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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2006

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

For the transition period from _____ to ______

Commission File Number: 0-25827

LINCOLN GOLD
CORPORATION(Name of small business issuer in its charter)

|NEVADA                                           | 88-0419475                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

|Suite 350, 885 Dunsmuir Street           |           
|---------------------------------------- | ----------
|Vancouver, British Columbia, Canada      | V6C 1N5   
|(Address of principal executive offices) | (Zip Code)

Issuers telephone number: (604) 688-7377

Securities registered under Section 12(b) of the Exchange
Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Not Applicable      | Not Applicable                           

Securities registered under Section 12(g) of the Exchange
Act:

Common Stock, $0.001 par value(Title of class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State issuers revenues for its most recent fiscal year $NIL

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State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) $3,296,667 as of March
26, 2007

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date. 43,656,666
shares of common stock as of March 26, 2007

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

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PART I

|ITEM 1. | DESCRIPTION OF BUSINESS.
|------- | ------------------------

FORWARD-LOOKING STATEMENTS

The information in this Annual Report on Form 10-KSB contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements involve risks and uncertainties,
including statements regarding our capital needs, business plans and
expectations. Such forward-looking statements involve risks and uncertainties
regarding the market price of gold, availability of funds, government
regulations, common share prices, operating costs, capital costs, outcomes of
ore reserve development and other factors. Forward-looking statements are made,
without limitation, in relation to operating plans, property exploration and
development, availability of funds, environmental reclamation, operating costs
and permit acquisition. Any statements contained herein that are not statements
of historical facts may be deemed to be forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as may,
will, should, expect, plan, intend, anticipate, believe,
estimate, predict, potential or continue, the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined below, and, from time to time, in other reports we file with the
SEC. These factors may cause our actual results to differ materially from any
forward-looking statement. We disclaim any obligation to publicly update these
statements, or disclose any difference between our actual results and those
reflected in these statements. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.

CORPORATE ORGANIZATION

Incorporation

We were incorporated under the laws of the State of Nevada as
Braden Technologies, Inc. on February 17, 1999. We have been engaged in the
acquisition, exploration and development of mineral properties since our
inception.

Share Split

We completed a four-for-one split of our common stock effective
March 10, 2004. As a result of this stock-split, our authorized capital
increased from 25,000,000 shares to 100,000,000 shares of common stock.
Concurrent with our stock split, the number of our issued and outstanding shares
increased from 2,850,000 shares to 11,400,000 shares.

Acquisition of Lincoln Gold

We completed the acquisition of Lincoln Gold Corp., (Lincoln
Gold) a Nevada corporation effective March 26, 2004. This acquisition was
completed by our acquisition of all of the issued and outstanding shares of
Lincoln Gold from the former shareholders of Lincoln Gold. On closing of the
acquisition, we issued 24,000,000 shares of our common stock to the shareholders
of Lincoln Gold. As a result of this issuance, the number of our issued and
outstanding shares increased from 11,400,000 shares to 35,400,000 shares, of
which approximately 67.80% was owned by the former shareholders of Lincoln Gold
upon the completion of the acquisition.

Merger with Lincoln Gold

Subsequent to our acquisition of Lincoln Gold, we merged with
Lincoln Gold in a parent/ subsidiary merger in April 2004 under Chapter 92A of
the Nevada Revised Statutes. We completed the change of our name from Braden
Technologies Inc. to Lincoln Gold Corporation as part of this merger
process.

OVERVIEW

We are engaged in the acquisition and exploration of mineral
properties in the State of Nevada. Our plan of operations for the next twelve
months is to conduct exploration of our mineral properties in the State of
Nevada.

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We are an exploration stage company. All of our projects are at
the exploration stage and there is no assurance that any of our mining claims
contain a commercially viable ore body. We plan to undertake further exploration
of our properties. We anticipate that we will require additional financing in
order to pursue full exploration of these claims. We do not have sufficient
financing to undertake full exploration of our mineral claims at present and
there is no assurance that we will be able to obtain the necessary financing.

There is no assurance that a commercially viable mineral
deposit exists on any of our mineral properties. Further exploration beyond the
scope of our planned exploration activities will be required before a final
evaluation as to the economic and legal feasibility of mining of any of our
properties is determined. There is no assurance that further exploration will
result in a final evaluation that a commercially viable mineral deposit exists
on any of our mineral properties.

MINERAL PROPERTIES AND PLAN OF OPERATIONS

We hold interests in four groups of mineral properties, with
three properties located in Nevada and one property located in Mexico, as
described below:

Name of Property
    LocationHannah Property
    Churchill County, NevadaJDS Property
    Eureka County, NevadaJenny Hill Property
    Mineral & NYE Counties, NevadaLa Bufa
    Mexico


In addition, we are in the process of negotiating to acquire a
fourth property in Nevada. The property is known as the Pine Grove and is near
Yerington, Nevada. There are two patented claims associated with the property
and two claim holders. We are in the process of drawing up formal agreements on
the claims pursuant to negotiations that have been completed to date. No
expenditures have been made on the claims and none will be made until the formal
agreements are signed.

Our plan of operations is to carry out exploration of our
mineral properties. Our specific exploration plan for each of our mineral
properties, together with information regarding the location and access, history
of operations, present condition and geology of each of our properties, is
presented in the section of this Annual Report on Form 10-KSB entitled
Description of Properties. All of our exploration programs are preliminary in
nature in that their completion will not result in a determination that any of
our properties contains commercially exploitable quantities of mineralization.

Our exploration programs will be directed by our management and
will be supervised by Mr. Jeff Wilson, our vice-president of exploration. We
will engage contractors to carry out our exploration programs under Mr. Wilsons
supervision. Contractors that we plan to engage include project geologists,
geochemical sampling crews and drilling companies, each according the specific
exploration program on each property. Our budgets for our exploration programs
are set forth in the section of this Annual Report on Form 10-KSB entitled
Description of Properties. We plan to solicit bids from drilling companies
prior to selecting any drilling company to complete a drilling program. We
anticipate paying normal industry rates for reverse-circulation drilling.

We plan to complete our exploration programs within the periods
specified in the section of this Annual Report on Form 10-KSB entitled
Description of Properties.Key factors that could delay completion of
our exploration programs beyond the projected timeframes include the following.

|(a) | Poor availability of drill rigs due to high demand in
      Nevada and Mexico;                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Delays caused by permitting and bonding with the US
      Bureau of Land Management with respect to drilling programs;                                                                                  
|(c) | Our inability to identify a joint venture partner and
      conclude a joint venture agreement where we anticipate a joint venture
      will be required due to the high costs of a drilling
  program;

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|(d) | Adverse weather, including heavy snow; and   
|--- | ---------------------------------------------
|(e) | Our inability to obtain sufficient
  funding.

Key factors that could cause our exploration costs to be
greater than anticipated include the following:

|(a) | adverse drilling conditions, including caving ground,
      lost circulation, the presence of artesian water, stuck drill steel and
      adverse weather precluding drill site access;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | increased costs for contract geologists and geochemical
      sampling crews due to increased in demand in Nevada; and                                                                 
|(c) | increased drill rig and crew rental costs due to high
      demand in Nevada and Mexico.                                                                                               

Our board of directors will make determinations as whether to
proceed with the additional exploration of our Nevada and Mexico mineral
properties based on the results of the preliminary exploration that we
undertake. In completing these determinations, we will make an assessment as to
whether the results of the preliminary exploration are sufficiently positive to
enable us to achieve the financing that would be necessary for us to proceed
with more advanced exploration.

We may consider entering into joint venture arrangements on
several of our mineral properties, as noted in the section of this Annual Report
on Form 10-KSB entitled Description of Properties, to provide the required
funding to pursue drilling and advanced exploration of our mineral claims. If we
entered into a joint venture arrangement, we would likely have to assign a
percentage of our interest in our mineral claims to the joint venture partner.
The assignment of the interest would be conditional upon contribution by the
joint venture partner of capital to enable the advanced exploration on the
mineral properties to proceed. We are presently in the process of attempting to
locate a joint venture partner for our mineral claims, but we have not concluded
any joint venture agreements to date. There is no assurance that any third party
would enter into a joint venture agreement with us in order to fund exploration
of our mineral claims.

We plan to continue exploration of our mineral claims for so
long as the results of the geological exploration that we complete indicate the
further exploration of our mineral claims is recommended and we are able to
obtain the additional financing necessary to enable us to continue exploration.
We have renewed all of our Nevada mineral claims by making the required filings
with the Bureau of Land Management by September 1, 2006. We further plan to
renew all of our mineral claims by making the required filings with the Bureau
of Land Management by September 1, 2007 except where we determine to abandon
exploration of any mineral claim prior to September 1, 2007. All exploration
activities on our mineral claims are presently preliminary exploration
activities. Advanced exploration activities, including the completion of
comprehensive drilling programs, will be necessary before we are able to
complete any feasibility studies on any of our mineral properties. If our
exploration activities result in an indication that our mineral claims contain
potentially commercial exploitable quantities of gold, then we would attempt to
complete feasibility studies on our property to assess whether commercial
exploitation of the property would be commercially feasible. There is no
assurance that commercial exploitation of our mineral claims would be
commercially feasible even if our initial exploration programs show evidence of
gold mineralization.

If we determine not to proceed with further exploration of any
of our mineral claims due to results from geological exploration that indicate
that further exploration is not recommended or due to our lack of financing, we
will attempt to acquire additional interests in new mineral resource properties.
Due to our limited finances, there is no assurance that we would be able to
acquire an interest in a new property that merits further exploration. If we
were to acquire an interest in a new property, then our plan would be to conduct
resource exploration of the new property. In any event, we anticipate that our
acquisition of a new property and any exploration activities that we would
undertake will be subject to our achieving additional financing, of which there
is no assurance.

PRIOR EXPLORATION ACTIVITIES

A summary of our exploration activities on properties that have
been discontinued prior to January 1, 2005 is included in our Annual Report on
Form 10-KSB for the year ended December 31, 2004.

Lincoln Flat Property

We previously held option to acquire a 100% interest in the
claims comprising the Lincoln Flat project, subject to a net smelter royalty,
pursuant an option agreement dated December 24, 2003 between us and Larry and
Susan

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McIntosh of Gardnerville, Nevada, as optionors. The Lincoln
Flat property is comprised of twenty-seven (27) unpatented lode claims covering
approximately 540 acres (0.84 sq miles) in Lyon and Douglas Counties Nevada. We
had the option to acquire a 100% interest in the Lincoln Flat property by making
aggregate payments to the optionors in the amount of $210,000.

We commenced field exploration work on the Lincoln Flat
property during the first quarter of 2005 with the objective of further
exploring a gold-hematite breccia target and a fracture-controlled gold porphyry
target. This field work included a soil sampling and rock-chip sampling program.

We submitted a Notice of Intent to Operate and Reclamation Bond
to the U.S. Bureau of Land Management with the objective of drill testing the
two target areas in June 2005. Permitting was approved by the U.S. Bureau of
Reclamation. We drilled nine reverse-circulation drill holes during the summer
of 2005 for a total footage of 5,145 ft. Drilling was conducted to test various
gold soil anomalies and geologic targets. While scattered intercepts of gold
were encountered, the results did not meet our expectations. As a result, we
terminated the option agreement and the property has been returned to the owner.
We have no further liabilities or obligations with respect to either the Lincoln
Flat Project or the option agreement other than to complete approximately
$15,000 of reclamation work relating to the drilling that we completed. This
reclamation work is required under our drilling permit.

Buffalo Valley Property

Agnico Eagle completed the drilling of five deep RC holes for
4,850 ft on the Company's Buffalo Valley Property near Battle Mountain, Nevada.
Assay results were discouraging and the property was returned to the Company who
subsequently returned the claims to Nevada North Resources (USA), Inc. This was
done at the end of May 2006 and was announced in a press release.

New Opportunities

During 2005, we continued to review new prospective gold
exploration opportunities in Nevada, Utah, Arizona, California, and Mexico. We
plan to continue to review new opportunities on a case-by-case basis.

COMPETITION

We are a junior mineral resource exploration company. We
compete with other mineral resource exploration companies for financing and for
the acquisition of new mineral properties. Many of the mineral resource
exploration companies with whom we compete have greater financial and technical
resources than those available to us. Accordingly, these competitors may be able
to spend greater amounts on acquisitions of mineral properties of merit, on
exploration of their mineral properties and on development of their mineral
properties. In addition, they may be able to afford more geological expertise in
the targeting and exploration of mineral properties. This competition could
result in competitors having mineral properties of greater quality and interest
to prospective investors who may finance additional exploration and development.
This competition could adversely impact on our ability to achieve the financing
necessary for us to conduct further exploration of our mineral properties.

We will also compete with other junior mineral exploration
companies for financing from a limited number of investors that are prepared to
make investments in junior mineral exploration companies. The presence of
competing junior mineral exploration companies may impact on our ability to
raise additional capital in order to fund our exploration programs if investors
are of the view that investments in competitors are more attractive based on the
merit of the mineral properties under investigation and the price of the
investment offered to investors.

We will also compete with other junior and senior mineral
companies for available resources, including, but not limited to, professional
geologists, camp staff, helicopter or float planes, mineral exploration supplies
and drill rigs.

GOVERNMENT REGULATIONS

We will be required to obtain work permits from the United
States Bureau of Land Management (BLM) for any exploration work on our Nevada
mineral properties that results in a physical disturbance to the land. We will
not be required to obtain a work permit for any phase of our proposed mineral
exploration programs that does not involve any physical disturbance to the
mineral claims, such as data compilation, field work and geochemical surveys. We
will be required to obtain work permits for all drilling operations that we plan
to conduct on our mineral properties.

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Prior to commencing drilling operations on any of our
properties, we must submit a Notice of Intent to Operate to the BLM and post a
bond as security for our obligation to complete reclamation activities. We will
be required by the Bureau of Land Management to undertake remediation work on
any work that results in physical disturbance to the mineral claims, including
drilling programs. We estimate that the cost of remediation work for our
drilling programs will be approximately $25,000 for each drilling program. The
estimated amount of remediation work is included within our budgets for our
exploration programs. The actual amount of reclamation cost will vary according
to the degree of physical disturbance.

We have made all current Bureau of Land Management filings for
our Nevada properties. All claims are in good standing until September 1, 2007.
Applicable county fees have also been paid.

The La Bufa property is an exploration concession granted by a
branch of the Mexican government and is for a three year terms. Thereafter, the
La Bufa property may be converted into an exploitation concession that would
have a term of fifty years. The La Bufa property is presently beginning the
second year of the term of its exploration concession. An annual fee of $1.25
pesos per hectare is due to the Mexican federal government. The net area of the
La Bufa exploration concession is 1040.75 hectares, thereby requiring an annual
payment of $1300.94 pesos. These amounts are subject to change and adjustment by
the Mexican authorities.

