10
        0.502
        0.54IR-4
        
        
        
        
        115
        145
        30
        0.036
        0.06IR-5
        Imperial Fault
        202
        -45
        300
        0
        15
        15
        0.011
        0.047IR-5
        
        
        
        
        95
        105
        10
        0.016
        <0.01IR-6
        Imperial Fault
        202
        -80
        275
        
        
        
        <0.01
        <0.03IR-7
        Imperial Fault
        202
        -45
        200
        80
        85
        5
        0.019
        0.02IR-7
        
        
        
        
        120
        140
        20
        0.037
        0.14IR-8
        Imperial Fault
        202
        -75
        400
        30
        45
        15
        0.012
        0.03IR-8
        
        
        
        
        190
        225
        35
        0.020
        0.06IR-9
        Imperial Fault
        202
        -45
        255
        160
        175
        15
        0.071
        0.05IR-10
        Imperial Fault
        202
        -75
        450
        145
        160
        15
        0.020
        0.012IR-10
        
        
        
        
        170
        180
        10
        0.014
        0.02IR-11
        Resource
        304
        -46
        150
        
        
        
        <0.01
        <0.05IR-12
        Resource
        303
        -45
        200
        
        
        
        <0.01
        <0.13IR-13
        Resource
        302
        -45
        200
        55
        60
        5
        0.018
        0.04IR-13
        Resource
        
        
        
        90
        100
        10
        0.022
        0.02IR-14
        Resource
        302
        -45
        205
        45
        60
        15
        0.032
        0.01IR-15
        Resource
        303
        -45
        200
        
        
        
        <0.01
        <0.03IR-16
        Resource
        305
        -45
        200
        40
        45
        5
        0.011
        0.26IR-17
        Resource
        305
        -45
        200
        45
        65
        20
        0.035
        0.08IR-18
        Resource
        303
        -45
        200
        50
        55
        5
        0.012
        0.15IR-19
        Resource
        304
        -45
        200
        
        
        
        <0.01
        <0.28IR-20
        Resource
        303
        -45
        200
        
        
        
        <0.01
        <0.02IR-21
        Resource
        304
        -45
        200
        115
        125
        10
        0.018
        0.01IR-22
        Resource
        302
        -45
        190
        0
        35
        35
        0.072
        0.08IR-23
        Resource
        305
        -45
        85
        10
        25
        15
        0.017
        0.01IR-23
        
        
        
        
        60
        85
        25
        0.034
        0.02IR-23
        
        Including at bottom of hole
        80
        85
        5
        0.096
        0.01IR-24
        Resource
        305
        -45
        150
        25
        55
        30
        0.023
        0.20IR-25
        Jasperoid Breccia
        325
        -45
        250
        
        
        
        <0.010
        <0.52IR-26
        Jasperoid Breccia
        200
        -60
        300
        
        
        
        <0.010
        <0.02IR-27
        Imperial Fault
        345
        -60
        400
        85
        105
        20
        0.017
        0.05IR-27
        
        
        
        
        110
        120
        10
        0.018
        0.01IR-28
        Imperial Fault
        180
        -70
        400
        265
        270
        5
        0.035
        0.28IR-29
        Imperial Fault
        204
        -45
        300
        15
        25
        10
        0.022
        0.01IR-29
        
        
        
        
        30
        50
        20
        0.079
        0.03IR-29
        
        
        
        
        70
        75
        5
        0.407
        0.114IR-29
        
        
        
        
        75
        105
        30
        0.069
        0.132IR-30
        Imperial Fault
        204
        -75
        400
        
        
        
        <0.01
        <0.02IR-31
        Imperial Fault
        206
        -75
        400
        
        
        
        <0.01
        <0.01Total
        
        
        
        7,935






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The first phase of the program was completed in the fall of 2004 and included 10 drill holes for a total of 2,995 feet. All of these holes were drilled on the Imperial Target.  In addition to the drilling the Company has also conducted underground sampling. A total of 40 samples have been taken of quartz vein related mineralization underground. This work confirmed the presence of high grade values in the two adits sampled and will help target further drilling.



Of the first ten drill holes drilled, several intersected stopes which were not visible on existing underground maps. This was to be expected to some extent, as Phase I of the drill program was designed to test an area of previous underground mining which had already had extensive workings. Of particular interest was drill hole IR-4 which intersected 10 feet of high grade gold. This 10 foot interval (105 to 115) averages 0.50 oz/ton gold occurs within a 40 foot interval (110 to 140) that averages 0.154 oz/ton gold. Seven of the ten holes drilled contain gold intercepts exceeding 1.0 ppm (0.029 oz/ton).



The second phase of the drilling was completed in the fall of 2005.  This phase included 21 holes for a total of 4,940 feet.  The Company drilled 14 holes in the Resource Target area with all but 5 containing +0.01 oz/ton gold intercepts.  Two of the holes intersected, or came close to intersecting, the feeder structure within the favorable host sediment. Hole IR-22 contained 35 feet averaging 0.072 oz/ton gold and IR-23 contained 25 feet at 0.034 oz/ton gold including 5 feet at 0.096 oz/ton at the bottom of the hole.  The drilling indicates the gold is located within one nearly flat-lying favorable sedimentary unit (a calcareous siltstone) that is approximately 50 feet thick. Gold grade drops off quickly as one moves away from the feeder fault. Holes drilled beneath the mineralized unit, even those intersecting the feeder fault, were barren. The flat-lying mineralization appears to dip gently to the
northwest and is approximately 200 feet wide and 40 to 50 feet thick. The gold bearing horizon has not been drilled to the southwest.



Two holes targeted the Jasperoid Breccia Target with one hole being drilled under the gold bearing jasperoid and another targeting the possible intersection of the northeast trending feeder fault with the Imperial fault.   Both of these holes (IR-25 and26) were barren. Just as at the Resource Target, these holes drilled beneath the favorable stratigraphy and missed the mineralization. Future drilling should be collared above the favorable horizon in proximity to the feeder fault.



In addition to the drilling, a total of 40 channel (continuous and consistent amount) samples were taken across veins exposed in the upper and lower adits. Sample widths were noted. Once at the assay lab each was weighed. Sample preparation, performed by ALS Chemex in Reno, Nevada, consisted of crushing the entire sample, splitting off 1,000 grams, pulverizing all 1,000 grams and splitting off 50 grams of this pulp for fire assay for gold and 50 grams for silver.



Results of all of the channel sampling done are noted in the table below:





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Imperial Upper Adit ResultsSample Number
        Weight (lb)
        Width (ft)
        Gold (oz/ton)
        Silver (oz/ton)IUA 0
        4.97
        6.0
        0.232
        0.123IUA 10
        5.08
        4.0
        0.507
        0.464IUA 30
        7.63
        4.0
        0.035
        0.020IUA 40
        6.86
        4.0
        0.275
        0.079IUA 50
        8.80
        2.5
        0.248
        0.201IUA 65
        5.76
        3.0
        0.340
        0.239IUA 70
        9.10
        3.0
        0.271
        0.213IUA 80
        7.46
        3.0
        0.165
        0.239IUA 93
        6.18
        2.0
        0.249
        0.181IUA 105
        9.26
        4.0
        0.331
        0.175IUA 120
        9.88
        3.0
        0.615
        0.978IUA 128
        6.31
        2.5
        1.517
        1.083IUA 140
        8.60
        1.5
        0.106
        0.149IUA 150
        6.31
        1.5
        0.045
        0.018IUA 175
        7.59
        2.5
        7.636
        0.251IUA 190
        11.18
        3.0
        0.112
        0.032IUA 210
        10.10
        3.0
        0.127
        0.114IUA 230
        11.79
        2.5
        0.012
        <0.015IUA 250
        10.67
        2.0
        0.014
        0.018




IMPERIAL LOWER ADIT





Sample  Number
        Weight (lb)
        Width (ft)
        Gold (oz/ton)
        Silver (oz/ton)ILA 50
        7.04
        1.0
        0.143
        0.742ILA 70
        5.72
        1.5
        0.033
        0.053ILA 90
        8.87
        2.5
        0.183
        0.850ILA 110
        10.12
        3.0
        0.154
        0.844ILA 137
        11.53
        2.0
        0.506
        1.451ILA 152
        10.19
        1.5
        0.045
        0.085ILA 170
        7.00
        1.5
        0.004
        0.015ILA 202
        9.13
        2.0
        0.048
        0.020ILA 250
        7.72
        2.5
        0.053
        <0.015ILA 300
        7.37
        3.0
        0.004
        0.035ILA 350
        8.16
        3.0
        0.002
        0.064ILA 400
        8.65
        2.0
        0.013
        0.015ILA 420
        7.15
        2.5
        0.341
        0.044ILA 430
        10.52
        1.5
        0.379
        0.020ILA 444
        7.90
        2.0
        0.159
        0.020ILA 450
        10.01
        3.0
        0.102
        0.023ILA 460
        12.52
        1.5
        0.089
        0.053ILA 500
        10.27
        2.5
        0.178
        0.397ILA 510
        8.98
        3.0
        0.497
        0.131ILA 520
        5.19
        3.0
        0.148
        0.155ILA 527
        5.96
        2.0
        0.113
        0.018






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The Company is currently reviewing its plans for the Imperial Property but does not intend to incur any significant exploration expenses on the Imperial Property in 2007.









HERCULES PROPERTY







Map of Hercules Property located in western Nevada.

On October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in a property known as the Hercules Property.  Concurrent with the signing of the agreement, the Company made the first property option payment of $20,000. The agreement requires certain additional minimum annual property option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014. The agreement is subject to a 3% royalty payable to MinQuest



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with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $300,000 was to be spent by September 1, 2006.



To January 31, 2007, the Company had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2006 and 2005.  In addition the Company has incurred approximately $316,700 in exploration expenditures on the property.  The Companys drill program that was completed in February 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2007.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



Description and Location of the Hercules Property



The Hercules Property is located in Lyon County, Nevada, approximately 40 kilometers southwest of Reno. Access is via 11 kilometers of paved and dirt road from Dayton.  The property consists of 40 unpatented claims.  Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) under the Federal Land Policy and Management Act of 1976. MinQuest holds a 100% interest in these claims via unpatented mining claims.