RESEARCH AND DEVELOPMENT EXPENDITURES

We have not spent any amounts on research and development
activities since our inception. Our planned expenditures on our exploration
programs are summarized under the section of this Annual Report on Form 10-KSB
entitled Description of Properties.

EMPLOYEES

We have two employees, namely Paul Saxton, our chief executive
officer and chief financial officer, and Jeffrey Wilson, our vice-president of
exploration. We carry out our exploration programs through contracts with third
parties, including geologists, engineers, drilling companies.

SUBSIDIARIES

We do not have any subsidiaries.

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|ITEM 2. | DESCRIPTION OF PROPERTIES.
|------- | --------------------------

DESCRIPTION OF PROPERTIES

We maintain our head office located at Suite 350  885 Dunsmuir
Street, Vancouver, B.C., V6C 1N5. These premises are located at the business
premises of our president, Mr. Paul Saxton. We pay a proportionate share of rent
and administrative expenses associated with these premises.

Our operations office is located at 325 Tahoe Drive, Carson
City, Nevada, 89703. Our operations office is located in the home of Mr. Jeff
Wilson, our vice-president of exploration. These premises are provided by Mr.
Wilson at no cost to us.

Our current four groups of mineral properties located in the
State of Nevada are described below:

HANNAH PROPERTY, CHURCHILL COUNTY, NEVADA

|1. | Location and Access
|-- | -------------------

The Hannah Property is located approximately 55 miles east of
Reno, Nevada in the southern portion of the Trinity Range north of Interstate 80
in Churchill County. Access is east from Reno via Interstate 80 and then north
on gravel and dirt roads from Hot Springs Flat to the Property. A map showing
the location of and access to the Hannah property is presented below:



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|2. | Ownership Interest
|-- | ------------------

The Hannah property is comprised of twenty-three (23)
unpatented lode claims covering approximately 460 acres (0.72 sq. miles) in
Churchill County, Nevada.

We have an option to acquire a 100% interest in the claims
comprising the Hannah project, subject to a net smelter royalty, pursuant to an
option agreement dated December 24, 2003 between us and Larry and Susan McIntosh
of Gardnerville, Nevada, as optionors. We have the option to acquire a 100%
interest in the Hannah property by making aggregate payments to the optionors in
the amount of $210,000. We may exercise this option at any time prior to the ten
year anniversary of the effective date of the agreement, being December 24,
2013. We are obligated to make the following option payments in order to
maintain our option agreement in good standing:

Date of Payment
    Amount of Option PaymentDecember 24, 2003
    $5,000 (paid)January 10, 2005
    $5,000 (paid)January 10, 2006
    $10,000 (paid)January 10, 2007
    $15,000 (in quarterly payments) First
      payment has been madeJanuary 10, 2008
    $25,000January 10, 2009
    $25,000January 10, 2010
    $25,000January 10, 2011
    $25,000January 10, 2012
    $25,000January 10, 2013
    $50,000


We will be deemed to have exercised the option upon completion
of the above option payments at which time we will be entitled to a 100%
interest in the Hannah property, subject to the payment of a net smelter royalty
to the optionors. The net smelter royalty will be calculated as 3% of net
smelter returns, as defined in the option agreement, if the price of gold is
less than or equal to $400 per ounce, and 4% of net smelter returns if the price
of gold is greater than $400 per ounce. If we exercise the option, we will have
the right to reduce the net smelter royalty by 1%, up to a maximum of 2%, upon
the payment of $500,000 to the optionors for each 1% of reduction as set out in
the table below:

Gold Price (US$ per ounce)
    Net Smelter Royalty payable on execution
      of the Agreement
    Net Smelter Royalty payable after first
      payment of $500,000
    Net Smelter Royalty payable after second
      payment of $500,000Less than or equal to $400
    3%
    2%
    1%Greater than $400
    4%
    3%
    2%


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If we complete a positive feasibility study for the development
or mining of mineral products on the Hannah property and obtains all government
approvals, consents, licenses and permits to construct, develop or operate a
mine on the Hannah property prior to January 10, 2013, we will be obligated
purchase the Hannah property prior to the commencement of mining of mineral
products. In this event, the purchase price for the Hannah property shall be the
sum of all unpaid option payments due to the optionors through January 10, 2013.

We have the exclusive right to conduct exploration on the
Hannah property during the term of the option agreement, provided that we make
the required option payments. We are obligated to make all federal and county
claim maintenance fees in a timely manner to keep the claims in good standing
during the term of the option agreement. In the event that we do not make any
required option payment, then the optionors will be entitled to terminate the
agreement and we will lose our interest in the property. However, we will not
have any obligation to make further option payments in the event of termination
due our inability to make any required option payment. We may surrender our
interest in the property and terminate the agreement at our election upon
written notice to the optionors. In this event, the optionors will retain all
option payments paid pursuant to the agreement.

We have paid $3,075 for BLM and County annual claim maintenance
fees that were required to be paid by October 1, 2006. We will be required pay
approximately $3,075 for BLM and County annual claim maintenance fees by
September 1, 2007. We are not obligated to complete any minimum exploration
expenditures or other work commitment in order to maintain our option on the
Hannah property.

|3. | History of Operations
|-- | ---------------------

Various old shafts, adits, and numerous small prospects are on
the Hannah Property from prospecting in the early 1900s. Cominco was active in
the general area in the 1960s and Chevron drilled three scattered holes on the
claim block in the 1980s. None of Chevrons holes tested the Hannah gold
target. Four backhoe trenches were dug by Cordex in the late 1990s, however no
follow-up work was conducted. NDT Ventures held the property in 2002 but
conducted no significant work. A total of 50 soil samples and 329 rock-chip
samples have been collected from the property and assayed.

|4. | Present Condition of the Property and
      Current State of Exploration
|-- | ------------------------------------------------------------------------

The Hannah Property is in the early stage of exploration and
presently contains no known gold or silver resources. Our current state of
exploration consists of geologic mapping, soil and rock-chip sampling, a ground
magnetometer survey, and 11 reverse-circulation drill holes (4,815 ft) drilled
by the Company in 2005. Shallow ore-grade gold and silver mineralization is
present in two adjacent drill holes.

There is no plant or equipment on the Hannah Property other
than some scattered remnants of past prospecting. The property consists of
barren land with no improvements with the exception of dirt roads.

We have no formal reports on the Hannah Property. However, we
do have all soil and rock-chip sample maps and results, a preliminary geologic
map, a ground magnetometer map, and drill hole logs and assay results from 11
reverse-circulation drill holes.

During 2006, we conducted a ground magnetometer survey in the
vicinity of mineralized drill holes H-1 and H-11 which were drilled in a
northwest-trending, highly oxidized shear zone. Results show a magnetic high to
the northwest buried under pediment gravels and a magnetic low to the southeast
beneath alluvium. The abrupt transition area from low to high magnetic response
offers a possible structural intersection between contrasting rocks types.
Structural intersections are potential gold-silver targets.

Provided adequate funding is available, we would like to
conduct offset drilling from the two holes that encountered ore-grade
gold-silver mineralization. However, we are also showing the property to
multiple juniors who have expressed potential interest in participating in a
joint venture on the Hannah Property. To date, we have not concluded any joint
venture agreement for the Hannah Property. It is important to note that there is
no work obligation in the property option agreement. Owing to this situation,
the property may sit idle until a joint venture partner is acquired, provided
that we continue to make the payments required under the option agreement.

Our plan of exploration for the Hannah Property is as follows:

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Description of Phase of Exploration
    Description of Exploration Work
      RequiredAcquire Joint Venture Partner
    Execute an Exploration Agreement with Option to
      Joint Venture with a potential joint venture partner (a JV Partner)Exploration Trenching
    JV Partner conducts trenching across target
      with an excavatorPhase 2 Drilling
    JV Partner drills 5 to 10 angle RC drill holesBottle Roll Metallurgical Tests
    JV Partner conducts metallurgical tests on
      select drill cuttingsData Evaluation
    Evaluate results


The anticipated timetable and estimated budget for completion
for each stage of exploration is as follows:

Stage of Exploration
    Anticipated Timetable for
      Completion
    Estimated Cost of
      CompletionAcquire Joint Venture Partner
    2ndQuarter
    $3,000Exploration Trenching
    3rdQuarter
    $0 (Partners Cost)Phase 2 Drilling
    4thQuarter
    $0 (Partners Cost)Bottle-Roll Metallurgical Tests
    4thQuarter
    $0 (Partners Cost)Data Evaluation
    4thQuarter
    $2,000


All significant work is expected to be conducted by a joint
venture partner using qualified contractors.

|5. | Geology
|-- | -------

The Hannah Property lies in exotic metamorphic terrain
comprised of Triassic metavolcancis (greenstones) and various Cretaceous
intrusive rocks and Tertiary lake beds (no formation names). A highly oxidized,
northwesttrending, gold-silver-bearing shear zone cuts the metavolcanic rocks
and is exposed in an outcrop approximately 50 to 100 ft wide and 300 ft long at
the edge of the pediment. Pediment and alluvial gravels cover the shear zone to
the northwest and southeast. The altered shear zone consists of hydrothermally
altered breccia that contains conspicuous iron-oxides and bleaching. Two drill
holes cut the zone. Angle hole H-1 (-45o) encountered 35 ft @ 0.016 opt gold
from 40 to 75 ft and angle hole H-2 (-60o) encountered 10 ft @ 0.094 opt gold +
5.1 opt silver from 15 to 25 ft. This mineralization is believed to continue
under gravels to the northwest and southeast. Similar, although much narrower,
shear zones occur on the property and extend up to 1,200 ft in strike
length.

JDS PROPERTY, EUREKA COUNTY, NEVADA

|1. | Location and Access
|-- | -------------------

The JDS property is located in central Nevada within the
Cortez Trend portion of the Battle Mountain-Eureka Mineral Belt, approximately
40 miles northwest of the small mining town of Eureka. The property is in Denay
Valley adjacent to the northern end of the Simpson Park Mountains. Access is
fair to good during good weather via the Tonkin Road (dirt/gravel) that
traverses through the property. A map showing the location of and access to the
JDS property is presented below:

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|2. | Ownership Interest
|-- | ------------------

We are the owner of the seventy-seven (77) unpatented lode
claims comprising the JDS project which covers approximately 1,540 acres (2.04
sq miles). We staked and recorded the mineral claims. These mineral claims are
registered in our name and are not subject to underlying lease payments or
royalties. The JDS property is subject only to annual claim maintenance fees
payable to the BLM and Eureka County. We must pay approximately $12,500 in BLM
and Eureka County annual claim maintenance fees by September 1, 2007 in order to
maintain our interest in these properties.

Effective May 15, 2006, we entered into a letter agreement on
the JDS property for an Exploration Agreement with Option to Form Joint Venture
with Golden Odyssey Exploration (TVX: GOE). The earn-in terms are presented
below:

Earn-In Period
    Required Expenditures
    Percent Earned Interest upon
      Completion of Required Expenditure18 months from Letter Agreement
    6000 ft of exploration drilling
    51%To be determined
    US$1,500,000
    14%To be determined
    US$2,000,000
    10%Total 75%


Under the terms of the letter agreement, Golden Odyssey is
obligated for all annual claim maintenance fees payable to the U.S. Bureau of
Land Management and to Eureka County.

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|3. | History of Operations
|-- | ---------------------

There have been no previous operations of any type on the
property.

|4. | Present Condition of the Property and
      Current State of Exploration
|-- | ------------------------------------------------------------------------

In 2005, we completed a mercury soil gas survey and a detail
gravity survey line over the northwest portion of the claim block. This area is
considered the most prospective for discovery of a Carlin-type gold deposit
hosted in lower plate carbonate rocks.

There is no plant or equipment of the JDS Property. The
property consists of barren land with no improvements other than a Eureka County
dirt road that crosses the property and various cattle fences.

We presently have one geologic report on the JDS property that
was written by Kenneth D. Cunningham, Wyoming Professional Geologist PG-1636,
dated February 9, 2004. The report reviews the potential for Carlin type gold
deposits on the JDS Property. We have all raw data and maps for the mercury soil
gas survey and for the detail gravity survey line in the same general area. We
also have various summary maps and property diagrams.

Work in 2006 consisted largely of farm-out efforts by the
Company which were consummated in May 2006 when we entered into the letter
agreement with Golden Odyssey. Golden Odyssey has initiated drill permitting
with the U.S. Bureau of Land Management and have located an available drill rig.
Golden Odyssey plans to complete this drilling during the first quarter of 2007.

Property exploration during 2007 will be conducted by Golden
Odyssey Exploration.

Description of Phase of Exploration
    Description of Exploration Work
      RequiredPhase 1 Drilling
    Golden Odyssey to drill 6,000 ft of
      reverse-circulation drilling in various locationsData Evaluation
    Evaluate drill data


The anticipated timetable and budget for the Companys share of
work is listed below:

Stage of Exploration
    Anticipated Timetable for
      Completion
    Estimated Cost of CompletionPhase 1 Drilling
    1stQuarter-2ndQuarter
    $0 (Golden Odysseys Cost)Data Evaluation
    3rdQuarter
    $5,000


|5. | Geology
|-- | -------

The JDS Property lies within the Cortez Trend in the southern
portion of the Battle Mountain-Eureka Mineral Belt. Although covered by valley
fill, the geology of the JDS Property is believed to be an extension of
favourable lower plate rocks of the Roberts Mountains Thrust that are known to
host large Carlin-type gold deposits. Potential Devonian host rocks are exposed
in the nearby Simpson Park Mountains and are believed concealed under shallow
cover at JDS. Similar Devonian strata host very large gold deposits at Pipeline
and Cortez to the northwest of the JDS Property. Available gravity data at JDS
suggest shallow depth to bedrock and north-trending faults that converge in the
northwestern portion of the claim block. The combination of favourable lower
plate bedrock and converging faults indicate exploration potential for
Carlin-type gold deposit(s). A strong mercury soil gas anomaly has also been
identified in the northwest portion of the JDS Property.

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JENNY HILL PROPERTY, MINERAL & NYE COUNTIES, NEVADA

|1. | Location and Access
|-- | -------------------

The Jenny Hill Property is located in west-central Nevada
approximately 16 miles due west of the small town of Gabbs in the Black Hills
portion of the southern Monte Cristo Mountains. The claims are in Mineral and
Nye Counties. Access to the property is via paved State Highway 361 south of
Gabbs to the Rawhide Road (dirt) that extends westerly to the vicinity of the
southern tip of the Black Hills. A map showing the location of and access to the
Jenny Hill property is presented below:



|2. | Ownership Interest
|-- | ------------------

The Jenny Hill Property is comprised of 182 unpatented lode
claims covering approximately 3,640 acres (5.7 sq miles) in Mineral and Nye
Counties, Nevada. These mineral claims are held by the Company subject to a
Lease with Option to Purchase Agreement effective September 28, 2004 between the
Company and Larry and Susan McIntosh of Gardnerville, Nevada.