Exploration History of the Hercules Property



The Hercules Property was first discovered in 1860 by pioneers during the famous Washoe Rush. Production from high grade veins started as early as 1870 and occurred as late as 1956. The Hercules Mine, located on the property, had production of 5,000 ounces of gold and 20,000 ounces of silver as indicated from stoping. Recent exploration efforts began in the early 1980s when placer mining was attempted on the eastern portion of the property, below the Hercules Mine. Since then, Asamera, St. Joe, Horizon Gold, Phelps Dodge and Adamas\GSL have conducted exploration efforts totaling over US$2,000,000 in expenditures.  Drilling undertaken by predecessor companies are as follows:




        St. Joe              1985           11 RC holes for 2,715 feet (882 m)



        Asamera           1985           10 Core holes for 4,314 feet (1,400 m)



        Horizon Gold    1986-90     138 RC holes for 18,091 feet (5,874 m)



        Phelps-Dodge   1995-97     17 RC holes for a total of 8,805 feet (2,859 m)




A total of 33,925 feet (11,015 m) in 176 holes have been completed on the property. The vast majority of the drilling targeted shallow open pit heap-leachable gold mineralization. No systematic exploration of the high-grade vein targets has been completed.



Geology of the Hercules Mineral Claims



The property lies within the Walker Lane structural corridor.  The Walker Lane is characterized by a strong northwesterly structural fabric causing easterly rifting. As with much



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of the Walker Lane rocks at Hercules consist dominantly of Tertiary age pyroclastic volcanics and volcaniclastic sediments cover the entire property. The pyroclastic rocks have been intruded by several volcanic vents and plugs. Thin post-mineral basalt and rhyodacite of Pliocene age cover mineralization on the northern and western sides of the property.



The Hercules Property contains one of the most significant untested Comstock-type vein systems in the Western U.S. The depth of erosion of the Hercules vein system is evidenced by the following:



1.
        Multiple parallel veins that should merge at depth.


2.
        Presence of low-temperature alteration minerals such as chalcedony, calcite, and kaolinite in exist in veins at current surface.


3.
        Presence of low temperature elements such as mercury, arsenic and antimony.


4.
        A low silver to gold ratio relative to bonanza horizon.


5.
        Low base metal content (lead, zinc) relative to bonanza horizon.


6.
        Localized high-grade gold (+0.5 oz/ton) in veins at current erosion surface.




The Hercules mineralization is largely localized along two parallel dip-slip multi-vein structures which trend north-northeast. The structures have near-vertical dips and have been offset by two east-west faults. Gold/silver is hosted by permeable volcanics/volcaniclastics as well as by the high-angle structures. The highest grade mineralization occurs in quartz veins within the faults. Silicification and banded quartz-adularia veins are surrounded by intense clay alteration grading to weak propylitic alteration.



The second target type at Hercules is bulk-minable, heap-leachable gold/silver.This area contains the following individual target areas:




        Zones C/D/E contain significant mineralization.within three separate pods. Drilling is wide spaced and incomplete between the three pods. The pods remain open ended along strike and down dip. These pods may join along strike.  Two claims not owned by MinQuest cover part of this resource. In the past, these claims were leased for reasonable terms.





        Zone A/B is an extension of the C/D/E/ zone. The A/B zone contains additional mineralization of gold and silver.





        The West Cliff Zone also contains additional mineralization as indicated in widely spaced drilling and surface sampling results. Untested mineralization occurs north of the West Cliff resource. This area has a 5,000 feet (1620 m) strike length.





        The Loaves Zone is the last target in this area.




All of these areas remain open along strike and at depth.



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St. Joe and Horizon Gold performed bulk tests from drill cuttings and surface samples. The average recovery for gold was 88%. The process involved crushing and pulverizing the sample and completing a bottle roll using over 50 separate samples. Although the tests are encouraging, further metallurgy is needed to determine recoveries of various size fractions.



A bonanza grade gold/silver deposit is the primary target at Hercules. All of the mineralized vein structures listed previously are targets. Exploration should begin in areas with higher-grade gold values at surface, with higher silver/gold ratios, more base metals, higher temperature alteration suites and where multiple veins occur. This will ensure the shallowest targets will be tested first. The most likely site to start as indicated by initial study is area D and E of the Hercules Mine target. Accurate drilling down dip in 100 m steps will allow spot coring of the target horizon at 300-400 m beneath the surface.



The secondary target is open pit bulk-minable heap leachable gold/silver for which some resources have already been established. The size and grade of these resources could be increased by drilling across their feeder structures and by drilling possible extensions.



The West Cliff target is located in the southwest portion of the property. This area is defined by 17 widely spaced drill holes and underground and surface channel sampling results. Soil sampling and drilling suggests a second en-echelon zone occurs 300 feet (100 m) east of the main zone.  The area is open ended for 1000 feet (305m) north, 600 feet (180 m) south and down dip to the west.  Only two holes have tested the parallel zone.



The Loaves target consists of a zone of silicified volcanics containing banded quartz veins. The zone has a strike length of over 5,000 feet (1520 m) and extends under cover to the northwest. This zone is probably the offset extension of the West Cliffs resource. Only two of ten holes drilled to date have tested the structure. Previous drilling has targeted the footwall side of the fault. Even so, long intervals of anomalous gold with occasional short intervals of higher grade were encountered. This target requires angle drilling to test the hanging wall side of the structure to penetrate the fault zone at depth and along strike.



The Hercules Mine and Extensions (C\D\E) targets cover the main Hercules structure and parallel fault zones. Drilling and sampling from underground and outcrop areas have encountered relatively thick intercepts of gold and silver. This wide spaced drilling (both core and RC) and underground sampling indicate multiple mineralized structures with associated disseminated mineralization. The core samples were only partially assayed and may contain more gold than is displayed on the cross sections. The zone remains open for at least 1000 feet (300 m) north, over 1000 feet (300 m) south. Parallel mineralized structures are known to exist further to the east within the claim block.



The southern of the three Loaves targets contains 3 holes and surface panel sampling. Soil sampling suggests a minimum of 1700 feet (515 m) of strike length that remains untested.



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Current State of Exploration



The Hercules claims have had a significant amount of exploration undertaken in their history. However, they do not currently have any mineral reserves. The property that is the subject to our mineral claims is undeveloped. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Geological Exploration Program



The exploration potential at the Hercules Property is considered excellent. The main targets are untested. Several of the near-surface targets were poorly tested and are open between the current resources. Obvious extensions of drilling, soil and rock gold anomalies and high grade veins in old workings suggest not only an excellent chance of increasing the known resource of open pit mineralization but of finding a world class bonanza gold/silver deposit at depth. The vast majority of the previous resource drilling was vertical and did not test for these potentially higher grade fault zones.



During 2005 the Company undertook an exploration program on the Hercules Property.  The program consisted of geologic mapping, geochemical sampling, compilation of previous drilling data, and a re-evaluation of geophysical surveys.  Also, a total of 105 soil samples were collected on the north end of the property.  The geophysical targets on the northern portion of the claim block were reviewed and evaluated.  The information developed from previous exploration groups was combined with new information from the geophysical surveys and recent mapping to place 7 reverse circulation holes to determine strike, dip and stratigraphy within the A, B, C, West Cliffs and Bread Loaves mineralized zones.  The structures believed to be present in these areas would provide a pathway for mineral rich fluids.  The fluids should pond within certain porous rock types below impermeable stratigraphy.



Six drill holes were located on the margins of the previously defined mineralized zones. The seventh hole tested a parallel alteration zone to the west of any previous drilling.  Seven drill holes were completed for 2,470 feet (753 m).  The drilling extended the known precious metals mineralization near surface and between pods A-C.  The holes also defined several fault zones that fed these mineralized areas.  Generally, the fault zones were encountered within an impermeable mudstone unit.  The faults were represented by bleaching, iron oxide and clay alteration within the mudstone.  The faults were 3 to 8 meters wide and contained anomalous gold values in the 0.01 to 0.05 g/t range.  It is believed that this mudstone unit restricted the flow of mineralizing fluids and may have caused ponding of the fluids at its base.



The following table lists the intercepts in each drill hole:



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Drill Hole #
        Gold Eq g/t
        Thickness (m)
        From (m)
        To (m)HY 05-01
        0.95
        12.2
        6.1
        18.3HY 05-02
        0.379
        1.5
        32.0
        33.50.33
        10.7
        44.2
        54.90.83
        3.0
        65.5
        68.5HY 05-03
        0.58
        3.0
        32.0
        35.00.32
        4.5
        41.2
        45.70.54
        3.0
        51.8
        54.80.59
        6.1
        83.8
        89.9HY 05-04
        0.38
        6.1
        3.0
        9.10.61
        1.5
        10.7
        12.20.45
        1.5
        42.7
        44.20.42
        1.5
        54.9
        56.4HY 05-05
        NSVHY 05-06
        0.55
        1.5
        51.8
        53.3HY 05-07
        NSV




NSV = no significant values found



All holes successfully identified altered and mineralized structures.  Holes 05-01 through 05-04 extended the known ore zones of A through C east and north.  It appears that drill hole 05-05 may have missed the West Cliffs vein due to thicker alluvial cover than anticipated.  Hole 05-07 was the only hole that tested outside of the known mineralization.  The hole intersected an opaline rich structure hosted within basalt and andesite west of any previous drilling. The structure contained sulfide minerals (mainly pyrite) and low temperature quartz, but did not contain any significant precious metal values.  The cuttings were not assayed for trace elements.  This structure is along strike of an interpreted fault defined by an IP geophysical survey to the north.



During 2006 the Company conducted a drill program that was completed in February 2007.     In addition to the drilling, soil sampling was conducted in an area of potential interest along strike of known mineralization on the north end of the property.  The Company is currently waiting for the final assay and report results before determining its exploration plans for 2007.



CORTEZ PROPERTY



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Map of the Cortez Properties located in western Nevada.



On February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in properties known as the Crescent Fault Property, the Bankop Property, and the Bullion Mountain Property (collectively, the Cortez Property). Concurrent with the signing of the agreement, the Company made the first property option payment of $65,000. The agreement requires certain additional minimum annual property option payments totaling $445,000 and minimum annual exploration expenditures totaling $1,150,000 to be paid or incurred by February 15, 2010. The agreement is subject to a 3% royalty payable to MinQuest. In addition, the Company is required to use MinQuest for exploration activities undertaken on the properties.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration
expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.



To January 31, 2007, the Company had made the initial option payment of $65,000 due on signing as well as the $30,000 option payment due in February 2006.  In addition the Company has incurred approximately $162,700 in exploration expenditures on the property.  The Companys drill program that was completed in February 2007 resulted in the Company



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satisfying the expenditure requirements to January 31, 2007.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



CRESCENT FAULT PROPERTY



Description and Location of the Crescent Fault Property



The Crescent Fault Property is located in Eureka County, Nevada and consists of 33 unpatented claims. Access to the property is via paved highway and graded gravel road. Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific Exploration (DPE) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Crescent Fault Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.