We have the option to acquire a 100% interest in the Jenny Hill
  project, subject to a net smelter royalty, by making aggregate payments to the
  owners in the amount of $1,500,000. We may exercise this option at any time
  prior to the seven year anniversary of the effective date of the agreement,
  being September 28, 2011. We are obligated to make the following required advance
  royalty payments, each of which may be credited towards the exercise price of
  the option, pending the exercise of option as lease payments:

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Date of Payment
    Amount of Advance Royalty PaymentSeptember 28, 2004
    $7,000 (paid)September 28, 2004
    $13,000 (paid)September 28, 2005
    $25,000 (paid)September 28, 2006
    $30,000 (paid)September 28, 2007
    $60,000September 28, 2008
    $70,000September 28, 2009
    $80,000September 28, 2010
    $90,000September 28, 2011
    $1,125,000


We were obligated to do US$50,000 in work during the first year
of the agreement and are obligated to conduct US$100,000 in work for every year
thereafter. We are also obligated to pay all annual federal and county claim
maintenance fees due prior to September 1 of each year. These fees total
approximately US$24,115.

We have the exclusive right to conduct exploration on the Jenny
Hill property, provided that we make the required advance royalty payments and
complete the required exploration expenditures. In the event that we do not make
the required advance royalty payments or complete the required exploration
expenditures, then the owners will be entitled to terminate the agreement and we
will lose our interest in the property. However, we will not have any obligation
to make further advance royalty payments or payments in lieu of exploration
expenditures in the event of termination due our inability to make the required
advance royalty payments or complete the required exploration expenditures. We
may surrender our interest in the property and terminate the agreement at our
election upon written notice to the owners. In this event, the owners will
retain all payments and royalties paid pursuant to the agreement.

In the event that mineral production is commenced on the
property, we will be obligated to pay to the owners a 2% net smelter return
royalty. The definition of net smelter returns is to be agreed upon in the
definitive agreement. We have the right of first refusal to purchase any
interest in the property should the owners determine to sell any interest in the
property. The owners have also granted to us an area of interest of
approximately 1 mile surrounding the Jenny Hill claims. Under this right, any
additional mineral claims acquired by the owners that are contiguous or within
one mile of the Jenny Hill claims will be subject to our lease and option to
purchase agreement.

We executed a letter of intent to joint venture the Jenny Hill
property with Kinross Gold Corporation on December 9, 2005. Under the terms of
the letter agreement, Kinross is obligated to keep the property in good standing
with the BLM and local counties and will make the underlying payments to the
owner. Upon completing $3.0 million in work expenditures on the property,
Kinross will have earned a 60% interest in the property and a joint venture will
be formed between us and Kinross. At Kinross discretion, Kinross may earn an
additional 10% interest by producing a feasibility study on the project. Upon
the joint venture reaching a positive construction decision for a mine, Kinross
will have the option earn an additional 5% interest by arranging financing
instruments on our behalf. Kinross may earn a total interest of 75% in the
Property, in which event we would hold a 25% interest. If Kinross elects to drop
the property before July 1 in any given year, the lease payment obligations and
government claim holding costs shall revert back to us.

The Kinross Gold earn-in schedule under the letter of intent
  to joint venture is presented in the following table:

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Earn-In Schedule
      Required Expenditures
      Percent Earned InterestYear 1*
      US$200,000
      0%Years 2 thru 5
      US$2,800,000
      0%Total: US$3,000,000
      60%Complete Feasibility Study
      At Cost
      10%Arrange Lincoln Financing
      At Cost
      5%Total: 75%


*Note: The Year 1 work period was extended owing to the lack of
an available drill rig.

|3. | History of Operations
|-- | ---------------------

There are abundant old gold workings and prospect pits on the
Jenny Hill property and remnants of a small mill in the Black Hills dating back
to the 1880s. Minor gold production also came from the Black Hills by local
prospectors in the 1960s. Comaplex Minerals and NDT Ventures were independently
active on the southern portion of the claim block in 2000-2004. To date, 303
soil samples and 377 rock-chip samples have been collected and analyzed yielding
conspicuous gold. Comaplex Minerals completed 39.14 line miles of ground
magnetometer survey (contractor Zonge Geosciences, Inc.) on the southern portion
of the claim block. We acquired our interest in the Jenny Hill Property in
October 2004.

|4. | Present Condition of the Property and
      Current State of Exploration
|-- | ------------------------------------------------------------------------

The Jenny Hill Property is in the early stage of exploration
and presently contains no known gold or silver resources. Our current state of
exploration consists of geologic mapping, soil and rock-chip sampling, ground
magnetometer survey, and a local gravity survey. Drill targets have been
identified.

There is no plant or equipment on the Jenny Hill Property other
than some scattered remnants of past prospecting and mining activities in the
Black Hills. The property consists of barren land with no improvements other
than various dirt roads.

Jenny Hill is an early-stage exploration property. There are no
formal geologic reports available at this time. However, we do have a geologic
map, copies of all soil and rock-chip sample maps and assays, a ground
magnetometer survey (105 line kilometres) over the entire property, and a local
gravity survey (6 lines) over a northern portion of the property.

During 2006, Kinross Gold Corp. received approval for 20 drill
sites on the property from the U.S. Bureau of Land Management. However, no holes
were drilled during 2006 due to the lack of an available reverse-circulation
drill rig. Drilling is now planned for the first quarter of 2007.

The 2007 exploration plan is presented in the following table.

Description of Phase of Exploration
    Description of Exploration Work
      RequiredPhase 1 Drilling
    Kinross to drill at least 10
      reverse-circulation holesData Evaluation
    Evaluate drill data


The anticipated timetable and budget for our share of work is
  listed in the following table:

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Stage of Exploration
      Anticipated Timetable for Completion
      Estimated Cost of CompletionPhase 1 Drilling
      1stQuarter
      $0 (Kinrosss Cost)Data Evaluation
      2ndQuarter
      US$5,000


|5. | Geology
|-- | -------

The Jenny Hill Property is located along the eastern margin of
the northwest-trending Walker Lane Mineral Belt. Bedrock consists of a mass of
Jurassic granitic rock resting on a thrust fault, cretaceous dikes and sills,
and sedimentary strata of Triassic Luning Formation. Potential for a Carlin-type
gold deposit(s) is present in the altered siltstones of the Luning Formation at
the northern end of the claim block. Outcrops yield a Carlin-type geochemical
signature with anomalous gold. Potential for gold-bearing skarn exists on the
southern portion of the claim block where Cretaceous dikes have cut and altered
the Luning Formation adjacent to a large thrust sheet of Cretaceous granitic
rock. Anomalous gold is present at the surface in skarn exposures. The northern
and southern areas of the property appear linked by a major north-trending fault
that may be related to gold mineralization. The property has never been
drilled.

LA BUFA PROPERTY, Chihuahua, Mexico

|1. | Location and Access
|-- | -------------------

The La Bufa exploration concession is located in the southwest
extremity of the state of Chihuahua, Mexico and is centered on the small town
(mining district) of Guadalupe y Calvo in the Sierra Madre Occidental. The
single exploration concession adjoins and surrounds other concessions within the
district. Net area is 2,291.26 hectares (approximately 5,661.7 net acres). The
nearest commercial airport is in the city of Chihuahua, 480 km by road from the
property. All-season vehicle access to the property is excellent. The town of
Guadalupe y Calvo is the terminus of the paved, well-maintained Mexico Highway
24 which winds 270 kilometers from mining town of Hidalgo del Parral to the
northeast. Access on the concession is via dirt roads. A map showing the
location and access to the La Bufa property is presented below.

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|2. | Ownership Interest
|-- | ------------------

The La Bufa Property consists of three contiguous Mexican
Exploration Concessions, La Bufa (No. 219036), La Bufa 1 (No. 222724), and La
Bufa 2 (No. 223165) totalling 1,916.21 hectares, as follows:

Name
    Type
    Title
    File
    Area Hect.
    Issued
    Expires
    Tax Rate
    Pesos
    US$La Bufa
    Explor.
    219036
    16/31696
    1040.7594
    31/Jan/03
    30-Jan-09
    $6.0100
    $6,256
    $585La Bufa
    Explor.
    222724
    16/32275
    485.0000
    27-Aug-04
    26-Aug-10
    $6.0100
    $2,916
    $273La Bufa
    Explor.
    223165
    16/32529
    765.5000
    28-Oct-04
    27-Oct-10
    $6.0100
    $4,602
    $430


The La Bufa Property consists of three contiguous Mexican
concessions issued by the Direccion General de Minas in 2003 and 2004 to Minera
Gavilan, S.A. de C.V., a Mexican subsidiary controlled 100% by Almaden Minerals
Ltd. a publicly traded Canadian junior listed on the Toronto Stock Exchange
(AMM).

On August 8, 2005, we executed a letter of intent to joint
venture the property with Almaden whereby we can earn a 51% interest in the
property by undertaking exploration expenditures in the minimum amount of US$2.0
million over 4 years. We can earn an additional 9% interest by undertaking
exploration expenditures in the minimum amount of an additional US$1.0 million
over a further 18 months. As consideration, we issued to Almaden 50,000 shares
of our common stock upon signing of the letter of intent and have agreed to
issue to Almaden 60,000 shares

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on the first anniversary, 70,000 shares on the second
anniversary, 80,000 shares on the third anniversary, 90,000 shares on the fourth
anniversary, and 100,000 shares upon our electing to acquire the additional 9%
interest. In all, we may acquire a 60% interest in the La Bufa property by
undertaking $3.0 million in exploration work and issuing 450,000 shares of our
common stock to Almaden, with Almaden retaining a 40% interest.

We have entered into negotiations with Almaden in order to
enter into an option agreement with Almaden (the Option Agreement) that would
replace and supercede the August 8, 2005 letter of intent. As with the letter of
intent, the Option Agreement would entitle us to acquire up to a 60% interest in
the Bufa Property. We would be entitle to earn this interest in the Bufa
Property in consideration of us (a) undertaking a work program on the Bufa
Property aggregating US$3,500,000, and (b) issuing an aggregate of 1,550,000
shares of our common stock of the Corporation pursuant to the following
schedule:

- 150,000 shares within 5 business days from the effective date of the Option
  Agreement;
- 200,000 shares on or before the first anniversary of the effective date of
  the Option Agreement
- 200,000 shares on or before the second anniversary of the effective date of
  the Option Agreement; and
- 1,000,000 shares on or before the fourth anniversary of the effective date
  of the Option Agreement.

To date, a draft of the Option Agreement has been prepared and
delivered to Almaden but has not been executed.

|3. | History of Operations
|-- | ---------------------

Gold was discovered in the Guadalupe y Calvo district in 1835
with extended periods of production up to 1939. The gold-silver veins were
exploited largely by underground operations. A mint was constructed in 1844 by
the Mexican government to take advantage of the precious metals production in
the district.

Modern exploration work in the district has centered largely in
the area of past production which is surrounded completely by the La Bufa
concessions. Although the vein system extends beyond the area of the old
workings, little exploration work has been conducted. Asarco drilled two angle
core holes in the 1970s on La Bufa ground with both holes encountering
ore-grade gold and silver. A previous joint venture on the La Bufa Property
between Almaden Minerals Ltd. and Grid Capital Corporation resulted in the
drilling of five angle core holes (666.15 m) in three locations during December
2004. Hole GUD04-03 returned encouraging gold-silver-lead-zinc assays from
multiple, narrow-vein intercepts (Almaden Minerals News Release, Jan. 24, 2005).
However, Grid Capital backed out of the joint venture for undisclosed reasons.
We have since entered into a new joint venture with Almaden to explore the La
Bufa concession.

|4. | Present Condition of the Property and
      Current State of Exploration
|-- | ------------------------------------------------------------------------

The La Bufa Property is in the early stage of exploration and
presently contains no known gold or silver resources. There is no plant or
equipment on the Property. The concessions encompass the town of Guadalupe y
Calvo. Potential for gold-silver veins exists primarily along the eastern side
of the town in low, forested and brush-covered hills.

In 2006, the Company conducted aerial photography over the
entire district for the purpose of generating a topographic base map suitable
for detail geologic mapping. A Mexican survey crew was contracted to survey
control points required to produce the topographic maps. However, heavy snow
delayed the survey crew from access to the survey area. Surveying is now planned
for the 1st quarter of 2007.

The Company also conducted a soil sampling program over the
most prospective portion of the La Bufa Property in 2006. The survey covered
approximately 1600 meters (5,250 ft) of potential vein strike. Results reveal at
least eight significant gold anomalies that warrant follow-up work.

The 2007 exploration plan is presented in the following table:

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Description of Phase of Exploration
      Description of Exploration Work RequiredBase map construction
    Obtain ground control points; submit data;
      generate mapsDetail geologic mapping
    Map & sample quartz veins + geology onto
      new base mapSelect drill targets
    Compile geologic mapping with soil &
      rock-chip geochem dataAcquire drilling permit
    Contract professional landman to acquire drill
      permitConstruct drill pads
    Hire local labor and construct drill pads;
      recondition roadsPhase 1 core drilling
    Hire drill contractor and drill 8 angle core
      holes for 250 m eachEvaluate drilling data
    Compile drilling data with surface data


The anticipated timetable and budget for the 2007 exploration
plan is presented in the following table.

Stage of Exploration
    Anticipated Timetable for
      Completion
    Estimated Cost of CompletionBase map construction
    2ndQuarter
    US$14,000Detail geologic mapping
    2rdQuarter
    $43,000Select drill targets
    2rdQuarter
    $3,000Acquire drilling permit
    2rdQuarter
    $10,000Construct drill pads
    3rdQuarter
    $16,000Phase 1 core drilling
    3rdQuarter
    $287,000Evaluate drilling data
    4thQuarter
    $7,000Total: $380,000


There are several key factors that can delay completion of the
exploration program:

| | 1) | Delays in the permit approval process for
  drilling.
| | -- | -----------------------------------------------------
| |    |                                                      
| | 2) | Limited availability of core rigs in Mexico.         
| |    |                                                      
| | 3) | Lack of funding.                                     

Factors that could cause exploration costs to be greater than
anticipated are largely from drilling condition to include the following:

| | 1) | Caving ground   
| | -- | ----------------
| |    |                 
| | 2) | Lost circulation
| |    |                 
| | 3) | Artesian water  

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| | 4) | Stuck drill steel                                                               
| | -- | --------------------------------------------------------------------------------
| |    |                                                                                 
| | 5) | Drilling in near proximity to the town (special
      compensation, noise, etc.)