Exploration History of the Crescent Fault Property



The Crescent Fault Property was explored by Homestake from 1983 to 1986, Noranda from 1992 to 1994, and North Mining from 1995 to 1996. Past exploration includes considerable rock chip sampling, geologic mapping, and drilling. Clastic sediments have been silicified and argillized along a range front fault zone. Drilling has tested part of the range front and some of the down dropped section. Drilling on the property is summarized as follows:



Homestake
        1985-1986
        2 holes drilled for 1,855 feet


Noranda
        1992-1993
        8 holes drilled for 4,436 feet


North
        1995
        8 holes drilled for 3,930 feet




Drilling has intersected significant sphalerite and galena. The lead-zinc mineralization appears to be related to epidote-chlorite skarn. The drilling has focused on testing the surface expression of pyritic jasperoid and quartz veining developed within parallel to sub-parallel faults to the range front. Potential down dropped sections of mineralization may exist under alluvial cover. Outcrops of jasperoid are developed along low angle thrust faults and high angle shear zones. Tertiary age dikes have been noted along high angle faults trending northwesterly.



Geology of the Crescent Fault Property Mineral Claims



The property was discovered while prospecting along the Crescent fault. One short adit and a few small prospect pits were the only evidence of previous exploration efforts prior to the first drill holes. The drilling has focused along the range front, intersecting significant alteration and mineralization.



The regional geology consists of a package of Pennsylvanian to Permian carbonate to siliciclastic sediments. This sediment package has been intruded by a possible Cretaceous granodiorite to porphyry rhyolite. The range front has had both strike-slip and dip-slip



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movement, down dropped along the Crescent fault. Placer Dome has determined the strike-slip movement to be up to 1 mile in an east-northeasterly direction. Many parts of the Crescent fault have been down dropped over 1000 feet under alluvial cover. In the vicinity of the property, drilling and geophysical data indicate a shelf of bedrock has been preserved at depths ranging from 250 to 400 feet deep for up to 1000 feet from the fault zone. Potential for a preserved portion of mineralized bed rock at reasonable depth is very good.



Tertiary volcanoclastics on the eastern part of the property are altered and quartz veined along strike of the fault. Jasperoid shows slickensides indicating two movements, one down dropped and one left lateral. Low angle faulting was noted near the top of the ridge and has been down faulted along the range front, in the next section west. The low angle faulting is represented by Ordovician chert and quartzite thrust over Pennsylvanian carbonate. North to northwest trending faults bisect the range front fault zone, down dropping and offsetting mineralization in several areas. Possible Tertiary age dikes and sills have intruded and healed several northwesterly faults and the crescent fault zone. These dikes are argillized, iron stained and in a few places, quartz veined.



The property covers a well defined zone of alteration exposed along the range front fault zone bounding the southeast portion of Crescent Valley. The alteration is composed of jasperoid, decalcified limestone, silicified shale, and quartz veining filling faults and fractures in intrusive rocks and siliciclastic sediments. Tertiary age dikes have intruded the sediments and older intrusive rocks, generally following a northwesterly trend. Alteration zones carry low values in gold, silver and copper along with minor elevations of trace elements typically identified in other disseminated gold deposits of the area. The jasperoid is vuggy with weak, erratic gold and anomalous arsenic, mercury and antimony on the surface.



The Jasperoid target dips northwesterly under alluvium, paralleling the Crescent Fault. Drilling has intercepted relatively shallow bedrock under the alluvium, but no gold has been encountered to date. Extensions of the zone will be mapped and sampled to further define this target area.



Skarn mineralization is hidden. Skarn is weakly developed and spotty throughout the area. Drilling has encountered high grade gold and base metals in carbonate rocks.  Mapping of alteration phases may better define the Skarn target. At present, the best potential target is a blind skarn zone with high-grade gold potential.



Current State of Exploration



The Crescent Fault claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Paved roads come within 5 miles of the property and well maintained gravel roads provide



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access within 1,000 feet of the property boundary. A dirt road is in place and provides adequate access throughout the property. All currently proposed drilling can be done without further road building.



Geological Exploration Program



Potential exists for the existence of relatively high-grade gold. The exploration completed to date has identified mineralization within fault zones parallel to the range front fault. Sampling has indicated weakly anomalous gold values exist over 12,000 feet of strike length.  In 2005 the Company initiated a program of geophysical and geochemical surveys over the pediment area along strike of the mineralization.  The surveys were following up on the observations of previous geophysicists and drill-hole data from former property owners suggesting shallow pediment.  Five CSMT (Controlled Source Magneto Telluric) survey lines were collected to determine changes in lithology and potential parallel faulting to the main Crescent Fault.



Also in 2005 a reconnaissance auger sampling program was designed to test for concealed gold mineralization in pediment cover.  The auger holes were positioned 30 meters apart along each line and the lines were separated about 300 meters apart, perpendicular to the range front.  The holes tested the caliche layer developed within transported material.  Gold mineralization is known to leak from sources below and become entrapped in the caliche layer.  This system is not widely used but is proven technology in finding buried gold deposits in desert environments in both Nevada and Australia.  It has been successful in finding at least two gold deposits in the Battle Mountain area.



A total of 175 samples were collected along 9 widely separated lines.  The samples were tested for calcium carbonate on site and 31 elements in the ALS/Chemex lab.  No gold was identified in any of the samples.



The 2005 program of CSMT and auger drilling did not identify any significant drill targets within the pediment zone.  The topography is too steep to effectively conduct geophysical surveys to identify new drill targets on the rest of the property.  However, the original drill targets still remain.



The exploration contractor has made several recommendations to the Company.  Amongst the recommendations are that at least one drill hole should be spotted to intersect the favorable host rocks at a depth of 300 meters and a second hole should be placed to twin the original drill hole that intersected 4 g/t gold.  This hole would determine the alteration type and structural control of the mineralization.  It has also been recommended that 5 additional drill holes be targeted at areas of gold in rock chip that have yet to be drill tested.  Offsetting known mineralization in previous drilling is also highly recommended.



The Crescent Fault Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three properties making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations



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from MinQuest, the Company elected to conduct a drill exploration program on the Bankop Property in 2006 in order to meet the Companys exploration expenditure commitments under the Cortez Property Option Agreement.  As a result, the Company did not undertake an exploration program on the Crescent Fault claims in 2006.  The determination for expenditure allocation in 2007 will be dependent upon the review and analysis of the results of the 2006 drill program undertaken on the Bankop Property.  Once that process is complete, the Company will determine its course of action for 2007.



BANKOP PROPERTY



Description and Location of the Bankop Property



The Bankop Property is located in eastern Lander County, Nevada, approximately 40 kilometers (25 miles) southeast of Battle Mountain and six kilometers (4 miles) northwest of the Pipeline Mine. The property consists of 21 unpatented mining claims. Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific Exploration (DPE) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Bankop Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.



Exploration History of the Bankop Property



There has been no production from the Bankop claims.



Historic prospect pits, adits, and shafts occur throughout the low lying hills of the area. The property has seen recent exploration efforts beginning as early as 1965. Exploration companies involved included U.S Mining and Exploration Company, Inc., Phelps Dodge, Inc., Placer Amex, Inc., Cyprus Exploration Company, Homestake Mining Company, U.S Borax, Placer Dome U.S. Inc., Noranda Exploration, Inc. (Hemlo Gold, Inc.), Uranerz U.S.A., Inc. and Minorca Resources Inc. This very large volume of geologic information is an extremely valuable tool for further study of the property.



Geology of the Bankop Mineral Claims



Regionally, the Utah Camp property is situated within the Battle Mountain-Eureka Trend, a northwest striking 30 to 40 mile wide (45 to 60 km) belt of mostly Paleozoic rocks which are intruded by numerous Cretaceous to Tertiary age intrusives. All bedrock mapped to date on the Bankop property is Upper Plate fine-grained clastic rocks. Although these rocks are dominated by siliceous lithologies, they do contain an appreciable thickness of carbonate-rich rocks. Deep drilling by Uranerz contains thick sections of calcareous siltstone within the Valmy. Calcareous sandstones make up a significant portion of the middle Elder Formation. Both of these rock types are good host rocks for Carlin style mineralization.



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A significant portion of the property is covered by Quaternary alluvium. Outcrop is normally sparse, except where thick sections of quartzite occur. Colluvial cover is relatively thick once the break in slope is reached traversing from ridge top to valley.



Besides the bedding plane faults associated with thrust slices, several high angle faults have been mapped. The dominant trend is northeast and the next most abundant trend is northwest. East-west high angle structures are most common in the southern portion of the property.



Mineralization occurring within the property is gold associated with arsenic and mercury. The main alteration type is clay, and therefore, it is rare for the mineralization to outcrop. Instead it is usually found in topographic lows. Bulldozer work has exposed decalcified sandstone. This and several other gold anomalies in rocks and soils within the property are indications of Carlin style mineralization. Significant gold intercepts of Carlin style mineralization occur around a bulldozer trench. Several holes drilled in this area have shown mineralization  All of the above holes were drilled vertically.



A number of companies have explored for Carlin style systems within the property. Although these efforts provide an excellent database for further studies they failed to define or test a single feeder structure. Because the property is underlain by upper plate rocks not known to host large gold deposits elsewhere in the district, the emphasis has been on deep drilling to test lower plate carbonate rocks.  Without an associated feeder fault this effort will be fruitless.



Current State of Exploration



The Bankop claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Geological Exploration Program



The work program undertaken by the Company in 2005 included an auger program that grid sampled the entire claim block with 30 by 300 meter centers.  This program was successful in further defining the trend and extent of gold mineralization and identifying four other gold anomalies elsewhere on the property.  The reconnaissance auger sampling program was designed to further extend the known gold anomaly and potentially identify a widening of the gold zone.  Areas of blossoming gold anomalies may suggest structural intersections that should be drill tested.  The auger holes were positioned 30 meters apart along each line and lines were separated about 200 meters apart.  The holes penetrated the loess cover in almost every instance and collected soil and/or rock form the bottom of the hole.  Depths of penetration ranged from less than 0.3 meters to over 7 meters.



Gold values were generally widespread within the south half of the property.  High grade values were encountered along several lines.  The best value was collected from Line D near



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the middle of the traverse.  A compilation of rock, soil, auger and drill geochemistry for gold indicates three anomalous areas with multiple sample sites and two single point anomalies.  The anomalous areas range from 600 by 150 meters to 30 by 30 meters.



A second gold anomaly was identified on the southern portion of the claim block.  This zone trends northerly and is 600 meters long and 150 meters wide.  The zone is hosted partly within the Ordovician Valmy quartzite.  A brecciated fault zone defines the contact between the Valmy and Elder Formations.   Gold values are elevated along this fault zone.  However, the fault is oblique to the sample lines and has limited coverage by the auger survey.



A third gold anomaly was identified by Uranerz, but missed by the Auger survey.  The anomaly is represented by two sample sites that fall midway between lines A and B on the northern portion of the claim block.