The exploration program will be managed on site by Richard
Bybee, P. Geo. State of Wyoming (PG-1505) with extensive experience in Latin
America. Our vice-president of exploration, Jeffrey L. Wilson, P. Geol. State of
Utah, will oversee the project. Additional seasoned geologists will be used as
warranted. No contracts have been let at this time.

|5. | Geology
|-- | -------

The La Bufa Property lies within the Guadalupe y Calvo district
which is one of many epithermal gold-silver districts in the Sierra Madre
Occidental of western Mexico. The Sierra Madre Occidental is characterized by
deeply incised mountains, and has a total relief of about 3,000 meters. Most of
the bedrock exposed in the vicinity of Guadalupe y Calvo consists of an upper
volcanic series of bedrock which is commonly hundreds of meters in thickness.
However, erosional exposures of a lower volcanic series of rock, which is
favourable to mineralization and occurs in ranges up to 1,000 meters in
thickness, are exposed along the eastern flank and central portions of the
northwest-trending Guadalupe River Valley that traverses the La Bufa concession.
The contact between the upper and lower volcanic series of rock is rarely
exposed.

District mineralization occurs as northwest-trending,
epithermal gold-silver-lead-zinc quartz veins and breccia veins with local
attending stockworks. The veins occur only in the lower volcanic series. Veins
typically range from 1 to 3+ meters in true thickness and are generally steeply
dipping but may also have shallow dips. Historic production in the district
encountered local mineralized zones measuring tens of meters in thickness. Past
mining on the Rosario vein extended for a continuous strike length of over 600
meters on seven levels. The vein system appears to consist of multiple strands
and extends south-eastward for a distance of at least 1700 meters across the La
Bufa Concession. The main paved road entering the town has a road cut that
exposes a 70-meter zone containing multiple quartz veins.

Asarco drill holes on the La Bufa Property encountered
encouraging results. Hole H-1 hit 1.4 meters grading 9.0 gram per tonne gold +
324 grams per tonne silve. Hole H-2 hit 1.4 meters grading 6.3 grams per tonne
gold + 280 grams per tonne silver. Grid Capital drilled four core holes with
their best intercept of 1.6 meters grading 9.0 grams per tonne gold + 447 grams
per tonne silver.

GLOSSARY OF TECHNICAL TERMS

Mexico Property:

Term
    DefinitionEpithermal
    Said of a hydrothermal mineral deposit formed within 1 km
      of the surface at temperatures of 50°-200°C, occurring mainly as veins.Quartz Breccia
    Quartz vein material that is broken into angular
      fragmentsQuartz Stockworks
    A three-dimensional network of planar to irregular quartz
      veinlets closely enough spaced that the whole mass can be mined.gpt
    Grams per metric tonneVolcanics
    Generally finely crystalline or glassy igneous rocks
      ejected explosively or extruded at or near the Earths surface through
      volcanic actionDacite
    Fine-grained extrusive volcanic rock with the same
      composition as andesite but having less calcic plagioclase and more quartzAndesite
    A dark to grayish colored, fine-grained extrusive
      volcanic rock that may contain phenocrysts of sodic plagioclase.


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Angular Unconformity
    Contact between two groups of rocks where the underlying
      rocks dip in a different angle that the younger overlying rocksTuff
    A general term for consolidated volcanic ashArtesian Water
    Ground water under pressureCaving Ground
    A drilling term that refers to rock formations that break
      when penetrated by a drill and produce rock fragments that may block the
      borehole and/or contaminate the drill cuttings.Lost Circulation
    The loss of drilling fluids through open faults,
      fractures, and/or permeable rock


Nevada Properties:

Term
    DefinitionArtesian water
    Ground water under pressureCarboniferous
    Geologic Period referring to rocks 286 to 360 million
      years oldCarlin-type deposit
    Gold deposits hosted in sedimentary rocks with
      disseminated gold occurring as micron or submicron particles (invisible
      gold), typically with very little to no silver. Very large deposits of
      this type are found in the Carlin Trend in north-central Nevada.Caving ground
    A drilling term that refers to rock formations that break
      when penetrated by a drill and produce rock fragments that may block the
      borehole and/or contaminate the drill cuttings.Cove-type deposit
    Gold-silver deposits hosted in sedimentary rocks with
      significant amounts of precious metals mineralization hosted in veinlets.
      The Cove deposit is located in the northern portion of the Battle
      Mountain-Eureka Trend.Cretaceous
    Geologic Period referring to rocks 66.4 to 144 million
      years old.Devonian
    Geologic Period referring to rocks 360 to 408 million
      years old.Dikes and sills
    Generally narrow bodies of igneous rock implaced as magma
      along faults across bedding (dike) or along zones parallel to bedding
      (sill).Geochemical survey
    A sampling program focusing on trace elements that are
      commonly found associated with mineral deposits. Common trace elements for
      gold are mercury, arsenic, and antimony.Geologic mapping
    The process of mapping geologic formations, associated
      rock characteristics and structural features.Geophysical survey
    The systematic measurement of electrical, gravity,
      seismic, magnetic, or other properties as a tool to help identify rock
      type(s), faults, structures and minerals.Golconda thrust
    A major, flat-lying fault that has transposed older rocks
      over younger rocks.


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Term
    DefinitionGossanous
    Refers to an iron-bearing material that typically
      overlies a sulfide-bearing mineralized zone. It forms by the oxidation and
      leaching out of sulfur and most metals leaving hydrated iron oxides.Gravimeter survey
    A survey using a sensitive instrument that can detect
      density differences in geologic formations.Hematite breccia
    Refers to a rock composed of angular rock fragments with
      conspicuous iron-oxide minerals in the matrix and fractures.Intrusive rock
    Refers to any igneous rock (e.g. granite) that was
      implaced as a magma.Jurassic
    Geologic Period referring to rocks 144 to 208 million
      years old.Lost circulation
    The loss of drilling fluids through open faults,
      fractures, and/or permeable rock.Magnetometer survey
    A survey using a sensitive instrument that can detect the
      distortion of the Earths magnetic field by different geologic formations.Mercury soil gas survey
    A geochemical sampling survey in which mercury vapor is
      sampled and measured. Mercury is typically associated with gold deposits
      in the Great Basin and is a pathfinder for finding gold deposits.Metamorphic rock
    Pre-existing rock that has been physically changed by
      temperature, pressure, shearing stress, or chemical environment, generally
      at depth in the Earths crustPathfinder elements
    Trace elements that are typically associated with gold
      deposits. Common pathfinder elements are mercury, arsenic and antimony.Penn-Permian
    Geologic Periods referring to rocks ranging from 245 to
      320 million years old.Permo-Triassic
    Geologic Periods referring to rocks ranging from 208 to
      286 million years old.Reverse-circulation drilling
    A drilling method that minimizes contamination of drill
          cuttings.Roberts Mountains Thrust
    A major, flat-lying fault that has transposed older rocks
      over younger rocks.Rock-chip sampling
    The process of chipping off rock samples from outcrops
      for chemical analysis.Schist
    A metamorphic rock that is highly foliated and readily
      splits into flakes or slabs commonly due to a high content of mica.Skarn deposit
    Mineralization formed at the flanks and in contact with
      intrusive rocks.Stratigraphy
    The sequence of stratified rocks.Subcrop
    Bedrock just below the surface and usually contributing
      weathered rock material to the surficial debris.


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Term
    DefinitionTertiary
    Geologic Period referring to rocks ranging in age from
      1.6 to 66.4 million years old.Thrust sheet
    A block of rock underlain by a flat-lying fault that
      originated from compressional forces.Triassic
    Geologic Period referring to rocks 208 to 245 million
      years oldTuff
    Volcanic ash that has been solidified into rock.


|ITEM 3. | LEGAL PROCEEDINGS.
|------- | ------------------

We currently are not a party to any material legal proceedings
and to our knowledge, no such proceedings are threatened or contemplated.

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

We did not submit any matters to our security holders to be
voted upon during our fiscal year ended December 31, 2006.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS.
|------- | ---------------------------------------------------------------

MARKET INFORMATION

Shares of our common stock are quoted on the OTC Bulletin Board
under the symbol LGCP. The following table indicates the high and low bid prices
of our common stock during the periods indicated:

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|QUARTER ENDED      | HIGH BID | LOW BID
|------------------ | -------- | -------
|December 31, 2006  | $0.12    | $0.07  
|September 30, 2006 | $0.16    | $0.11  
|June 30, 2006      | $0.31    | $0.13  
|March 31, 2006     | $0.35    | $0.14  
|December 31, 2005  | $0.27    | $0.15  
|September 30, 2005 | $0.54    | $0.23  
|June 30, 2005      | $0.90    | $0.44  
|December 31, 2004  | $0.51    | $0.31  
|October 30, 2004   | $0.90    | $0.42  
|June 30, 2004      | $0.90    | $0.28  
|March 31, 2004     | $0.28    | $0.21  

The source of the high and low bid information is the NASD OTC
Bulletin Board. The market quotations provided reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not represent actual
transactions.

HOLDERS OF COMMON SHARES

As at March 1, 2007, we had eighty-nine registered holders of
our common stock.

DIVIDENDS

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.

We have not declared any dividends and we do not plan to
declare any dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

We have reported sales of securities without registration under
the Securities Act of 1933 during our fiscal year ended December 31, 2006 on the
following Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K that
we have filed with the Securities and Exchange Commission.

Report
    Date of Filing with SECQuarterly Report on Form 10-QSB for the nine months
      ended September 30, 2006
    November 14, 2006


25 of 43

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In addition, we completed the following sales of securities
without registration pursuant to the Securities Act of 1933 (the Act) during
the fiscal year ended December 31, 2006 that were not reported on the Quarterly
Reports on Form 10-QSB and Current Reports on Form 8-K described above:

1. We have approved the issuance of 60,000 shares of our common
stock to Almaden Minerals that were to be issued August 2006 in accordance with
our obligations under the letter of intent entered into between us and Almaden
Minerals for the La Bufa property. The issuance of the shares was completed
pursuant to Rule 903 of Regulation S of the Act on the basis that the sale of
the shares was completed in an offshore transaction, as defined in Rule 902(h)
of Regulation S. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States in connection with the sale of the shares.
Almaden Minerals represented to us that it is not a U.S. person, as defined in
Regulation S, and was not acquiring the shares for the account or benefit of a
U.S. person. All certificates representing the shares issued were endorsed with
a restrictive legend confirming that the securities had been issued pursuant to
Regulation S of the Act and could not be resold without registration under the
Act or an applicable exemption from the registration requirements of the Act.

2. In February 2007, we issued 666,666 common shares to a
consultant pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the Act). The shares were issued as restricted securities, as defined under
the Act, that cannot be resold without registration under the Act or an
applicable exemption from the registration requirements of the Act. The
consultant had access to information regarding our business, operations and
financial condition by virtue of its position as a consultant, had opportunity
to discuss this information with our management and is a sophisticated investor
by virtue of its experience and background and is capable, by reason of such
experience and background, of evaluating the merits and risks of an investment
in our common shares. The consultant further represented to us that it is an
accredited investor as defined in Rule 501(a) of Regulation D and acquired the
securities for investment only and not with a view toward distribution. No
general solicitation or general advertising was conducted in connection with the
offering of the shares.

|ITEM 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION.
|------- | ----------------------------------------------------------------

PLAN OF OPERATIONS

Our plan of operations for the next twelve months is to
continue with the exploration of our Nevada and Mexican mineral properties. Our
planned geological exploration programs are described in detail in Item 2 of
this Annual Report on Form 10-KSB entitled Description of Properties.

Our planned exploration expenditures for the next twelve months
on our Nevada mineral properties and our Mexican La Bufa property, together with
amounts due to maintain our interest in these claims, are summarized as follows:

Name of Property
    Planned Exploration
      Expenditures
    Amounts of Claims Maintenance
      Due
    Amount of Property Payment
      Due
    TotalExploration of Hannah Property, Nevada
    $nil
    $6,000
    $15,000
    $21,000Exploration of JDS Property, Nevada (1)
    $5,000
    $Nil
    $Nil
    $5,000Exploration of Jenny Hill Property, Nevada (2)
    $5,000
    $Nil
    $Nil
    $5,000Exploration of La Bufa Property, Mexico
    $359,000
    $7,000
    $10,000
    $376,000


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Exploration of Prospective Properties, including
      the Pine Grove properties
    $309,000
    $20,000
    $20,000
    $349,000Administration  Nevada
    $165,000
    -
    -
    $165,000Administration - Vancouver
    $250,000
    -
    -
    $250,000Total
    1,093,000
    33,000
    45,000
    1,171,000


|(1) | Golden Odyssey has initiated drill permitting with the
      U.S. Bureau of Land Management and have located an available drill rig for
      a drill exploration program at the JDS. Drilling is planned for the first
      quarter of 2007. Golden Odyssey will be responsible for annual claim
      maintenance fees. We have allocated $5,000 for data evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Kinross anticipates undertaking exploration expenditures
      in the amount of $251,500 on the Jenny Hill property. Further, Kinross
      will be required to pay $12,983 to the BLM and local counties and $25,000
      to the property owner. These exploration expenditures are to be undertaken
      and paid for by Kinross pursuant to our letter of intent to our letter of
      intent to joint venture the property with Kinross. However, if Kinross
      determines to return the property to us prior to the time when the
      property payments and/ or maintenance payments are due, then we will be
      obligated to make the annual claim maintenance payments to the BLM and
      local counties and the property payments required to maintain the property
      in good standing. We have allocated $5,000 for data
  evaluation.

The general and administrative expenses for the year will
consist primarily of professional fees for the audit and legal work relating to
our regulatory filings throughout the year, as well as transfer agent fees,
management fees, investor relations and general office expenses.

We had cash in the amount of $21,961 and a working capital
deficit in the amount of $130,363 as of December 31, 2006. Based on our planned
expenditures, we will require a minimum of approximately $1,301,362 to proceed
with our plan of operations over the next twelve months. We anticipate that we
will require additional financing in order to pursue our exploration programs
beyond the preliminary exploration programs for our mineral properties that are
outlined above. If we achieve less than the full amount of financing that we
require, we will scale back our exploration programs on our mineral properties
and will proceed with scaled back exploration plans based on our available
financial resources.