During 2006 the Company conducted a drill program that was completed in January 2007.    A total of seven holes covering 2,440 feet of the initially planned 3,000 feet of drilling were completed on the Property.  The drilling was terminated early because of extreme winter weather causing equipment failure.  The 2006 drill program on the Bankop Property was designed to test the expression of surface gold values discovered in the previous work programs at relatively shallow depths.  The surface expression of the gold values indicates at least three separate targets variously named the South, Central and East Targets.  The South and Central targets were drill-tested to determine the strike and extent of faulting that presumably controlled the gold deposition at surface.  The Company is currently awaiting the final report on the results from the 2006 drill program.



The Bankop Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three projects making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations from MinQuest, the Company elected to conduct a drill exploration program on the Bankop Property in 2006 in order to meet the Companys exploration expenditure commitments under the Cortez Property Option Agreement.  The determination for expenditure allocation in 2007 will be dependent upon the review and analysis of the results of the 2006 drill program undertaken on the Bankop Property.  Once that process is complete, the Company will determine its course of action for 2007.



BULLION MOUNTAIN PROPERTY



Description and Location of the Bullion Mountain Property



The Bullion Mountain Property is located in Lander County, Nevada within T29N, R46E and consists of 21 mining claims. A portion of the claims is made up of the Bully and Chief groups of claims.  Access is via gravel road south from Battle Mountain  Land claims in the district are administered under Department of Interior, Bureau of Land Management (BLM) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific



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Exploration (DPE) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Bullion Mountain Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.



Exploration History of the Bullion Mountain Property



The property may have been prospected as early as the 1870s. Numerous prospect pits and shallow adits dot the top of the ridge that makes up part of Bullion Mountain. The most extensive prospecting occurs along low and high angle fault zones with clear quartz veins. The fault zones generally trend east-northeasterly. These veins can assay over a half ounce of gold across 1 meter.



The property lies along the Pipeline fault zone which has been defined by Placer Dome as having a northwesterly trend.  The Chief and Bully claims have been previously explored by Placer Dome, Asarco, Hemlo, Lac, Barrick, and Pallum. Recent work includes drilling by Asarco on the Bully claims and drilling by Placer Dome and Pallum on the Chief claims.



Numerous surface samples have identified high grade gold (>0.5 opt) in fault zones in upper plate rocks. Drilling by Asarco has encountered 3 meters of 0.204 opt gold on the Bully claims. Drilling by Pallum encountered 1.5 meters of 0.08 opt gold and 15 meters of 0.02 opt gold on the Chief claims. Drilling by Placer Dome and Pallum has identified a small, low grade gold target on the Chief Claims.



Geology of the Bullion Mountain Mineral Claims



Upper plate Silurian to Devonian siliciclastic rocks have been thrust over Cambrian to Silurian carbonate facies. The entire package of sediments has been intruded by Tertiary age granite (Bullion Mountain granite). The Upper Plate assemblage is hornfelsed and bleached near the margin of the intrusive.



The entire area within the claim block is structurally complex with both low and high angle faulting. High angle faults have displaced all rock types.  ENE faults on the Bully claims contain significant gold values.  Many of these ENE faults and shears have been healed with quartz veins and jasperoid silica. Gold is generally found associated with clear, crystalline quartz veins and narrow, argillized dikes. Many of the faults of the area show secondary movement represented by several stages of quartz veining. Recent exploration efforts have been limited to low angle fault zones on the Chief claims and within a discreet area on the Bully claims.



Drilling has identified significant gold values on the Chief and Bully Claim groups.  The Bully target area contains several high grade fault zones within a breccia zone of lower grade material. The Chief area has been drilled on a grid with roughly 200 foot centers. The drilling suggests a shallow dipping fault breccia zone with consistent gold values. Both target areas may have high angle faults providing plumbing for the gold mineralization in the area. At present, a feeder fault has not been identified within the Chief claim boundary. Exploratory



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drilling in the valley between Chief and Bully has encountered minor gold values in upper plate rocks. Further work in this area is also recommended.



Current State of Exploration



The Bullion Mountain claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.



Geological Exploration Program



Recommended exploration work at the Bully and Chief portion on the property includes detailed geologic mapping and sampling of the claim blocks. Drilling is recommended within the previously defined resource area on the Chief claims. Previous sampling on the Bully claims has identified high grade gold in narrow veins throughout the claim block. Infrastructure is well established in the Chief area. Access roads may have to be built into much of the Bully area. A modest program of infill sampling and detailed mapping should help define drill targets within the Bully claim group. Permitting should be relatively simple since roads are in and the surrounding area is a well known mining field situated on land administered by the US Bureau of Land Management.  No exploration work was carried out on this property during 2006 or 2005.



The Bullion Mountain Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three projects making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations from MinQuest, the Company elected to conduct a drill exploration program on the Bankop Property in 2006 in order to meet the Companys exploration expenditure commitments under the Cortez Property Option Agreement.  As a result, the Company did not undertake an exploration program on the Bullion Mountain claims in 2006.  The determination for expenditure allocation in 2007 will be dependent upon the review and analysis of the results of the 2006 drill program undertaken on the Bankop Property.  Once that process is complete, the Company will
determine its course of action for 2007.



ITEM 3.
        LEGAL PROCEEDINGS




There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  The Companys property is not the subject of any pending legal proceedings.



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ITEM 4.
        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




There was no matter submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 31, 2007.



PART II



ITEM 5.
        MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Market Information



Our common stock is traded on the Over the Counter Bulletin Board sponsored by the National Association of Securities Dealers, Inc. under the symbol AGFL.OB. The Over the Counter Bulletin Board is maintained by the NASDAQ Stock Market, but does not have any of the quantitative or qualitative standards such as those required for companies listed on the NASDAQ Small Cap Market or National Market System. The following table sets forth the range of quarterly high and low closing bids of the common stock as reported on http://finance.yahoo.com during the fiscal years ending January 31, 2007 and 2006:





Financial Quarter
        Bid Information*Fiscal Year Ended January 31,
        Quarter
        High Bid
        Low Bid2007
        Fourth Quarter
        $0.82
        $0.62Third Quarter
        $1.06
        $0.70Second Quarter
        $1.85
        $0.75First Quarter
        $2.11
        $0.602006
        Fourth Quarter
        $1.79
        $1.15Third Quarter
        $1.21
        $0.35Second Quarter
        $0.93
        $0.45First Quarter
        $2.25
        $2.10




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



Holders of Our Common Stock



The Company estimates that as of April 18, 2007, we had forty-seven (47) registered holders of shares of common stock.



Recent Sales of Unregistered Securities



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There were no sales of equity securities of the Company by the Company during the period covered by this report that were not registered under the Securities Act of 1933, as amended.



Dividend Policy



As of April 27, 2007, there had been no dividends declared on the Companys Common Stock.  We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.



There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.  The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:



1.We would not be able to pay our debts as they become due in the usual course of business; or



2.Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.



Securities Authorized for Issuance under Equity Compensation Plans



The following table presents certain information as of January 31, 2007 with respect to compensation plans under which equity securities of the Company are authorized for issuance:



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




(a)
        Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights






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

(c)Equity Compensation Plans Approved by Security Holders
        -
        -
        -






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Equity Compensation Plans Not Approved by Security Holders
        2,135,800(1)
        $1.57
        2,100,000Total
        2,135,800
        $1.57
        2,100,000




(1) Such amount includes 925,000 common stock purchase options which are outstanding and exercisable pursuant to the American Goldfields Inc.s 2004 Stock Option Plan.  It also includes 1,210,800 common stock purchase warrants.



The 2004 Stock Option Plan



In March 2004, the Board of Directors adopted the American Goldfields Inc.s 2004 Stock Option Plan (the 2004 Plan) reserving 5,000,000 common shares for grant to employees, directors and consultants. As of April 27, 2007, there were a total of 2,900,000 options that had been granted under the plan. Of these, 925,000 remain outstanding and exercisable at a weighted average exercise price of $1.00 per option as of April 27, 2007.  The following discussion describes material terms of grants made pursuant to the stock option plans:



Pursuant to the 2004 Stock Option Plan, grants of shares can be made to employees, officers, directors, consultants and independent contractors of non-qualified stock options as well as for the grant of stock options to employees that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986 (Code) or as non-qualified stock options. The Plan is administered by the Option Committee of the Board of Directors (the Committee), which has, subject to specified limitations, the full authority to grant options and establish the terms and conditions for vesting and exercise thereof. Currently the entire Board functions as the Committee.



In order to exercise an option granted under the Plan, the optionee must pay the full exercise price of the shares being purchased. Payment may be made either: (i) in cash; or (ii) at the discretion of the Committee, by delivering shares of common stock already owned by the optionee that have a fair market value equal to the applicable exercise price.



Subject to the foregoing, the Committee has broad discretion to describe the terms and conditions applicable to options granted under the Plan. The Committee may at any time discontinue granting options under the Plan or otherwise suspend, amend or terminate the Plan and may, with the consent of an optionee, make such modification of the terms and conditions of such optionees option as the Committee shall deem advisable.



Purchases of equity securities by the issuer and affiliated purchasers



None.



ITEM 6.
        MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND PLAN OF OPERATIONS




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The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Form 10-KSB. The matters discussed herein contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are
not limited to, those discussed under the heading Factors that May Affect Future Results and elsewhere in this report and the risks discussed in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect managements analysis, judgment, belief or expectation only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.



Plan of Operations



Our business plan is to proceed with the exploration of the Gilman, Imperial, Hercules and Cortez Properties to determine whether there are commercially exploitable reserves of gold and silver or other metals. We had $385,512 in cash and $247,584 in working capital as of January 31, 2007.



During our exploration stage, our President will only be devoting approximately five hours per week of his time to our business. We do not foresee the limited involvement of our President as negatively impacting our Company over the next twelve months as all exploratory work is being performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months; nor do we plan to make any purchases of equipment over the next twelve months due to reliance upon outside consultants to provide all tools needed for the exploratory work being conducted.



Results of Operations for the Fiscal Year Ended January 31, 2007



We did not earn any revenues during the fiscal year ended January 31, 2007 or 2006. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.