During the next twelve month period, we anticipate that we will
not generate any revenue. Accordingly, we will be required to obtain additional
financing in order to continue our plan of operations. We believe that debt
financing will not be an alternative for funding additional phases of
exploration as we do not have tangible assets to secure any debt financing. We
anticipate that additional funding will be in the form of equity financing from
the sale of our common stock. However, we do not have any financing arranged and
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 our exploration
programs. In the absence of such financing, we will not be able to continue
exploration of our mineral claims. Even if we are successful in obtaining equity
financing to fund our exploration programs, there is no assurance that we will
obtain the funding necessary to pursue any advanced exploration of our mineral
claims following the completion of preliminary exploration. If we do not
continue to obtain additional financing, we will be forced to abandon our
properties and our plan of operations.

We may consider entering into a joint venture arrangement to
provide the required funding to pursue drilling and advanced exploration of our
mineral claims. Even if we determined to pursue a joint venture partner, there
is no assurance that any third party would enter into a joint venture agreement
with us in order to fund exploration of our mineral claims. If we entered into a
joint venture arrangement, we would likely have to assign a percentage of our
interest in our mineral claims to the joint venture partner.

27 of 43

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Our exploration plans will be continually evaluated and
modified as exploration results become available. Modifications to our plans
will be based on many factors, including: results of exploration, assessment of
data, weather conditions, exploration costs, the price of gold and available
capital. Further, the extent of our exploration programs that we undertake will
be dependent upon the amount of financing available to us.

BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

We were incorporated as Braden Technologies Inc. Effective
March 26, 2004, we acquired 100% of the issued and outstanding shares of Lincoln
Gold Corp. by issuing 24,000,000 shares of our common stock. We subsequently
merged with Lincoln Gold Corp. and changed our name to Lincoln Gold Corporation.
Since the acquisition transaction resulted in the former shareholders of Lincoln
Gold Corp. owning the majority of our issued and outstanding shares, the
transaction, which is referred to as a reverse take-over, has been treated for
accounting purposes as an acquisition by Lincoln Gold Corp. of the net assets
and liabilities of Braden Technologies Inc. Under this purchase method of
accounting, the results of operations of Braden Technologies Inc. are included
in these consolidated financial statements from March 26, 2004. Our date of
inception is the date of inception of Lincoln Gold Corp., being September 25,
2003 and our financial statements are presented with reference to the date of
inception of Lincoln Gold Corp.

RESULTS OF OPERATIONS

Our results of operations for the year ended December 31, 2006
are as follows:

|                                             |  | Accumulated     |   |  |              |   |  |              |  
|-------------------------------------------- |  | --------------- | - |  | ------------ | - |  | ------------ | -
|                                             |  | From            |   |  |              |   |  |              |  
|                                             |  | September 25,   |   |  |              |   |  |              |  
|                                             |  | 2003            |   |  |              |   |  |              |  
|                                             |  | (Date of        |   |  | Year         |   |  | Year         |  
|                                             |  | Inception)      |   |  | Ended        |   |  | Ended        |  
|                                             |  | to December 31, |   |  | December 31, |   |  | December 31, |  
|                                             |  | 2006            |   |  | 2006         |   |  | 2005         |  
|                                             |  | $               |   |  | $            |   |  | $            |  
|Revenue                                      |  | -               |   |  | -            |   |  | -            |  
|Expenses                                     |  |                 |   |  |              |   |  |              |  
|Depreciation                                 |  | 4,866           |   |  | 2,888        |   |  | 1,978        |  
|Foreign exchange loss                        |  | 5,833           |   |  | 2,043        |   |  | 2,115        |  
|General and
      administrative (Note 5(a)) |  | 2,437,402       |   |  | 294,656      |   |  | 730,433      |  
|Impairment of mineral properties             |  |                 |   |  |              |   |  |              |  
|(Note 2(h))                                  |  | 65,000          |   |  | 10,000       |   |  | 55,000       |  
|Mineral exploration                          |  | 899,504         |   |  | 95,852       |   |  | 529,017      |  
|Total Expenses                               |  | 3,412,605       |   |  | 405,439      |   |  | 1,318,543    |  
|Loss From
      Operations                   |  | (3,412,605      | ) |  | (405,439     | ) |  | (1,318,543   | )
|Other Income (Expense)                       |  |                 |   |  |              |   |  |              |  
|Accounts payable written off                 |  | 33,564          |   |  | -            |   |  | 33,564       |  
|Interest income                              |  | 11,005          |   |  | 2,591        |   |  | 8,414        |  
|Interest expense                             |  | (47,721         | ) |  | (10,693      | ) |  | (17,981      | )
|                                             |  | (3,152          | ) |  | (8,102       | ) |  | 23,997       |  
|Net Loss                                     |  | (3,415,757      | ) |  | (413,541     | ) |  | (1,294,546   | )
|Net Loss Per Share  Basic and Diluted       |  |                 |   |  | (0.01        | ) |  | (0.03        | )
|Weighted Average
      Shares Outstanding    |  |                 |   |  | 42,366,000   |   |  | 41,079,000   |  

28 of 43

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Both our net loss and exploration expenditures decreased
substantially for fiscal 2006 compared to fiscal 2005. These decreases are
attributable largely to our decreased exploration activities during fiscal 2006,
as described in detail in Item 2 of this Annual Report on Form 10-KSB entitled
Description of Properties. We anticipate that our expenses and net loss will
increase throughout the current fiscal year in comparison with 2006 as a result
of our planned exploration activities and as a result of payments required to
maintain our interests in our mineral properties. In addition, we anticipate
continued increased professional fees as we comply with our obligations as a
reporting company under the Securities Exchange Act of 1934. We anticipate that
we will not earn any revenues during the current fiscal year or in the
foreseeable future as we are presently engaged in the exploration of our mineral
properties.

LIQUIDITY AND CAPITAL RESOURCES

Our cash position at December 31, 2006 was $21,961 compared to
$132,806 as of December 31, 2005. We had working capital deficit of $130,363 as
of December 31, 2006 compared to working capital of $3,457 as of December 31,
2005.

Plan of Operations

We estimate that our total expenditures over the next twelve
months will be approximately $1,171,000 as outlined above under the heading
Plan of Operations. Based on our planned expenditures and our working capital
deficit, we will require a minimum of approximately $1,301,362to proceed
with our plan of operations over the next twelve months. In addition, we
anticipate that we will require additional financing in order to pursue our
exploration programs beyond the preliminary exploration programs for our mineral
properties that are outlined above.

If we are unable to achieve the necessary additional financing,
then we plan to reduce the amounts that we spend on our exploration activities
and administrative expenses in order to be within the amount of capital
resources that are available to us. Specifically, we anticipate that we would
defer drilling programs pending our obtaining additional financing.

Registered Offering

We completed the offering of 1,075,000 units (each a Unit) at
a price of $0.20 per Unit for total proceeds of $215,000 on July 27, 2006. We
completed this offering pursuant to our Form SB-2 registration statement filed
with the Securities and Exchange Commission pursuant to the United States
Securities Act of 1933 (the Act). Each Unit comprised of one share of common
stock (each a Share and together, the Shares), one-half of one Series A
Warrant and one whole series B Warrant. Each whole Class A Warrant will be
exercisable to acquire one share of common stock (each a Class A Warrant Share
and together, the Class A Warrant Shares) at $0.35 per share and will expire
on the date that is one year from the date of issuance. Each whole Class B
Warrant will be exercisable to acquire one share of common stock (each a Class
B Warrant Share and together, the Class B Warrant Shares) at $1.35 per share
and will expire on the date that is four years from the date of issuance. Each
of the Class A Warrants and the Class B Warrants are subject to accelerated
exercise provisions. We have applied the proceeds from this financing for
general corporate purposes.

Outstanding Convertible Note

We arranged for a $200,000 convertible note during the fiscal
year ended December 31, 2004. This convertible note was convertible into shares
of our common stock at a price of $0.04 per share. If the convertible note was
converted, we would be obligated to issue an additional 5,000,000 shares of our
common stock. The note accrues interest at the rate of 10% per annum. The
principal is repayable on January 28, 2006 and interest is payable annually. We
issued 5,000,000 warrants which were exercisable at $0.04 per share of common
stock expiring on January 28, 2006.

On September 15, 2005 we completed an agreement whereby we
repaid $100,000 of the convertible note along with $35,000 accrued interest and
agreed to repay the remaining $100,000 within sixty days. With the completion of
the first payment the convertible note was deemed to be repaid in full and the
conversion feature and warrants issued were cancelled. The remaining $100,000
owed will be repaid when the next funding of the Company is completed.

Going Concern

29 of 43

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We have not attained profitable operations and are dependent
upon obtaining financing to pursue any extensive exploration activities. For
these reasons our auditors stated in their report that they have substantial
doubt we will be able to continue as a going concern.

Future Financings

We will require additional financing in order to proceed with
the exploration of our mineral properties. We plan to complete private placement
sales of our common stock in order to raise the funds necessary to pursue our
plan of operations and to fund our working capital deficit. Issuances of
additional shares will result in dilution to our existing shareholders. We
currently do not have any arrangements in place for the completion of any
private placement financings and there is no assurance that we will be
successful in completing any private placement financings.

Off-Balance Sheet Arrangements

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

CRITICAL ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in
conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. We regularly evaluates estimates and
assumptions related to the useful life and recoverability of long-lived assets,
stock-based compensation and deferred income tax asset valuation allowances. We
base our estimates and assumptions on current facts, historical experience and
various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by us
may differ materially and adversely from our estimates. To the extent there are
material differences between the estimates and the actual results, future
results of operations will be affected.

Mineral Property Costs

We have been in the exploration stage since its formation on
September 25, 2003 and has not yet realized any revenues from its planned
operations. We are primarily engaged in the acquisition and exploration of
mining properties. Mineral property exploration costs are expensed as incurred.
Mineral property acquisition costs are initially capitalized when incurred using
the guidance in EITF 04-02, Whether Mineral Rights Are Tangible or Intangible
Assets. We assess the carrying costs for impairment under SFAS No. 144,
Accounting for Impairment or Disposal of Long Lived Assets at each fiscal
quarter end. When we have been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated life
of the probable reserve. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations. During the fiscal
year ended December 31, 2006, mineral property costs totalling $10,000 were
impaired as there are no proven or probable reserves on these properties.

Stock Based Compensation

Prior to January 1, 2006, we accounted for stock-based awards
under the recognition and measurement provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees using the intrinsic
value method of accounting, under which compensation expense was only recognized
if the exercise price of our employee stock options was less than the market
price of the underlying common stock on the date of grant. Effective January 1,
2006, we adopted the fair value recognition provisions of SFAS No. 123R Share
Based Payments, using the modified prospective transition method. Under that
transition method, compensation cost is

30 of 43

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recognized for all share-based payments granted prior to, but
not yet vested as of January 1, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123, and
compensation cost for all share-based payments granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123R. Results for prior periods have not been restated. There
was no effect on our reported loss from operations, cash flows of loss per share
as a result of adopting SFAS No. 123R.

All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. Equity
instruments issued to employees and the cost of the services received as
consideration are measured and recognized based on the fair value of the equity
instruments issued.

|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

Our audited consolidated financial statements, as set forth
below, are included with this Annual Report on Form 10-KSB:

|                                                                                                                                                                             | PAGE
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                             |     
|Report
      of Independent Registered Accounting Firm                                                                                                                       | F-1 
|                                                                                                                                                                             |     
|Consolidated
      Balance Sheets, December 31, 2006 and 2005                                                                                                                | F-2 
|                                                                                                                                                                             |     
|Consolidated
      Statements of Operations for the years ended December 31, 2006 and 2005
      and for the period from inception (September 25, 2003) to December 31, 2006 | F-3 
|                                                                                                                                                                             |     
|Consolidated
      Statements of Cash Flows for the years ended December 31, 2006 and 2005
      and for the period from inception (September 25, 2003) to December 31, 2006 | F-4 
|                                                                                                                                                                             |     
|Consolidated
      Statements of Stockholders Equity for the period from inception (September
      25, 2003) to December 31, 2006                                          | F-5 
|                                                                                                                                                                             |     
|Notes to the Consolidated Financial Statements                                                                                                                               | F-6 

31 of 43

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Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders 
  Lincoln Gold Corporation 
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets
  of Lincoln Gold Corporation as of December 31, 2006 and 2005, and the related
  consolidated statements of operations, cash flows and stockholders' equity (deficit)
  for the years then ended and accumulated from September 25, 2003 (Date of Inception)
  to December 31, 2006. These financial statements are the responsibility of the
  Company's management. Our responsibility is to express an opinion on these financial
  statements based on our audits.

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

In our opinion, the financial statements referred to above present
  fairly, in all material respects, the financial position of Lincoln Gold Corporation
  as of December 31, 2006 and 2005, and the results of its operations and its
  cash flows for the years then ended and accumulated from September 25, 2003
  (Date of Inception) to December 31, 2006 in conformity with accounting principles
  generally accepted in the United States.

The accompanying financial statements have been prepared assuming
  the Company will continue as a going concern. As discussed in Note 1 to the
  financial statements, the Company has not generated any revenue, has a working
  capital deficiency, and has incurred significant operating losses since inception.
  These factors raise substantial doubt about the Companys ability to continue
  as a going concern. Managements plans in regard to these matters are also
  discussed in Note 1. The financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.