For the year ended January 31, 2007 we had a net loss of $692,299 compared to $1,819,720 for the prior year, a decrease of $1,127,421.  Our loss for 2007 has decreased substantially over 2006 primarily due to a decrease in the effect of stock-based compensation.  The expense recognized in 2006 for the fair value of stock options granted during the year was $1,302,400 compared to $195,600 in 2007.  In addition, after removing the effect of stock-based compensation, mineral claim payments and exploration expenditures decreased to $393,787 in



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2007 from $462,268 in 2006.  The decrease was largely a result of the Company making option payments totaling $85,000 in 2007 compared to $120,000 in 2006.  During 2007 the Company made option payments under the Hercules $20,000 (2006 - $20,000), Imperial $20,000 (2006 - $20,000), Gilman $15,000 (2006 - $15,000), and the Cortez $30,000 (2006 - $65,000) property option agreements.  The balance of the decrease in mineral claim payments and exploration expenditures was due to fewer exploration expenses being incurred in 2007 compared to 2006.  In 2007, the Company undertook drill programs on the Hercules and Bankop Properties while in 2006 the Company conducted the Phase II exploration drill program on the Imperial Property, completed two initial auger drill programs on the Cortez Property, and undertook a seven-hole reverse circulation drill program on the Hercules property.   A portion of the 2007
exploration programs was not incurred until February and March 2007.  Office and Sundry was consistent between 2007 and 2006 once the effect of $355,200 in stock-based compensation recognized in 2006 is eliminated.  The stock-based compensation recognized in Office and Sundry in 2006 related to investor relations and financial services received by the Company.  Consulting fees in 2007 and 2006 included $195,600 and $355,200 respectively in stock-based compensation.  The balance of $26,500 in 2007 related to expenses incurred for investor relations related consulting.



Liquidity and Capital Resources



We had cash of $385,512 and working capital of $247,584 as of January 31, 2007. We anticipate that we will incur over the next twelve months:



1.
        $95,000 in connection with property payments under the Companys four option agreements. Of this amount, $40,000 was paid by the Company on February 28, 2007 under the Cortez Property Option Agreement;




2.
        $540,300 in property exploration expenses in order to meet the requirements of the Companys property option agreements;




3.
        $100,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934.




Net cash used in operating activities during the year ended January 31, 2007 was $372,950 compared to $522,752 during the year ended January 31, 2006.  The reduced cash used in operations was primarily due to a decrease in the net loss in 2007 ($692,299) compared to 2006 ($1,819,720). The effect of the lower loss was partially offset by the recognition of a larger stock-based compensation amount of $1,302,400 in 2006 compared to $195,600 in 2007.  The other factor partially offsetting the effect of the 2006 stock-based compensation was a 2007 inflow of $112,819 related to accounts payable and accrued liabilities while in 2006, there was an outflow of $5,233.



Cash from financing in 2007 was due to $480,000 received from the exercise of stock options partially offset by a $30,000 outflow related to a 3,000,000 common stock share redemption.



---



In 2006, $4,500 was received from the exercise of stock options.  Cash used in investing activities related to the payment of refundable reclamation deposits to the State of Nevada of $6,534 in 2007 and $13,951 in 2006.



Current cash on hand is not sufficient to fund all of the Companys operating requirements for the next twelve months. We shall require additional funding and we anticipate that such funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program, should we decide to proceed. We believe that debt financing will not be an alternative for funding any further phases in our exploration program. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing.



Off Balance Sheet Arrangements



We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.



---





ITEM 7.
        FINANCIAL STATEMENTS




Index to Consolidated Financial Statements:



1.
        Auditors Report;




2.
        Audited Consolidated Financial Statements for the year ended January 31, 2007, including:




a.
        Consolidated Balance Sheets as at January 31, 2007 and 2006;




b.
        Consolidated Statements of Operations for the years ended January 31, 2007 and 2006 and for the period from inception on December 21, 2001 to January 31, 2007;




c.
        Consolidated Statements of Cash Flows for the years ended January 31, 2007 and 2006 and for the period from inception on December 21, 2001 to January 31, 2007;




d.
        Statements of Stockholders Equity for the years ended January 31, 2007 and 2006 and for the period from inception on December 21, 2001 to January 31, 2007;




e.
        Notes to the Consolidated Financial Statements.






---





















AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



FINANCIAL STATEMENTS



JANUARY 31, 2007 and 2006

(Stated in U.S. Dollars)



---









REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of

American Goldfields Inc.

(An exploration stage company)



We have audited the accompanying balance sheets of American Goldfields Inc. (an exploration stage company) as at January 31, 2007 and 2006 and the related statements of operations, cash flows, and stockholders equity for each of the two years in the period ended January 31, 2007 and the 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 an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at January 31, 2007 and 2006 and the results of its operations and its cash flows for 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.





Vancouver, Canada
        Morgan & Company




April 17, 2007
        Chartered Accountants
















---





AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



BALANCE SHEETS

(Stated in U.S. Dollars)





JANUARY 312007
        
        2006ASSETSCurrent AssetsCash and cash equivalents
        $
        385,512
        $
        314,996Prepaid expenses
        
        1,699
        
        6,629387,211
        
        321,625Reclamation deposit(note 4)
        
        33,741
        
        27,207Web-site development costs, net(note 5)
        
        500
        
        6,500$
        421,452
        $
        355,332LIABILITIESCurrent LiabilitiesAccounts payable and accrued liabilities
        $
        139,627
        $
        26,808Accounts payable  related party (note 7)
        
        30,000
        
        -169,627
        
        26,808STOCKHOLDERS EQUITYCommon Stock(note 6)Authorized:600,000,000 common shares with a par value of $0.001 per share100,000,000 preferred shares with a par value of $0.001 per shareIssued:20,292,878 common shares issued and outstanding at January 31, 2007 (January 31, 2006  25,892,878)
        
        20,293
        
        25,893Additional paid-in capital
        
        2,460,257
        
        1,839,057Warrants
        
        702,264
        
        702,264Deficit accumulated during the exploration stage
        
        (2,930,989)
        
        (2,238,690)Total stockholders equity
        
        251,825
        
        328,524$
        421,452
        $
        355,332










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



---





AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



STATEMENTS OF OPERATIONS

(Stated in U.S. Dollars)





DECEMBER 21,2001YEAR ENDED JANUARY 31
        (INCEPTION) TOJANUARY 312007
        2006
        2007ExpensesMineral claim payments and exploration expenditures
        $
        393,787
        $
        1,054,268
        $
        1,709,108Office and sundry
        
        37,047
        
        384,117
        
        460,280Rent
        
        4,166
        
        4,138
        
        15,166Professional fees
        
        25,219
        
        23,900
        
        138,196Transfer agent fees
        
        470
        
        -
        
        6,035Amortization
        
        6,000
        
        6,000
        
        17,500Interest expense
        
        -
        
        -
        
        1,070Directors fees
        
        6,489
        
        431
        
        11,920Consulting fees
        
        222,100
        
        355,200
        
        583,027Total Expenses
        
        695,278
        
        1,828,054
        
        2,942,302Interest income
        
        2,979
        
        8,334
        
        11,313Net loss for the period
        $
        (692,299)
        $
        (1,819,720)
        $
        (2,930,989)Basic and diluted loss per share of common stock
        $
        (0.03)
        $
        (0.07)Weighted average number of shares outstanding  basic and diluted
        22,673,700
        
        25,849,179
















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



---





AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



STATEMENTS OF CASH FLOWS

(Stated in U.S. Dollars)



DECEMBER 21,2001YEAR ENDED JANUARY 31,
        (INCEPTION) TOJANUARY 312007
        2006
        2007Cash provided by (used in):Cash flows used in operating activitiesNet loss for the period
        $
        (692,299)
        $
        (1,819,720)
        $
        (2,930,989)Adjustments to reconcile net loss to netCash flows used in operating activitiesStock-based compensation
        
        195,600
        
        1,302,400
        
        1,541,200Amortization
        
        6,000
        
        6,000
        
        17,500Changes in assets and liabilitiesPrepaid expenses
        
        4,930
        
        (6,199)
        
        (1,699)Accounts payable and accrued liabilities
        
        112,819
        
        (5,233)
        
        144,170(372,950)
        
        (522,752)
        
        (1,229,818)Cash flows from (used in) financing activityProceeds from loan
        
        -
        
        -
        
        60,000Repayment of loan principal
        
        -
        
        -
        
        (60,000)Proceeds from the exercise of stock options
        
        480,000
        
        4,500
        
        574,500Proceeds from the issue of common stock
        
        -
        
        -
        
        1,104,571Cancellation of common stock
        
        (30,000)
        
        -
        
        (30,000)450,000
        
        4,500
        
        1,649,071Cash flows used in investing activityReclamation deposit
        
        (6,534)
        
        (13,951)
        
        (33,741)(6,534)
        
        (13,951)
        
        (33,741)Increase (decrease) in cash and cash equivalents
        
        (70,516)
        
        (532,203)
        
        385,512Cash and cash equivalents, beginning of period
        
        314,996
        
        847,199
        
        -Cash and cash equivalents, end of period
        $
        385,512
        $
        314,996
        $
        385,512




SCHEDULE OF NON-CASH ACTIVITIES



Cancellation of common stock (note 7)
        $
        30,000
        $
        -
        $
        30,000Settlement of accounts payable by contribution
from a stockholder
        $
        -
        $
        -
        $
        4,543Web-site development costs related to
non-employee stock-based compensation
        $
        -
        $
        -
        $
        18,000






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



---





AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



STATEMENT OF STOCKHOLDERS EQUITY



Period from Inception, December 31, 2001 to January 31, 2007

(Stated in U.S. Dollars)



COMMON STOCK
        DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE
        TOTAL STOCKHOLDERS EQUITYNUMBER OF COMMON SHARES
        PAR VALUE
        ADDITIONAL PAID IN CAPITAL
        WARRANTSShares issued for cash on
Incorporation at $0.001 per share
        6,000,000
        $     6,000
        $        -
        $            -
        $                 -
        $                 6,000Shares issued for cash at $0.03     per share on January 31, 2002
        2,985,713
        2,986
        86,585
        -
        -
        89,571Net loss for the period
        -
        -
        -
        -
        (10,745)
        (10,745)Balance, January 31, 2002
        8,985,713
        8,986
        86,585
        -
        (10,745)
        84,826Net loss for the year
        -
        -
        -
        -
        (54,598)
        (54,598)Balance, January 31, 2003
        8,985,713
        8,986
        86,585
        -
        (65,343)
        30,228Net loss for the year
        -
        -
        -
        -
        (28,366)
        (28,366)Balance, January 31, 2004
        8,985,713
        8,986
        86,585
        -
        (93,709)
        1,862Stock split adjustment on February 23, 2004
        44,928,565
        44,928
        (44,928)
        -
        -
        -Contributions by shareholders
        -
        -
        4,543
        -
        -
        4,543Cancellation of common shares on March 31, 2004
        (30,000,000)
        (30,000)
        30,000
        -
        -
        -Stock-based compensation
        -
        -
        61,200
        -
        -
        61,200Exercise of common stock options
        1,500,000
        1,500
        88,500
        -
        -
        90,000Private placement, common share issuances for cash at $2.50 per unit on November 4, 2004
        403,600
        404
        306,332
        702,264
        -
        1,009,000Net loss for the year
        -
        -
        -
        -
        (325,261)
        (325,261)Balance, January 31, 2005
        25,817,878
        25,818
        532,232
        702,264
        (418,970)
        841,344Exercise of common stock options
        75,000
        75
        4,425
        -
        -
        4,500Stock-based compensation
        -
        -
        1,302,400
        -
        -
        1,302,400Net loss for the year
        -
        -
        -
        -
        (1,819,720)
        (1,819,720)Balance, January 31, 2006
        25,892,878
        $   25,893
        $1,839,057
        $    702,264
        $      (2,238,690)
        $             328,524Cancellation of common stock on July 12, 2006
        (3,000,000)
        (3,000)
        (27,000)
        -
        -
        (30,000)Cancellation of common stock on July 14, 2006
        (3,000,000)
        (3,000)
        (27,000)
        -
        -
        (30,000)Exercise of common stock options
        400,000
        400
        479,600
        -
        -
        480,000Stock-based compensation
        -
        -
        195,600
        -
        -
        195,600Net loss for the year
        -
        -
        -
        -
        (692,299)
        (692,299)Balance, January 31, 2007
        20,292,878
        $   20,293
        $2,460,257
        $      702,264
        $      (2,930,989)
        $             251,825






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



---





1.
        NATURE OF OPERATIONS


Organization

The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.

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. Upon location of a commercial, minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.



2.
        SIGNIFICANT ACCOUNTING POLICIES


The 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

In prior years the annual financial statements were presented on a consolidated basis, which included the accounts of the Company and its wholly-owned Canadian subsidiary, Baymont Explorations Inc. (Baymont). Since May 2004, the Parent Company has focused its exploration activity in the State of Nevada and the Companys subsidiary has been inactive. As a result, during the year ended January 31, 2007, Baymont was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia. Baymont 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 Baymont are to be restated to eliminate the effect of Baymont. Since Baymont had no assets and its sole liability and its equity were eliminated on consolidation there is no effect on prior years financial statements.

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.



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.



---



AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



Use of Estimates

The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States, 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. Areas requiring the use of estimates include stock-based compensation, and accounts payable and accrued liabilities. Management believes the estimates are reasonable. However, actual results could differ materially from those reported.



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 assets for 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.



---



AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



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.

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.

Cash and Cash Equivalents

The Company considers all liquid investments, with an original maturity of three months or less when purchased, to be cash equivalents.

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.

Income Taxes

The Company has adopted 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.





---



AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



Loss Per Share

Basic earnings (loss) per share of common  stock is computed  by dividing net income  (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted  earnings  per  share of common  stock  reflect  the  potential dilution that could occur if securities or other contracts to issue common stock were  exercised  or  converted  into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

At January 31, 2007,  potential  common  shares of 2,135,800 (January 31, 2006  2,435,800) related  to  common  stock  options and warrants were  excluded  from  the computation  of diluted  earnings  per share since their  effect is anti-dilutive.

Financial Instruments

The Companys financial assets and liabilities consist of cash and accounts payable and accrued liabilities. Except as 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 due to the short-term maturities of these instruments.

Asset Retirement Obligations

The Company has adopted 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.

New Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 155,Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140(FAS 155).This Statement amends FASB Statements No. 133,Accounting for Derivative Instruments and Hedging Activities,and No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. This Statement:

a)
        permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation,


b)
        clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133,




---



AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



c)
        establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation,


d)
        clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and


e)
        amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.


This Statement is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. Earlier adoption is permitted as of the beginning of an entitys fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of this Statement may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis.

In March 2006, FASB issued Statement No. 156,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities(FAS 156), with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. An entity should adopt this statement as of the beginning of its first fiscal year that begins after September 15, 2006.

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 addresses measurement 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, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No.108 (SAB 108) which provides interpretive guidance on how the



---



AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. SAB 108 is effective for fiscal years ending after November 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.

In September 2006, FASB issued Statement No. 158Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R)(FAS 158). This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement 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 which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006.

In February 2007, FASB issued Statement No. 159 The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115.This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments. This Statement applies to all entities, including not-for-profit
organizations. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115,Accounting for Certain Investments in Debt and Equity Securities,applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. This Statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157,Fair Value Measurements.No entity is permitted to apply this Statement retrospectively to fiscal years preceding the effective date unless the entity chooses early adoption. The choice to adopt early should be
made after issuance of this Statement but within 120 days of the beginning of the fiscal year of adoption, provided the entity has not yet issued financial statements, including required notes to those financial statements, for any interim period of the fiscal year of adoption. This Statement permits application to eligible items existing at the effective date (or early adoption date).

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.





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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



3.
        MINERAL PROPERTY INTERESTS


Gilman Property

On May 7, 2004, the Company completed an agreement with MinQuest Inc. (MinQuest) for an option to acquire a 100% interest in the Gilman Property.  The Gilman property consists of 19 contiguous, unpatented mineral claims covering approximately 390 acres located in Lander County, Nevada, U.S.A. Upon signing the agreement the Company paid MinQuest $10,000. By May 15, 2009 the Company must make additional minimum annual option payments totaling $75,000 and incur annual exploration expenditures of an aggregate $450,000 on the property. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased.

On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement with MinQuest. As a result of the amendment, the Companys obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009. On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007. The result is in order to maintain its interest in the property the Company is now required to spend approximately $153,000 by May 15, 2007. All other terms and commitments of the original agreement remain unchanged.

To January 31, 2007, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 option payments due in May 2006 and 2005. In addition the Company has incurred approximately $22,000 in exploration expenditures on the property. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

Imperial Property

On June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Imperial Property. The Imperial Property consists of 22 contiguous, unpatented mineral claims covering approximately 450 acres located in Esmeralda County, Nevada, U.S.A. Upon signing the agreement the Company paid MinQuest $60,000. The agreement requires certain additional minimum annual option payments totaling $80,000 to be paid by July 1, 2008. The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by the July 1, 2009. The property option agreement is subject to a 3% royalty payable to MinQuest. The Company is required to use MinQuest for exploration conducted on the Imperial Property.

To January 31, 2007, the Company had made the initial option payment of $60,000 upon signing the agreement (see also note 7) as well as the $20,000 option payments due in July 2006 and 2005. In addition the Company has incurred approximately $273,700 in exploration expenditures on the property which satisfies the Companys expenditure requirements to July 1, 2007. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



Hercules Property

On October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Hercules Property. The Hercules Property consists of 40 mineral claims located in Lyon County, Nevada, USA. Upon signing the agreement the Company paid MinQuest $20,000. The agreement requires certain additional minimum annual option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000. On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $300,000 was to be spent by September 1, 2006.



To January 31, 2007, the Company had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2006 and 2005. In addition the Company has incurred approximately $316,700 in exploration expenditures on the property. The Companys drill program that was completed in February 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2007. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



Cortez Property

On February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Crescent Fault Claims, the Bankop Property, and the Bullion Mountain Property (collectively, the Cortez Property). The Cortez Property consists of an aggregate of approximately 68 mineral claims located in Eureka and Lander Counties, Nevada, U.S.A. Upon signing the agreement the Company paid MinQuest $65,000. By February 15, 2010 the Company must make additional minimum annual option payments totaling $445,000 and incur annual exploration expenditures of an aggregate $1,150,000 on the property. The property option agreement is subject to a 3% royalty payable to MinQuest and the Company is required to use MinQuest for exploration conducted on the Cortez Properties. On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the
timing of exploration expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.

To January 31, 2007, the Company had made the initial option payment of $65,000 due on signing as well as the $30,000 option payment due in February 2006. In addition the Company has incurred approximately $162,700 in exploration expenditures on the property. The Companys drill program that was completed in February 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2007. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.



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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



4.RECLAMATION DEPOSIT

The Company has been granted exploration permits from the State of Nevada for several of its properties. As part of the application process, the Company is required to pay refundable deposits to the State as surety for the estimated reclamation costs associated with planned exploration programs. Upon completion of required reclamation the Company will receive a refund of the deposit.



5.
        WEB-SITE DEVELOPMENT COSTS


Web-site development costs, totaling $18,000, represent capitalized costs of design, configuration, coding, installation and testing of the Companys web-site up to initial installation. Ongoing web-site post-implementation costs will be charged to operations as incurred.



6.
        COMMON STOCK


a)
        Issued Shares




i)
        On July 12, 2006, the Company granted stock options to its President. Pursuant to such agreement, the Companys President was granted 200,000 options, with each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.




ii)
        On July 12, 2006 the Company and its President entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Companys stock owned by the President for a purchase price of $0.01 per share.  The payment of the $30,000 purchase price was made subsequent to January 31, 2007.




ii)
        In connection with the resignation of a Director, the Company and the Director entered into a Redemption Agreement (the Agreement), dated July 14, 2006, whereby the Director agreed to sell 3,000,000 common shares of the Company owned by the Director to the Company at a price of $0.01 per share. Pursuant to the Agreement the Company paid $30,000 to the Director and returned the shares to treasury for cancellation.




iii)
        During the year ended January 31, 2007, 400,000 (2006 - 75,000) shares were issued, pursuant to exercise of stock options, for total consideration of $480,000 (2006 - $4,500).




b)
        Stock Options




In March 2004, the Board of Directors adopted the American Goldfields Inc.s 2004 Stock Option Plan (the 2004 Plan) reserving 5,000,000 common shares for grant to employees, directors and consultants. Because additional stock options are expected to be granted in future periods, the following stock-based compensation expenses are not representative of the effects on reported financial results for future periods.



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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



During the year ended January 31, 2007, the Company granted 200,000 (2006  1,100,000) options under the 2004 plan. These options were valued using the Black-Scholes option pricing model with the following assumptions:



2007
        2006Dividend yield
        
        0%
        0%Volatility
        
        139%
        152%Risk-free interest rate
        
        4.4%
        4.1%Expected life
        
        10 years
        10 years




The weighted average fair value of options granted for the year ended January 31, 2007 was $0.98 (January 31, 2006 - $1.18). As a result of the recognition of stock-based compensation, the following amounts have been included in the Consolidated Statement of Loss:

2007
        2006Mineral property acquisition and exploration expenditures
        $                                                -
        $                                                592,000Office and sundry
        -
        355,200Consulting
        195,600
        355,200$                                                195,600
        $                                                1,302,400


Activity under the 2004 Plan is summarized as follows:

Options Outstanding
        Weighted Average Exercise PriceBalance, January 31, 2005
        
        200,000
        $  0.06Options granted
        
        1,100,000
        $  1.20Options exercised
        
        (75,000)
        $   0.06Balance, January 31, 2006
        
        1,225,000
        $   1.08Options granted
        
        200,000
        $   1.00Options cancelled
        
        (100,000)
        $  1.20Options exercised
        
        (400,000)
        $  1.20Balance, January 31, 2007
        
        925,000
        $   1.00


The following table summarizes information concerning outstanding and exercisable common stock options under the 2004 Plan at January 31, 2007:



Range of Exercise Prices
        Options Outstanding
        Remaining Contractual Life
(in years)
        Weighted Average Exercise Price
        Number of Options Currently Exercisable
        Weighted Average Exercise Price$  0.06
        125,000
        7.17
        $   0.06
        125,000
        $   0.06$  1,00
        200,000
        9.42
        $   1.00
        200,000
        $   1.00$  1.20
        600,000
        8.75
        $   1.20
        600,000
        $   1.20925,000
        8.68
        $   1.00
        925,000
        $   1.00




The aggregate intrinsic value of stock options outstanding at January 31, 2007 is ($256,875). All options granted by the Company under the 2004 plan have vested immediately. As a result, there were no unvested options at period end for any of the periods shown.