CHARTERED ACCOUNTANTS

Vancouver, Canada

March 22, 2007

F-1

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Consolidated Balance Sheets 
  (Expressed in U.S. dollars)

|                                                                            |  | December 31, |   |  | December 31, |  
|--------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
|                                                                            |  | 2006         |   |  | 2005         |  
|                                                                            |  | $            |   |  | $            |  
|                                                                            |  |              |   |  |              |  
|ASSETS                                                                      |  |              |   |  |              |  
|Current Assets                                                              |  |              |   |  |              |  
|Cash                                                                        |  | 21,961       |   |  | 132,806      |  
|Prepaid
      expenses and deposits                                         |  | 4,893        |   |  | 11,302       |  
|Total Current Assets                                                        |  | 26,854       |   |  | 144,108      |  
|Property and Equipment
      (Note 3)                                       |  | 4,440        |   |  | 7,328        |  
|Total Assets                                                                |  | 31,294       |   |  | 151,436      |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                              |  |              |   |  |              |  
|Current Liabilities                                                         |  |              |   |  |              |  
|Accounts payable                                                            |  | 35,467       |   |  | 20,474       |  
|Accrued liabilities                                                         |  | 14,990       |   |  | 12,097       |  
|Due to related parties (Note 5(b))                                          |  | 6,760        |   |  | 8,080        |  
|Note payable (Note 6)                                                       |  | 100,000      |   |  | 100,000      |  
|Total Liabilities                                                           |  | 157,217      |   |  | 140,651      |  
|Commitments and Contingencies (Note 1 and 4)                                |  |              |   |  |              |  
|Stockholders Equity (Deficit)                                              |  |              |   |  |              |  
|Common Stock, 100,000,000 shares authorized,
      $0.001 par value;        |  |              |   |  |              |  
|42,990,000 and 41,865,000 shares issued and outstanding,
      respectively |  | 42,990       |   |  | 41,865       |  
|Additional Paid-in Capital                                                  |  | 3,294,863    |   |  | 3,092,488    |  
|Common Stock Subscribed (Note 7(a))                                         |  | 73,333       |   |  | -            |  
|Deficit Accumulated During the Exploration Stage                            |  | (3,537,109   | ) |  | (3,123,568   | )
|Total Stockholders
      Equity (Deficit)                                  |  | (125,923     | ) |  | 10,785       |  
|Total Liabilities and Stockholders Equity (Deficit)                        |  | 31,294       |   |  | 151,436      |  

F-2

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

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Consolidated Statements of Operations 
  (Expressed in U.S. dollars)

|                                                   |  | Accumulated         |   |  |              |   |  |              |  
|-------------------------------------------------- |  | ------------------- | - |  | ------------ | - |  | ------------ | -
|                                                   |  | From                |   |  |              |   |  |              |  
|                                                   |  | September 25,       |   |  |              |   |  |              |  
|                                                   |  | 2003                |   |  | Year         |   |  | Year         |  
|                                                   |  | (Date of Inception) |   |  | Ended        |   |  | Ended        |  
|                                                   |  | to December 31,     |   |  | December 31, |   |  | December 31, |  
|                                                   |  | 2006                |   |  | 2006         |   |  | 2005         |  
|                                                   |  | $                   |   |  | $            |   |  | $            |  
|Revenue                                            |  | -                   |   |  | -            |   |  | -            |  
|Expenses                                           |  |                     |   |  |              |   |  |              |  
|Depreciation                                       |  | 4,866               |   |  | 2,888        |   |  | 1,978        |  
|Foreign exchange loss                              |  | 5,833               |   |  | 2,043        |   |  | 2,115        |  
|General and administrative
      (Note 5(a))       |  | 2,437,402           |   |  | 294,656      |   |  | 730,433      |  
|Impairment of mineral properties (Note
      2(h)) |  | 65,000              |   |  | 10,000       |   |  | 55,000       |  
|Mineral exploration                                |  | 899,504             |   |  | 95,852       |   |  | 529,017      |  
|Total Expenses                                     |  | 3,412,605           |   |  | 405,439      |   |  | 1,318,543    |  
|Loss From Operations                               |  | (3,412,605          | ) |  | (405,439     | ) |  | (1,318,543   | )
|Other Income (Expense)                             |  |                     |   |  |              |   |  |              |  
|Accounts payable written
      off                 |  | 33,564              |   |  | -            |   |  | 33,564       |  
|Interest income                                    |  | 11,005              |   |  | 2,591        |   |  | 8,414        |  
|Interest expense                                   |  | (47,721             | ) |  | (10,693      | ) |  | (17,981      | )
|                                                   |  | (3,152              | ) |  | (8,102       | ) |  | 23,997       |  
|Net Loss                                           |  | (3,415,757          | ) |  | (413,541     | ) |  | (1,294,546   | )
|Net Loss Per Share
       Basic and Diluted       |  |                     |   |  | (0.01        | ) |  | (0.03        | )
|Weighted Average Shares Outstanding                |  |                     |   |  | 42,366,000   |   |  | 41,079,000   |  

F-3

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

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Consolidated Statements of Cash Flows 
  (Expressed in U.S. dollars)

|                                                         |  | Accumulated         |   |  |              |   |  |              |  
|-------------------------------------------------------- |  | ------------------- | - |  | ------------ | - |  | ------------ | -
|                                                         |  | From                |   |  |              |   |  |              |  
|                                                         |  | September 25, 2003  |   |  | Year         |   |  | Year         |  
|                                                         |  | (Date of Inception) |   |  | Ended        |   |  | Ended        |  
|                                                         |  | to December 31,     |   |  | December 31, |   |  | December 31, |  
|                                                         |  | 2006                |   |  | 2006         |   |  | 2005         |  
|                                                         |  | $                   |   |  | $            |   |  | $            |  
|Operating Activities                                     |  |                     |   |  |              |   |  |              |  
|Net loss                                                 |  | (3,415,757          | ) |  | (413,541     | ) |  | (1,294,546   | )
|Adjustments to reconcile net loss
      to net cash used |  |                     |   |  |              |   |  |              |  
|in operating activities:                                 |  |                     |   |  |              |   |  |              |  
|Accounts
      payable written off                       |  | (33,564             | ) |  | -            |   |  | (33,564      | )
|Depreciation                                             |  | 4,866               |   |  | 2,888        |   |  | 1,978        |  
|Impairment
      of mineral properties                   |  | 65,000              |   |  | 10,000       |   |  | 55,000       |  
|Stock-based compensation                                 |  | 1,218,996           |   |  | 73,333       |   |  | 108,000      |  
|Changes in operating assets and
      liabilities:       |  |                     |   |  |              |   |  |              |  
|Prepaid expenses and deposits                            |  | (4,893              | ) |  | 6,409        |   |  | (11,302      | )
|Account payable
      and accrued liabilities            |  | (18,349             | ) |  | 17,886       |   |  | (47,130      | )
|Due to related parties                                   |  | 6,760               |   |  | (1,320       | ) |  | (219         | )
|Net Cash Used in Operating Activities                    |  | (2,176,941          | ) |  | (304,345     | ) |  | (1,221,783   | )
|Investing Activities                                     |  |                     |   |  |              |   |  |              |  
|Cash acquired on acquisition
      of subsidiary         |  | 68                  |   |  | -            |   |  | -            |  
|Mineral property acquisition costs                       |  | (55,000             | ) |  | -            |   |  | (55,000      | )
|Purchase of property and equipment                       |  | (9,306              | ) |  | -            |   |  | (9,306       | )
|Net Cash Flows Used
      in Investing Activities        |  | (64,238             | ) |  | -            |   |  | (64,306      | )
|Financing Activities                                     |  |                     |   |  |              |   |  |              |  
|Advances from related parties                            |  | 4,180               |   |  | -            |   |  | -            |  
|Repayment of advances from
      related parties         |  | (4,180              | ) |  | -            |   |  | (4,180       | )
|Proceeds from loan payable                               |  | 46,000              |   |  | -            |   |  | -            |  
|Repayment of loan payable                                |  | (46,000             | ) |  | -            |   |  | (46,000      | )
|Issuance of note payable                                 |  | 100,000             |   |  | -            |   |  | (100,000     | )
|Proceeds from issuance
      of common stock             |  | 2,226,850           |   |  | 215,000      |   |  | 1,483,500    |  
|Share
      issuance costs                               |  | (63,710             | ) |  | (21,500      | ) |  | (42,210      | )
|Net Cash Flows Provided by Financing Activities          |  | 2,263,140           |   |  | 193,500      |   |  | 1,291,110    |  
|Increase (Decrease) in Cash                              |  | 21,961              |   |  | (110,845     | ) |  | 5,021        |  
|Cash  Beginning of Period                               |  | -                   |   |  | 132,806      |   |  | 127,785      |  
|Cash  End of
      Period                               |  | 21,961              |   |  | 21,961       |   |  | 132,806      |  
|                                                         |  |                     |   |  |              |   |  |              |  
|Non-cash Investing and Financing Activities              |  |                     |   |  |              |   |  |              |  
|Shares issued for mineral property costs                 |  | 10,000              |   |  | 10,000       |   |  | -            |  
|                                                         |  |                     |   |  |              |   |  |              |  
|Supplemental Disclosures                                 |  |                     |   |  |              |   |  |              |  
|Interest paid                                            |  | 35,000              |   |  | -            |   |  | 35,000       |  
|Income tax paid                                          |  | -                   |   |  | -            |   |  | -            |  

F-4

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

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Consolidated Statements of Stockholders Equity (Deficit) 
  For the period from September 25, 2003 (Date of Inception) to December 31, 2006
  (Expressed in U.S. dollars)

|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  | Deficit     |   |  |            |  
|------------------------------------------ |  | ------------ | - |  | ------ | - |  | ------------- | - |  | --------- | - |  | ---------- |  |  | ----------- | - |  | ---------- | -
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  | Accumulated |   |  |            |  
|                                           |  | Common Stock |   |  | Stock  |   |  | Additional    |   |  | Common    |   |  | During the |  |  |             |  
|                                           |  |              |   |  |        |   |  | Subscriptions |   |  | Paid-in   |   |  | Stock      |  |  | Exploration |   |  |            |  
|                                           |  | Number of    |   |  | Amount |   |  | Receivable    |   |  | Capital   |   |  | Subscribed |  |  | Stage       |   |  | Total      |  
|                                           |  | Shares       |   |  | $      |   |  | $             |   |  | $         |   |  | $          |  |  | $           |   |  | $          |  
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Balance  September 25, 2003 (Date of      |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Inception)                                 |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | -           |   |  | -          |  
|Shares issued for cash at $0.001 per       |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 850,000      |   |  | 850    |   |  | -             |   |  | -         |   |  | -          |  |  | -           |   |  | 850        |  
|Shares issued for cash at $0.01 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 1,550,000    |   |  | 1,550  |   |  | -             |   |  | 13,950    |   |  | -          |  |  | -           |   |  | 15,500     |  
|Net loss for the
      period              |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | (16,319     | ) |  | (16,319    | )
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Balance, December 31, 2003                 |  | 2,400,000    |   |  | 2,400  |   |  | -             |   |  | 13,950    |   |  | -          |  |  | (16,319     | ) |  | 31         |  
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Adjustment to number of shares issued      |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|and outstanding as a result of
      the   |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|acquisition of Lincoln Gold Corp.:         |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Remove shares of
      Lincoln Gold        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Corp.                                      |  | (2,400,000   | ) |  | (2,400 | ) |  | -             |   |  | 2,400     |   |  | -          |  |  | -           |   |  | -          |  
|Add shares of Lincoln
      Gold           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Corporation (formerly
      Braden         |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Technologies
      Inc.)                   |  | 11,400,000   |   |  | 11,400 |   |  | -             |   |  | (11,400   | ) |  | -          |  |  | -           |   |  | -          |  
|Fair value of shares issued in             |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|connection
      with the acquisition of   |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Lincoln Gold Corp.                         |  | 24,000,000   |   |  | 24,000 |   |  | -             |   |  | (4,950    | ) |  | -          |  |  | (19,050     | ) |  | -          |  
|Net asset deficiency
      of legal parent |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|at date of reverse
      take-over         |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|transaction                                |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | (102,302    | ) |  | (102,302   | )
|Shares issued for cash at $0.50 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 700,000      |   |  | 700    |   |  | -             |   |  | 349,300   |   |  | -          |  |  | -           |   |  | 350,000    |  
|Shares issued for cash at $0.30 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 2,300,000    |   |  | 2,300  |   |  | (528,000      | ) |  | 687,700   |   |  | -          |  |  | -           |   |  | 162,000    |  
|Stock-based compensation                   |  | -            |   |  | -      |   |  | -             |   |  | 1,037,663 |   |  | -          |  |  | -           |   |  | 1,037,663  |  
|Net loss for the year                      |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | (1,691,351  | ) |  | (1,691,351 | )
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Balance, December 31, 2004                 |  | 38,400,000   |   |  | 38,400 |   |  | (528,000      | ) |  | 2,074,663 |   |  | -          |  |  | (1,829,022  | ) |  | (243,959   | )
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Proceeds from stock subscriptions          |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|receivable                                 |  | -            |   |  | -      |   |  | 528,000       |   |  | -         |   |  | -          |  |  | -           |   |  | 528,000    |  
|Shares issued for cash at $0.30 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 3,145,000    |   |  | 3,145  |   |  | -             |   |  | 940,355   |   |  | -          |  |  | -           |   |  | 943,500    |  
|Share issuance costs                       |  | -            |   |  | -      |   |  | -             |   |  | (42,210   | ) |  | -          |  |  | -           |   |  | (42,210    | )
|Shares issued for cash at $0.60 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share pursuant to the exercise
      of    |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|stock options                              |  | 20,000       |   |  | 20     |   |  | -             |   |  | 11,980    |   |  | -          |  |  | -           |   |  | 12,000     |  
|Shares issued for services at $0.36 per    |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 300,000      |   |  | 300    |   |  | -             |   |  | 107,700   |   |  | -          |  |  | -           |   |  | 108,000    |  
|Net loss for the year                      |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | (1,294,546  | ) |  | (1,294,546 | )
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Balance, December 31, 2005                 |  | 41,865,000   |   |  | 41,865 |   |  | -             |   |  | 3,092,488 |   |  | -          |  |  | (3,123,568  | ) |  | 10,785     |  
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Shares issued for mineral property at      |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|$0.20 per share                            |  | 50,000       |   |  | 50     |   |  | -             |   |  | 9,950     |   |  | -          |  |  | -           |   |  | 10,000     |  
|Shares issued for cash at $0.20 per        |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|share                                      |  | 1,075,000    |   |  | 1,075  |   |  | -             |   |  | 213,925   |   |  | -          |  |  | -           |   |  | 215,000    |  
|Share issuance costs                       |  | -            |   |  | -      |   |  | -             |   |  | (21,500   | ) |  | -          |  |  | -           |   |  | (21,500    | )
|Shares to be issued                        |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | 73,333     |  |  | -           |   |  | 73,333     |  
|Net loss for the year                      |  | -            |   |  | -      |   |  | -             |   |  | -         |   |  | -          |  |  | (413,541    | ) |  | (413,541   | )
|                                           |  |              |   |  |        |   |  |               |   |  |           |   |  |            |  |  |             |   |  |            |  
|Balance, December 31, 2006                 |  | 42,990,000   |   |  | 42,990 |   |  | -             |   |  | 3,294,863 |   |  | 73,333     |  |  | (3,537,109  | ) |  | (125,923   | )