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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



c)Warrants



Warrants OutstandingBalance, January 31, 2005 and 2006
        
        1,210,800Warrants granted
        
        -Balance, January 31, 2007
        
        1,210,800


The following table lists the common share warrants outstanding at January 31, 2007. Each warrant is exchangeable for one common share.



Quantity
        Exercise
Price
        Exercise
Period403,600
        $ 1.50
        November 4, 2005 to November 4, 2010403,600
        $ 2.00
        May 4, 2006 to May 4, 2011403,600
        $ 2.50
        November 4, 2006 to November 4, 20111,210,800




At January 31, 2007, all of the warrants are exercisable.



7.
        RELATED PARTY TRANSACTIONS


a)
        Operations


On May 26, 2004, Mr. Richard Kern joined the Companys Board of Directors. Mr. Kern is also the President of MinQuest Inc. (MinQuest). The Company has optioned all of its mineral property interest from MinQuest. Further, the Imperial and Cortez Property option agreements require the Company to use MinQuest as the primary contractor for exploration activity undertaken on the property. All exploration work undertaken on any of the Companys properties will be at the direction and discretion of the Company.

For the year ended January 31, 2007, the Company paid MinQuest a total of $85,000 (January 31, 2006 - $120,000) related to property option payments for the Imperial ($20,000), Hercules ($20,000), Cortez ($30,000) and Gilman ($15,000) Properties. Included in the net loss for the twelve months ended January 31, 2007 is an amount of $12,100 (January 31, 2006 - $20,600) with respect to fees paid to Mr. Kern for geological services rendered to the Company. In addition, the Company has reimbursed Mr. Kern or MinQuest a combined total of $23,810 (January 31, 2006 - $77,685) for expenses including subcontractor costs, claim filing fees, documentation preparation, field sample costs and travel related to exploration activity on the Companys properties.

b)
        Share Redemption


On July 12, 2006 the Company and its President entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Companys stock owned by the President for a purchase price of $0.01 per share.  The payment of the $30,000 purchase price was made subsequent to January 31, 2007.





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AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)



NOTES TO THE FINANCIAL STATEMENTS



JANUARY 31, 2007 AND 2006

(Stated in U.S. Dollars)



8.
        INCOME TAXES


Deferred tax assets of the Company are as follows:

2007
        2006Loss carry-forwards
        $
        463,000
        $
        297,000Timing differences
        
        -
        
        (2,000)Less:  Valuation allowance
        
        (463,000)
        
        (295,000)Deferred tax asset recognized
        $
        -
        $
        -




A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to these deferred tax assets. The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

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:

2007
        2006Computed expected tax benefit
        $
        235,000
        $
        619,000Permanent differences
        
        (67,000)
        
        (442,000)Change in Valuation Allowance
        
        (168,000)
        
        (177,000)Income tax provision
        $
        -
        $
        -


As at January 31, 2007 the Company has net operating loss carry-forwards of approximately $1,372,000 (2006 - $875,000), which expire between 2017 and 2027.





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ITEM 8.
        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




We have had no disagreements with our independent auditors on accounting or financial disclosures.



ITEM 8A.
        CONTROLS AND PROCEDURES.




Disclosure Controls and Procedures



Based on an evaluation under the supervision and with the participation of the Company's management as of a date within the end of the period covered by this Annual Report on Form 10-KSB, the Company's chief executive officer and chief financial officer has concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken. However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there is no certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless of how remote.



Internal Controls Over Financial Reporting



There have not been any changes in the Companys internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Companys most recent fiscal year that have materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.



ITEM 8B.
        OTHER INFORMATION.




None.



PART III



ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT



Set forth below is certain information concerning the Companys executive officers and directors as of April 27, 2007.



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Name
        Position
        Age
        Date of
First Election
Or AppointmentDonald Neal
        Director,  President, Chief Executive and Operating Officer, Treasurer, and Secretary
        56
        February 5, 2004Jared Beebe
        Director
        56
        September 15, 2006Richard Kern
        Director
        60
        May 26, 2004David Gladwell
        Director
        50
        January 11, 2006




The following is a brief account of the education and business experience of each director and executive officer during the past five years:



Donald Nealis a professional engineer with a background in Projects Engineering Management. In his 30 year career, Mr. Neal has developed extensive industrial expertise in areas relating to power plant and refinery engineering and design. He has been involved in the construction supervision and start-up phases of plants throughout the world, including the United States, Canada, Europe and Asia. His experience in industrial project management encompasses a range of capabilities including field service expertise, performance testing, failure analysis and pulverized coal firing, milling, feeding and fuel conveying systems. Mr. Neal is a graduate of the University of Waterloo (Applied Science), and is a member of the Association of Professional Engineers and Geoscientists of British Columbia. From 2000 to present, Mr. Neal has worked as an independent consultant for
Mocaits Development Corp. which is a privately held corporation. Prior to his present position, Mr. Neal worked as an Engineering Manager for Utility and Recovery Engineering Ltd.  Mr. Neal is also the Vice President of Giant Oil & Gas Inc. which is a publicly traded oil and gas company.



Jared Beebeis an experienced geologist with an extensive background in mineral exploration.   In his nearly 20 years of working in the mining industry, he has worked for a variety of exploration companies in Canada and the United States.  He is currently a Project Manager in Mexico for Soho Resources.  Prior to joining his current employer he worked for Globex Mining in 2006, Scorpio Mining in 2005 and from 1999 to 2004 he worked as a researcher at the University of Quebec where he studied Geographic Information Systems.  Mr. Beebe earned a Bachelor of Science degree in Geology from Metropolitan State College, Denver, Colorado, in 1981.  He is a member of the Association of Applied Geochemists, the Geological Society of Nevada, the Ordre du Géologues du Québec, and the Society of Economic Geologists.



Richard Kernis an exploration geologist with over twenty-five years experience in base and precious metals exploration in the United States, Central and South America, and Australia. Mr. Kern worked for Homestake Mining for over thirteen years, where his positions included Exploration Manager Eastern Australia and District Geologist Western United States. Mr. Kern directly managed major exploration programs in diverse locations, including



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Malaysia, Ecuador, Mexico and the Western U.S. In Nevada, his team drilled the discovery holes into a 1.6 million ounce gold deposit which has since gone into production, and a 9 million ounce gold-equivalent deposit in Australia, also in production. Mr. Kern has operated as an independent mineral exploration geologist for the last several years, with a focus on the Western United States. He holds a Bachelor of Science in Geology (Montana State) and Master of Science in Geology (Idaho State).



David Gladwellis an experienced geochemist with an extensive background in mineral exploration utilizing advanced technologies. After completing his formal geological education, Dr. Gladwell came to Canada to work as staff geochemist and later airborne operations geochemist for Barringer Magenta and then Barringer Research. During this time Dr. Gladwell conducted research on several significant gold zones including the Kerr Addison deposit in Ontario (later published) and the Cortez deposit/trend in Nevada. As geochemist at Barringer, Dr. Gladwell developed a suite of multivariate statistical software tools to provide interpretation of exploration programs in northern Ontario. In a joint effort between Barringer and British Petroleum, he also assisted with the development of a pressurized airborne Flame Ionization Detector (AIRTRACE) which he used to manage and interpret surveys
in the North Sea, the Minches, the Irish Sea, the English Channel, the Mediterranean offshore of Egypt, the Baltic Sea, the Gulf Coast, the Beaufort Sea and large tracts of the Northwest Territories. From 1999 to 2005, Dr. Gladwell worked as a Pastor and is currently an instructor at Georgian College and Applegate School in Ontario, Canada.  Dr. Gladwell earned a Bachelor of Science degree in Chemistry and Geology from the University of Liverpool, and a Ph.D. in Geochemistry from the Royal School of Mines, London University, UK.



None of our directors holds any directorships in companies with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, as amended.



Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.



The Board of Directors has not established an audit committee and does not have an audit committee financial expert. The Board is of the opinion that an audit committee is not necessary since the Companys directors have been performing the functions of an audit committee.



The Board has established an Option Committee and a Compensation Committee, each consisting of Messrs. Neal and Beebe. The Option Committee recommends and grants options to individuals under the option plans adopted by the company. The Compensation Committee recommends and grants compensation to individuals who work for the company.



The Board does not have a nominating committee, the functions of which are performed by the Board.



Section 16(a) Beneficial Ownership Reporting Compliance



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Section 16(a) of the Exchange Act requires the Companys executive officers, directors and persons who beneficially own more than 10% of a registered class of the Companys equity securities to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Such persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they filed.



We are not aware of any instances in fiscal year 2007 when an executive officer, director or owners of more than 10% of the outstanding shares of our common stock failed to comply with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.



Code of Ethics



The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For purposes of this Item, the term code of ethics means written standards that are reasonably 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;

- full, fair, accurate, timely, and understandable disclosure in reports and documents that the issuer files with, or submits to, the Commission and in other public communications made by the issuer;

- compliance with applicable governmental laws, rules and regulations;

- the prompt internal reporting of violations of the code to the board of directors or another appropriate person or persons; and

- accountability for adherence to the code.



The Company hereby undertakes to provide to any person without charge, upon request, a copy of such code of ethics. Such request may be made in writing to the board of directors at the address of the issuer.



ITEM 10.
        EXECUTIVE COMPENSATION




Summary Compensation.



Mr. Donald Neal has been serving as our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary since February 5, 2004.  We had no other officers during the fiscal year ended January 31, 2007.



On July 12, 2006 the Company entered into a Stock Option Agreement with Mr. Neal.  Pursuant to such agreement, Mr. Neal was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.



On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which



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the Company acquired 3,000,000 common shares of the Companys stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.



During the fiscal years ended January 31, 2007 and 2006, Mr. Neal received no other compensation for his services.



We have no employment agreements with any of our directors or our sole executive officer.  We have no pension, health, annuity, bonus, insurance, equity incentive, non-equity incentive, stock options, profit sharing or similar benefit plans.



The following table sets forth information concerning the compensation paid or earned during the fiscal years ended January 31, 2007 and 2006 for services rendered to our Company in all capacities by the following persons: (i) all individuals who served as the principal executive officer or acting in a similar capacity during the fiscal year ended January 31, 2007, regardless of compensation level; (ii) all individuals who served as officers at January 31, 2007 and whose total compensation during the fiscal year ended January 31, 2007 exceeded $100,000; and (iii) up to two additional individuals who served as officers during the fiscal year ended January 31, 2007 and whose total compensation during the fiscal year ended January 31, 2007 exceeded $100,000, regardless of whether they were serving as officers at the end of such fiscal year.



SUMMARY COMPENSATION TABLEName and principal position(a)
        Year(b)
        Salary ($)(c)
        Bonus ($)(d)
        Stock Awards ($)(e)
        Option Awards ($)(f)
        Non-Equity Incentive Plan Compensation ($)(g)
        Nonqualified Deferred Compensation Earnings ($)(h)
        All Other Compensation ($)(i)
        Total ($)(j)Donald Neal(1)
        2007
        0
        0
        0
        $195,600 (2)
        0
        0
        0
        $195,600 (2)2006
        0
        0
        0
        0
        0
        0
        0
        0




(1) Mr. Donald Neal has been serving as our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary since February 5, 2004.



(2) Represents the fair value of 200,000 common stock purchase options granted to Mr. Neal on July 12, 2006.  Each such stock option entitles him to purchase one share of common stock at a price of $1.00 until July 12, 2016.  The value of such stock options was based on the following assumptions: dividend yield of 0%, volatility of 139%, risk-free interest rate of 4.4%, and an expected life of 10 years.



Outstanding Equity Awards



On July 12, 2006 the Company entered into a Stock Option Agreement with Mr. Neal.  Pursuant to such agreement, Mr. Neal was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.



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The table set forth below presents certain information concerning unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer above outstanding as of January 31, 2007.



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDOPTION AWARDS
        STOCK AWARDSName(a)
        Number of Securities Underlying Unexercised Options(#)Exercisable(b)
        Number of Securities Underlying Unexercised Options(#)Unexercisable(c)
        Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(#)(d)
        Option Exercise Price($)(e)
        Option Expiration
Date(f)
        Number of Shares or Units of Stock That Have Not Vested(#)(g)
        Market Value of Shares or Units of Stock That Have Not Vested($)(h)
        Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)(i)
        Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(#)(j)Donald Neal
        200,000
        0
        0
        1.00
        7/12/2016
        0
        0
        0
        0




Compensation of Directors



Except as disclosed above under the section entitled Summary Compensation, our directors did not receive any compensation during the fiscal year ended January 31, 2007.



ITEM 11.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 27, 2007 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors, and (iii) officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to
be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days.



Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest.



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The percentages below are calculated based on 20,292,878 shares of common stock issued and outstanding.



Name of Beneficial Owner
        Title Of Class
        Amount and Nature of Beneficial Ownership
        Percent of ClassDonald Neal
200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6
        Common
        200,000(1)
        1.0%Jared Beebe
200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6
        NA
        0
        0Richard Kern
200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6
        NA
        0
        0David Gladwell
200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6
        NA
        0
        0All directors and executive officers as a group (4 persons)
        Common
        200,000(1)
        1.0%




(1) Includes 200,000 stock options granted to Mr. Neal on July 12, 2006, each of which entitles him to purchase one share of common stock at a price of $1.00 until July 12, 2016.



The persons or entities named in this table, based upon the information they have provided to us, have sole voting and investment power with respect to all shares of common stock beneficially owned by them.



ITEM 12.
        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS




Related Transactions Involving Richard Kern



Mr. Richard Kern joined the Board of Directors of the Company on May 26, 2004. Mr. Kern is also the president of MinQuest. All of the Companys mineral properties have been optioned from MinQuest. Such properties are discussed above under Item 2, Description of Properties, and the material terms of the agreements entered into between our Company and



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Minquest with respect to such properties are summarized below.  As a result, MinQuest and Mr. Kern are related parties to the Company and both MinQuest and Mr. Kern receive substantial payments from the Company. In addition, the Company has agreed to use Mr. Kern as the primary contractor on exploration undertaken to date on all of its properties. The potential exists for conflicts of interest to occur from time to time that could adversely affect the Companys ability conduct its business of exploration. Also, Mr. Kern is the most knowledgeable person regarding the historical and current state of exploration on the mineral properties currently optioned by the Company. If Mr. Kern were to terminate his relationship with the Company, the Company would be adversely affected while we found a suitable replacement.



Gilman PropertyOn May 7, 2004, the Company completed the formal agreement with MinQuest for an option to acquire a 100% interest in the Gilman Property.  Concurrently, the Company made the first $10,000 option payment to MinQuest.  The agreement requires certain additional minimum annual property option payments with a total of $75,000 required to be paid by May 15, 2009. The agreement also requires minimum annual exploration expenditures with a grand total of $450,000 in expenditures required to be incurred on the property by May 15, 2009. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased. The Company is not required to use MinQuest for exploration undertaken on the Gilman Property. However, at its discretion, the Company has engaged MinQuest as the
principal contractor for exploration performed to date.  On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement. As a result of the amendment, the Companys obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009.  On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007.  The result is that the Company is now required to spend approximately $153,000 by May 15, 2007.  All other terms and commitments of the original agreement remain unchanged.  To January 31, 2007, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 option payments due in May 2006 and 2005.  In addition the Company has incurred approximately $22,000 in exploration expenditures on the property.



Imperial PropertyOn June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Imperial Property.  The Company made the first scheduled option payment of $60,000 upon signing the agreement. The agreement requires certain additional minimum annual property option payments with a total of $80,000 required to be paid by July 1, 2008. The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by July 1, 2009. The property option agreement is subject to a 3% royalty payable to MinQuest. The Company is required to use MinQuest for exploration conducted on the Imperial Property.  To January 31, 2007, the Company had made the initial option payment of $60,000 upon signing the agreement as well as the $20,000 option payments due in
July 2006 and 2005.  In addition the Company has incurred approximately $273,700 in exploration expenditures on the property which satisfies the Companys expenditure requirements to July 1, 2007.



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Hercules PropertyOn October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Hercules Property.  Concurrent with the signing of the agreement, the Company made the first property option payment of $20,000. The agreement requires certain additional minimum annual property option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $300,000 was to be spent by September 1, 2006.  To January 31, 2007, the Company
had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2006 and 2005.  In addition the Company has incurred approximately $316,700 in exploration expenditures on the property.  The Companys drill program that was completed in February 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2007.



Cortez PropertyOn February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in properties known as the Crescent Fault Property, the Bankop Property, and the Bullion Mountain Property (collectively, the Cortez Property). Concurrent with the signing of the agreement, the Company made the first property option payment of $65,000. The agreement requires certain additional minimum annual property option payments totaling $445,000 and minimum annual exploration expenditures totaling $1,150,000 to be paid or incurred by February 15, 2010. The agreement is subject to a 3% royalty payable to MinQuest. In addition, the Company is required to use MinQuest for exploration activities undertaken on the properties.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest
agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.  To January 31, 2007, the Company had made the initial option payment of $65,000 due on signing as well as the $30,000 option payment due in February 2006.  In addition the Company has incurred approximately $162,700 in exploration expenditures on the property.  The Companys drill program that was completed in February 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2007.



Related Transactions Involving Greg Crowe



On July 14, 2006 Mr. Greg Crowe resigned as a Director of the Company.  In connection with his resignation, the Company and Mr. Crowe entered into a Redemption Agreement, dated July 14, 2006, pursuant to which Mr. Crowe agreed to sell the 3,000,000 common shares of the Company owned by Mr. Crowe to the Company at a price of $0.01 per share.  The Company paid Mr. Crowe $30,000 and returned the shares to treasury for cancellation.



Related Transactions Involving Donald Neal



On July 12, 2006 the Company granted Donald Neal, our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary, 200,000 stock options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.



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On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Companys stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.





Director Independence



We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of independent directors.  We believe that the following directors currently meet the definition of independent as that term is defined in the rules and regulations of the American Stock Exchange: Jared Beebe; and David Gladwell.



ITEM 13.
        EXHIBITS




Exhibit No.
        Description
        Where Found3.1
        Articles of Incorporation
        Previously filed with the Companys Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 20023.2
        Bylaws
        Previously filed with the Companys Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 20024.1
        Share Certificate
        Previously filed with the Companys Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 200210.1
        Property Option Agreement  (relating to the Gilman Property)
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on May 13, 200410.2
        Property Option Agreement  (relating to the Imperial Property)
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on July 9, 200410.3
        Property Option Agreement  (relating to the Hercules Property)
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on November 1, 200410.4
        Property Option Agreement  (relating to the Cortez Properties)
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on March 2, 2005






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10.5
        Stock Option Agreement, dated July 12, 2006, between American Goldfields Inc. and Donald Neal
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on July 18, 200610.6
        Buy-Back Option Agreement, dated July 12, 2006, between American Goldfields Inc. and Donald Neal
        Previously filed with the Companys Current Report on Form 8-K, filed with the SEC on July 18, 200631.
        Rule 13a-14(a)/15d14(a) Certifications
        Attached Hereto32.
        Section 1350 Certifications
        Attached Hereto




Item 14. Principal Accountant Fees and Services.



Morgan & Company has served as the Companys Principal Accountant since the Companys incorporation. Their fees billed to the Company for the fiscal years ending January 31, 2007 and 2006 are set forth below:



Fiscal year endingJanuary 31, 2007
        
        Fiscal year endingJanuary 31, 2006Audit Fees
        
        $
        16,800
        
        $
        15,310Audit Related Fees
        
        NIL
        
        NILTax Fees
        
        $
        2,000
        
        3,000All Other Fees
        
        $
        NIL
        
        $
        NIL




As of January 31, 2007, the Company did not have a formal, documented pre-approval policy for the fees of the principal accountant. It is in the process of adopting such a policy.



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



AMERICAN GOLDFIELDS INC.Dated: April 27, 2007
        By:/s/ Donald NealName:        Donald NealTitle:           President, Chief Executive and Operating Officer, Secretary and Treasurer, and Director




In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



SIGNATURE
        TITLE
        
        DATE/s/Donald Neal
Donald Neal
        Director, President, Chief Executive and Operating Officer, Secretary, and Treasurer
(Principal Executive, Financial, and Accounting Officer)
        
        April 27, 2007/s/ Richard Kern
Richard Kern
        Director
        
        April 27, 2007/s/ Jared Beebe
Jared Beebe
        Director
        
        April 27, 2007/s/ David Gladwell
David Gladwell
        Director
        
        April 27, 2007






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