F-5

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

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Lincoln Gold Corporation (the Company)
        was incorporated in the State of Nevada, USA, on February 17, 1999 under
        the name of Braden Technologies Inc. Effective March 26, 2004, the Company
        acquired 100% of the issued and outstanding shares of Lincoln Gold Corp.,
        a private company incorporated in the State of Nevada, USA, on September
        25, 2003. On April 6, 2004, the Company and its subsidiary, Lincoln Gold
        Corp., merged to form Lincoln Gold Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company is an Exploration Stage Company,
        as defined by Statement of Financial Accounting Standard (SFAS)
        No. 7 Accounting and Reporting by Development Stage Enterprises.
        The Companys principal business is the acquisition and exploration
        of mineral resources. The Company has not presently determined whether
        its properties contain mineral reserves that are economically recoverable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | These consolidated financial statements
        have been prepared on a going concern basis, which implies the Company
        will continue to realize its assets and discharge its liabilities in the
        normal course of business. The Company has never generated revenues since
        inception and has never paid any dividends and is unlikely to pay dividends
        or generate earnings in the immediate or foreseeable future. The continuation
        of the Company as a going concern is dependent upon the continued financial
        support from its shareholders, the ability of the Company to obtain necessary
        equity financing to continue operations and to determine the existence,
        discovery and successful exploitation of economically recoverable reserves
        in its resource properties, confirmation of the Companys interests
        in the underlying properties, and the attainment of profitable operations.
        As at December 31, 2006, the Company has never generated any revenues,
        has accumulated losses of $3,415,756 since inception of the development
        stage, and has a working capital deficiency of $130,363. These factors
        raise substantial doubt regarding the Companys ability to continue
        as a going concern. These financial statements do not include any adjustments
        to the recoverability and classification of recorded asset amounts and
        classification of liabilities that might be necessary should the Company
        be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Management plans to complete private
        placement sales of the Companys shares in order to raise the funds
        necessary to pursue its plan of operation and fund working capital. The
        Company filed an amended SB-2 Registration Statement with the U.S. Securities
        and Exchange Commission, which was declared effective on July 14, 2006,
        to register and offer up to 2,857,143 units at a price of $0.20 per unit.
        Each unit consisted of one share of common stock, one-half Class A Warrant
        and one Class B Warrant. The first tranche of this offering closed on
        July 27, 2006 and consisted of 1,075,000 units at $0.20 per unit for net
        proceeds of $193,500 after stock issuance costs of $21,500.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-6

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | c) | Basic and Diluted Net Income (Loss) Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company computes net income (loss) per share in
        accordance with SFAS No. 128 Earnings per Share. SFAS No.
        128 requires presentation of both basic and diluted earnings per share
        (EPS) on the face of the consolidated statement of operations. Basic EPS
        is computed by dividing net income (loss) available to common shareholders
        (numerator) by the weighted average number of shares outstanding (denominator)
        during the period. Diluted EPS gives effect to all dilutive potential
        common shares outstanding during the period using the treasury stock method
        and convertible preferred stock using the if-covered method. In computing
        diluted EPS, the average stock price for the period is used in determining
        the number of shares assumed to be purchased from the exercise of stock
        options or warrants. Diluted EPS and the weighted average number of common
        shares exclude all dilutive potential shares since their effect is anti
        dilutive. Shares underlying these securities totaled 7,147,500 as of December
        31, 2006.                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | d) | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | SFAS No. 130, Reporting Comprehensive Income,
        establishes standards for the reporting and display of comprehensive loss
        and its components in the consolidated financial statements. As at December
        31, 2006 and 2005 the Company has no items that represent a comprehensive
        loss and, therefore, has not included a schedule of comprehensive loss
        in the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | e) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company considers all highly liquid instruments
        with maturity of three months or less at the time of issuance to be cash
        equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | f) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | Property and equipment consists of office equipment
        and fixtures, computer software, and computer hardware and is recorded
        at cost. Depreciation is based on a straight line basis over the following
        periods: Office equipment and fixtures  five years; computer software
         two years; and computer hardware  three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | g) | Long-lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | In accordance with SFAS No. 144, Accounting for
        the Impairment or Disposal of Long-Lived Assets, the carrying value
        of intangible assets and other long-lived assets is reviewed on a regular
        basis for the existence of facts or circumstances that may suggest impairment.
        The Company recognizes impairment when the sum of the expected undiscounted
        future cash flows is less than the carrying amount of the asset. Impairment
        losses, if any, are measured as the excess of the carrying amount of the
        asset over its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | h) | Mineral Property Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company has been in the exploration stage since
        its formation on September 25, 2003 and has not yet realized any revenues
        from its planned operations. It is primarily engaged in the acquisition
        and exploration of mining properties. Mineral property exploration costs
        are expensed as incurred. Mineral property acquisition costs are initially
        capitalized when incurred using the guidance in EITF 04-02, Whether
        Mineral Rights Are Tangible or Intangible Assets. The Company assesses
        the carrying costs for impairment under SFAS No. 144, Accounting
        for Impairment or Disposal of Long Lived Assets at each fiscal quarter
        end. When it has been determined that a mineral property can be economically
        developed as a result of establishing proven and probable reserves, the
        costs then incurred to develop such property, are capitalized. Such costs
        will be amortized using the units-of-production method over the estimated
        life of the probable reserve. If mineral properties are subsequently abandoned
        or impaired, any capitalized costs will be charged to operations. During
        the fiscal year ended December 31, 2006, mineral property costs totaling
        $10,000 were impaired as there are no proven or probable reserves on these
        properties.

F-7

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | i) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The fair values of cash, accounts payable, accrued liabilities,
        due to related parties and note payable approximate their carrying values
        due to the immediate or short-term maturity of these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | j) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Potential benefits of income tax losses are not recognized
        in the accounts until realization is more likely that not. The Company
        has adopted SFAS No. 109 Accounting for Income Taxes as of
        its inception. Pursuant to SFAS No. 109 the Company is required to compute
        tax asset benefits for net operating losses carried forward. The potential
        benefits of net operating losses have not been recognized in these consolidated
        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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | k) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The Companys functional and reporting currency
        is the United States dollar. Foreign currency transactions are primarily
        undertaken in Canadian dollars and are translated into United States dollars
        using exchange rates at the date of the transaction. Monetary assets and
        liabilities denominated in foreign currencies are remeasured at each consolidated
        balance sheet date at the exchange rate prevailing at the balance sheet
        date. Foreign currency exchange gains and losses are charged to operations.
        The Company has not, to the date of these consolidated financial statements,
        entered into derivative instruments to offset the impact of foreign currency
        fluctuations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | l) | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Prior to January 1, 2006, the Company accounted for
        stock-based awards under the recognition and measurement provisions of
        Accounting Principles Board Opinion No. 25, Accounting for Stock
        Issued to Employees using the intrinsic value method of accounting,
        under which compensation expense was only recognized if the exercise price
        of the Companys employee stock options was less than the market
        price of the underlying common stock on the date of grant. Effective January
        1, 2006, the Company adopted the fair value recognition provisions of
        SFAS No. 123R Share Based Payments, using the modified prospective
        transition method. Under that transition method, compensation cost is
        recognized for all share-based payments granted prior to, but not yet
        vested as of January 1, 2006, based on the grant date fair value estimated
        in accordance with the original provisions of SFAS No. 123, and compensation
        cost for all share-based payments granted subsequent to January 1, 2006,
        based on the grant-date fair value estimated in accordance with the provisions
        of SFAS 123R. Results for prior periods have not been restated. There
        was no effect on the Companys reported loss from operations, cash
        flows of loss per share as a result of adopting SFAS No. 123R.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | All transactions in which goods or services are the
        consideration received for the issuance of equity instruments are accounted
        for based on the fair value of the consideration received or the fair
        value of the equity instrument issued, whichever is more reliably measurable.
        Equity instruments issued to employees and the cost of the services received
        as consideration are measured and recognized based on the fair value of
        the equity instruments issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | m) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | In February 2007, the Financial Accounting Standards
        Board (FASB) issued SFAS 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. Most of the provisions of SFAS No. 159 apply only to entities that
        elect the fair value option. However, the amendment to SFAS No. 115 Accounting
        for Certain Investments in Debt and Equity Securities applies to
        all entities with available-for-sale and trading securities. SFAS No.
        159 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 provision of SFAS
        No. 157, Fair Value Measurements. The adoption of this statement
        is not expected to have a material effect on the Company's financial statements.                                                                                                                                                                                                                                                  

F-8

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | m) | Recent Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In September 2006, the SEC issued Staff Accounting Bulletin
        (SAB) No. 108, Considering the Effects of Prior Year
        Misstatements when Quantifying Misstatements in Current Year Financial
        Statements. SAB No. 108 addresses how the effects of prior year
        uncorrected misstatements should be considered when quantifying misstatements
        in current year financial statements. SAB No. 108 requires companies to
        quantify misstatements using a balance sheet and income statement approach
        and to evaluate whether either approach results in quantifying an error
        that is material in light of relevant quantitative and qualitative factors.
        SAB No. 108 is effective for periods ending after November 15, 2006. The
        adoption of this statement did not have a material effect on the Company's
        reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In September 2006, the FASB issued SFAS No. 158, Employers
        Accounting for Defined Benefit Pension and Other Postretirement Plans
         an amendment of FASB Statements No. 87, 88, 106, and 132(R).
        This statement requires employers 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 requires 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. The provisions of SFAS No. 158 are effective for employers
        with publicly traded equity securities as of the end of the fiscal year
        ending after December 15, 2006. The adoption of this statement did not
        have a material effect on the Company's reported financial position or
        results of operations.                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In September 2006, the FASB issued SFAS No. 157, Fair
        Value Measurements. The objective of SFAS No. 157 is to increase
        consistency and comparability in fair value measurements and to expand
        disclosures about fair value measurements. SFAS No. 157 defines fair value,
        establishes a framework for measuring fair value in generally accepted
        accounting principles, and expands disclosures about fair value measurements.
        SFAS No. 157 applies under other accounting pronouncements that require
        or permit fair value measurements and does not require any new fair value
        measurements. The provisions of SFAS No. 157 are effective for fair value
        measurements made in fiscal years beginning after November 15, 2007. The
        adoption of this statement is not expected to have a material effect on
        the Company's future reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In June 2006, the FASB issued FASB Interpretation No.
        48, Accounting for Uncertainty in Income Taxes, an interpretation
        of FASB Statements No. 109 (FIN 48). FIN 48 clarifies
        the accounting for uncertainty in income taxes by prescribing a two-step
        method of first evaluating whether a tax position has met a more likely
        than not recognition threshold and second, measuring that tax position
        to determine the amount of benefit to be recognized in the consolidated
        financial statements. FIN 48 provides guidance on the presentation of
        such positions within a classified statement of financial position as
        well as on derecognition, interest and penalties, accounting in interim
        periods, disclosure, and transition. FIN 48 is effective for fiscal years
        beginning after December 15, 2006. The adoption of this statement is not
        expected to have a material effect on the Company's future reported financial
        position or results of operations.                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In March 2006, the FASB issued SFAS No. 156, "Accounting
        for Servicing of Financial Assets, an amendment of FASB Statement No.
        140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
        of Liabilities". This statement requires all separately recognized servicing
        assets and servicing liabilities be initially measured at fair value,
        if practicable, and permits for subsequent measurement using either fair
        value measurement with changes in fair value reflected in earnings or
        the amortization and impairment requirements of Statement No. 140. The
        subsequent measurement of separately recognized servicing assets and servicing
        liabilities at fair value eliminates the necessity for entities that manage
        the risks inherent in servicing assets and servicing liabilities with
        derivatives to qualify for hedge accounting treatment and eliminates the
        characterization of declines in fair value as impairments or direct write-downs.
        SFAS No. 156 is effective for an entity's first fiscal year beginning
        after September 15, 2006. The adoption of this statement is not expected
        to have a material effect on the Company's future reported financial position
        or results of operations.

F-9

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | m) | Recent Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | In February 2006, the FASB issued SFAS No. 155, "Accounting
        for Certain Hybrid Financial Instruments-an amendment of FASB Statements
        No. 133 and 140", to simplify and make more consistent the accounting
        for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting
        for Derivative Instruments and Hedging Activities", to permit fair value
        re-measurement for any hybrid financial instrument with an embedded derivative
        that otherwise would require bifurcation, provided that the whole instrument
        is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140,
        "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow
        a qualifying special-purpose entity to hold a derivative financial instrument
        that pertains to a beneficial interest other than another derivative financial
        instrument. SFAS No. 155 applies to all financial instruments acquired
        or issued after the beginning of an entity's first fiscal year that begins
        after September 15, 2006, with earlier application allowed. The adoption
        of this statement is not expected to have a material effect on the Company's
        future reported financial position or results of operations.

|3. | Property and Equipment
|-- | ----------------------

| |                               |  |       |  |  |              |  |  | December 31, |  |  | December 31, | 
| | ----------------------------- |  | ----- |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                               |  |       |  |  |              |  |  | 2006         |  |  | 2005         | 
| |                               |  |       |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                               |  | Cost  |  |  | Depreciation |  |  | Value        |  |  | Value        | 
| |                               |  | $     |  |  | $            |  |  | $            |  |  | $            | 
| | Computer hardware             |  | 4,676 |  |  | 2,461        |  |  | 2,215        |  |  | 3,774        | 
| | Computer software             |  | 1,345 |  |  | 1,289        |  |  | 56           |  |  | 729          | 
| | Office equipment and fixtures |  | 3,285 |  |  | 1,116        |  |  | 2,169        |  |  | 2,825        | 
| |                               |  | 9,306 |  |  | 4,866        |  |  | 4,440        |  |  | 7,328        | 

|4. | Mineral Property Interests
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   | b)                        
|   |                           
|   |                           

F-10

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|4. | Mineral Property Interests (continued)
|-- | --------------------------------------

| | c) | Buffalo Valley Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On July 9, 2004, the Company entered into
        a mining lease agreement with Nevada North Resources (U.S.A.) Inc. (Nevada
        North) for a term of twenty years. The agreement called for the
        Company to make advance minimum royalties to the Lessor over the term
        as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On July 26, 2005, the Company entered into
        an agreement whereby it granted the right to earn up to a 75% interest
        in the property to an Optionee. To earn a 60% interest, the Optionee had
        a work commitment (includes maintaining the underlying leases and claims
        in good standing) of $3,000,000 over a five-year period. Since exploration
        results were considered poor, the option agreement was terminated. On
        May 24, 2006, the Company terminated its lease agreement with Nevada North
        and returned the property to them.                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | d) | Jenny Hill Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On September 28, 2004, the Company entered
        into a mining lease and option to purchase agreement comprising ninety-seven
        mineral claims situated in Mineral and Nye Counties, Nevada for a term
        of seven years. The agreement calls for the Company to make option payments
        $1,500,000 over a seven year period as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The Company must also complete a work program
        on the property of $50,000, in the first lease year and $100,000 for the
        second and each subsequent lease year until the option is completed. The
        agreement is subject to a net smelter return of 2%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On December 9, 2005, the Company entered into
        a non-binding agreement whereby it offered the right to earn a 60% interest
        in the property to an Optionee. The Optionee can earn a 60% interest by
        spending $3,000,000 in exploration work on the property over a five-year
        period with a minimum expenditure of $200,000 to be spent during the first
        year. In addition, the Optionee can earn an additional 10% interest by
        completing a feasibility study on the project and an additional 5% interest
        (for a total of 75%) by arranging financing on behalf of the Company for
        its share of the construction costs as a result of both parties reaching
        a positive construction decision for a mine operation on the project.
        A formal agreement is to be signed by both parties within ninety days
        (extended).                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | e) | La Bufa Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On August 5, 2005, the Company entered into
        a Letter of Intent with Almaden Minerals Ltd. (Almaden) to
        form a joint venture for the exploration and development of the La Bufa
        property, located in Chihuahua, Mexico. Under the Letter of Intent, the
        Company may acquire a 51% interest in the La Bufa property by spending
        $2,000,000 on the property over four years and by issuing 350,000 shares
        of the Company to Almaden over a five year period (50,000 shares issued
        at a fair value of $10,000 on March 15, 2006). The Company is in the process
        of issuing 60,000 shares which were due and payable August 5, 2006. In
        addition, the Company may acquire another 9% of the property by spending
        an additional $1,000,000 on the property. If production is achieved, the
        Company will pay a bonus by issuing 100,000 of its shares. The Company
        is committed to spend $100,000 in the first year.

F-11

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|5. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6. | Note Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On January 28, 2004, the Company issued a
        $200,000 convertible note with 5,000,000 warrants to purchase common stock
        of the Company at $0.04 per share which expires on January 28, 2006. The
        note carries an interest rate of 10% compounded monthly and was due on
        January 28, 2006. The interest is payable annually with the second year
        interest payment due with the principal amount. The holder could convert
        any portion of the debt to common stock at the value of $0.04 per share
        until January 28, 2006. Warrants could be exercised in minimum amounts
        of 1,000 shares at a conversion price of $0.04 per share. In accordance
        with EITF 00-27 Application of Issue No. 98-5 to Certain Convertible
        Instruments and EITF 98-5 Accounting for Convertible Securities
        with Beneficial Conversion Features or Contingently Adjustable Conversion
        Ratios, there was determined to be minimal fair value related to
        the warrants issued and there was no beneficial conversion feature amount.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On September 15, 2005, the Company completed
        an agreement whereby the Company repaid $100,000 of the convertible note
        along with $35,000 accrued interest and agreed to repay the remaining
        $100,000 within sixty days (outstanding). With the completion of the first
        payment the conversion feature and warrants issued were cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|7. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-12

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|8. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In fiscal 2004, the Board of Directors approved the
        2004 Stock Option Plan for a maximum of 2,500,000 shares available to
        be granted to directors, officers, employees and consultants. The stock
        option exercise price is set at the fair market value of the shares at
        the date of grant. The term of the stock options, once granted, is not
        to exceed ten years. The vesting period of the stock options is set at
        the discretion of the Board of Directors.      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On February 23, 2005, the Board of Directors approved
        the 2005 Stock Option Plan for a maximum of 2,000,000 shares available
        to be granted to directors, officers, employees and consultants. The stock
        option exercise price is set at the fair market value of the shares at
        the date of grant. The term of the stock options, once granted, is not
        to exceed ten years. The vesting period of the stock options is set at
        the discretion of the Board of Directors.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | A summary of the Companys stock option activity
        is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                               

WeightedAverageExerciseNumber of
      
      
      PriceOptions
      
      
      $Balance, December 31, 2004
      
      2,410,000
      
      
      0.60Exercised
      
      (20,000
      )
      
      0.60Balance, December
        31, 2005 and 2006
      
      2,390,000
      
      
      0.60


There are no unvested stock options as
  at December 31, 2006.

Additional information regarding stock options outstanding
  as at December 31, 2006 is as follows:

Outstanding
        and ExercisableWeightedWeighted Average
      
      
      AverageNumber of
      
      
      Remaining
      
      
      Exercise PriceExercise price
      
      Options
      
      
      Contractual Life
      
      
      $$0.60
      
      2,390,000
      
      
      0.44 years
      
      
      0.60


The aggregate intrinsic value of stock options outstanding
  and vested as at December 31, 2006 is $262,900.

|9. | Share Purchase Warrants                                                                        
|-- | -----------------------------------------------------------------------------------------------
|   |                                                                                                
|   | The following table summarizes the continuity of the
        Companys share purchase warrants:

| |                            |  |            |   |  | Weighted | 
| | -------------------------- |  | ---------- | - |  | -------- | 
| |                            |  |            |   |  | Average  | 
| |                            |  |            |   |  | Exercise | 
| |                            |  | Number of  |   |  | Price    | 
| |                            |  | Warrants   |   |  | $        | 
| |                            |  |            |   |  |          | 
| | Balance, December 31, 2004 |  | 7,300,000  |   |  | 0.16     | 
| | Issued                     |  | 3,145,000  |   |  | 0.40     | 
| | Cancelled                  |  | (5,000,000 | ) |  | 0.04     | 
| | Balance, December 31, 2005 |  | 5,445,000  |   |  | 0.44     | 
| | Issued                     |  | 1,612,500  |   |  | 1.02     | 
| | Expired                    |  | (2,300,000 | ) |  | 0.50     | 
| | Balance, December 31, 2006 |  | 4,757,500  |   |  | 0.68     | 

F-13

---

Lincoln Gold Corporation 
  (An Exploration Stage Company) 
  Notes to the Consolidated Financial Statements 
  December 31, 2006 
  (Expressed in U.S. dollars)

|9. | Share Purchase Warrants (continued)                                                    
|-- | ---------------------------------------------------------------------------------------
|   |                                                                                        
|   | As at December 31, 2006 the following share purchase
        warrants were outstanding:

ExerciseNumber of
      PriceWarrants
      $
      Expiry Date3,145,000
      0.50
      March 10, 2007537,500
      0.35
      July 27, 20071,075,000
      1.35
      July 27, 20104,757,500


|10. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Potential benefits of income tax losses are not recognized
        in the accounts until realization is more likely than not. The Company
        has incurred cumulative net operating losses of approximately $2,186,000
        which commence expiring in 2023. Pursuant to SFAS No. 109 the Company
        is required to compute tax asset benefits for net operating losses carried
        forward. The potential benefits of net operating losses have not been
        recognized in these financial statements because the Company cannot be
        assured it is more likely than not it will utilize the net operating losses
        carried forward in future years. During the years ended December 31, 2006
        and 2005, the valuation allowance established against the deferred tax
        assets increased by $144,900 and $415,300, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The components of the net deferred tax asset as at December
        31, 2006 and 2005, and the statutory tax rate, the effective tax rate
        and the elected amount of the valuation allowance are indicated below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

2006
      2005$
      $Net Operating Losses
      2,186,000
      1,772,000Statutory Tax Rate
      35%
      35%Effective Tax Rate
      
      Deferred Tax Asset
      765,100
      620,200Valuation Allowance
      (765,100)
      (620,200)Net Deferred Tax Asset
      
      


|11. | Subsequent Events                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                   
|    | Subsequent to December 31, 2006, the Company issued
        666,666 shares of common stock for consulting services rendered in fiscal
        2006. See Note 7(a).

F-14

---

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

Engagement of Manning Elliott LLP

We engaged Manning Elliott LLP, Chartered Accountants as our
principal independent accountant effective May 4, 2005. We dismissed Amisano
Hanson, Chartered Accountants ("Amisano Hanson") as our principal independent
accountant effective May 4, 2005. The decision to change principal independent
accountants has been approved by our board of directors.

Amisano Hansons report dated April 14, 2005 on the balance
sheets of Lincoln Gold Corporation as at December 31, 2004 and 2003 and the
statements of operations, stockholders' deficiency and cash flows for the year
ended December 31, 2004 and for the periods from inception (September 25, 2003)
to December 31, 2004 and 2003 did not contain any adverse opinion or disclaimer
of opinion, nor was it modified as to uncertainty, audit scope, or accounting
principles.

In connection with the audits of the two fiscal years ended
December 31, 2004 and 2003 and the subsequent interim period through to April
14, 2005, there were no disagreements with Amisano Hanson on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements if not resolved to the satisfaction of
Amisano Hanson would have caused them to make reference thereto in their reports
on our audited financial statements.

We provided Amisano Hanson with a copy of the foregoing
disclosures and requested in writing that Amisano Hanson furnish us with a
letter addressed to the Securities and Exchange Commission stating whether or
not they agree with such disclosures. We received the requested letter from
Amisano Hanson wherein they have confirmed their agreement to our disclosures. A
copy of Amisano Hansons letter has been filed as an exhibit to our Current
Report on Form 8-K filed with the Securities and Exchange Commission on May 10,
2005.

Engagement of Amisano Hanson

We dismissed DeMello & Company, Chartered Accountants
("DeMello & Company") as our principal independent accountant effective
February 14, 2005. We engaged Amisano Hanson, Chartered Accountants as our
principal independent accountant effective February 14, 2005. The decision to
change principal independent accountants has been approved by our board of
directors.

DeMello & Company's report dated February 23, 2004 on the
balance sheets of Braden Technologies Inc. as at December 31, 2003 and 2002 and
the statements of operations, stockholders' deficiency and cash flows for the
years ended December 31, 2003 and 2002 did not contain any adverse opinion or
disclaimer of opinion, nor was it modified as to uncertainty, audit scope, or
accounting principles.

In connection with the audits of the two fiscal years ended
December 31, 2003 and 2002 and the subsequent interim period through to February
14, 2005, there were no disagreements with DeMello & Company on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements if not resolved to the
satisfaction of the DeMello & Company would have caused them to make
reference thereto in their reports on our audited financial statements.

We provided DeMello & Company with a copy of the foregoing
disclosures and requested in writing that DeMello & Company furnish us with
a letter addressed to the Securities and Exchange Commission stating whether or
not they agree with such disclosures. We received the requested letter from
DeMello & Company wherein they have confirmed their agreement to our
disclosures. A copy of DeMello & Companys letter has been filed as an
exhibit to our Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 17, 2005.

|ITEM 8A. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

As required by Rule 13a-15 under the Securities Exchange Act of
1934 (the Exchange Act), we carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of
December 31, 2006, being the date of our most recently completed fiscal year.
This evaluation was carried out under the

32 of 43

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supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, Mr. Paul Saxton. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that the
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified by the rules and forms of the Securities and Exchange
Commission.

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

During our most recently completed fiscal year ended December
31, 2006 there were no changes in our internal control over financial reporting
that have materially affected, or are reasonably likely to affect, our internal
control over financial reporting.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the registrants
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrants board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrants assets that could have a material effect on the financial
      statements.                                                                                                                                              

33 of 43

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PART III

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

Our current executive officers and directors are:

|Name                      | Age | Position                                                                                               
|------------------------- | --- | -------------------------------------------------------------------------------------------------------
|Andrew F. B. Milligan (1) | 84  | Director and Chairman of the
      Board                                                               
|Paul F. Saxton (1)        | 60  | Director, President, Chief Executive Officer, Chief
      Financial Officer and Chief Operating Officer
|James Chapman             | 53  | Director                                                                                               
|Andrew Bowering           | 47  | Director                                                                                               
|Steven Chi (1)            | 68  | Director                                                                                               
|Jeffrey L. Wilson         | 58  | Vice-President - Exploration                                                                           

|(1) | Member of our Audit Committee.
|--- | ------------------------------

Set forth below is a brief description of the background and
business experience of each of our executive officers and directors for the past
five years:

Paul F. Saxton, President, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer and Director

Mr. Saxton was appointed as a director of the Company on March
26, 2004. Our board of directors also appointed Mr. Saxton as our chief
executive officer and our chief financial officer as of March 26, 2004. Paul
Saxton is a mining engineer who also holds an MBA from the University of Western
Ontario. He has been active in the mining industry since 1969, holding various
positions including mining engineer, mine superintendent, President and CEO of
numerous Canadian mining companies. Following 10 years with Cominco, Paul became
Vice President and President of Mascot Gold Mines Ltd., initially working on the
design and construction of the Nickel Plate mine in BC. Subsequently Paul became
a Vice-President of Corona Corporation where he was responsible for western
operations and exploration for the company and was instrumental in the
re-opening of the Nickel Plate. In 1989, Paul was appointed Senior Vice
President of Viceroy Resource Corporation where he was responsible for obtaining
financing and the construction and operations of the Castle Mountain mine in
California. As President of Loki Gold Corporation and Baja Gold Inc, Paul was
responsible for bringing the Brewery Creek Gold mine into production. Following
his departure from Viceroy in 1998, Paul became President of Standard Mining
Corp., organizing the company and supervising its exploration activities until
2001, when Standard Mining Corp. was merged with Doublestar Resources Ltd.

Andrew F. B. Milligan, Chairman and Director

Mr. Andrew Milligan was appointed as one of our directors on
March 26, 2004. Our board of directors also appointed Mr. Milligan as our
chairman as of March 26, 2004. Mr. Milligan is a business executive who has
concentrated on mining ventures over the past 25 years. From 1984 to 1986 he was
President and Chief Executive Officer of Glamis Gold Ltd. In November 1986 he
was appointed President and Chief Executive Officer of Cornucopia Resources Ltd.
In 1998 and 1999 Cornucopia disposed of its gold mining interests and
subsequently merged with three other companies to form Quest Investment
Corporation. Mr. Milligan was a director of Quest

34 of 43

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until June, 2003. He is currently a director of several mining
companies trading on both the American Stock Exchange and the TSX Venture
Exchange.

James Chapman, Director

Mr. Chapman was appointed as one of our directors on April 12,
2004. Mr. Chapman graduated from the University of British Columbia in 1976 with
a B.Sc. Geology degree and has focused on mineral exploration primarily for
junior mining companies and consulting groups. This experience has incorporated
all aspects of the industry from property evaluation, project generation through
implementation and report preparation for owners, clients and regulatory
authorities. Since 1982 he has operated as an independent consulting geologist
on projects including precious and base metals, uranium, diamonds and phosphate,
from reconnaissance level projects to deposit definition drill programs. He is a
Qualified Person under Canadian regulations, as defined by National Instrument
Policy 43.101.

Andrew W. Bowering, Director

Mr. Andrew Bowering was appointed as a director of the Company
on August 20, 2004. Mr. Bowering is a corporate administrator with 17 years
experience in the financing and management of exploration, development and
start-up companies. He has held senior executive positions and directorships in
numerous public companies involved in mineral exploration in Canada, the United
States, Mexico and China. Mr. Bowering has directly raised over $25 million for
mineral exploration and development. He has led several large acquisition
programs in Northwest British Columbia, Alberta and Central Mexico. In addition
to mineral exploration activities, Mr. Bowering was a founder and principle of
two publicly traded consumer product companies that operated worldwide. He has
an in-depth knowledge of securities markets, regulatory affairs and
investor/public relations.

Steven Chi, Director

Mr. Chi was appointed as a director of the Company on August
20, 2004. Mr. Chi is a professional mining engineer with a career as an
executive of the international mining and construction giant, Washington Group
International (formerly Morrison Knudsen Company). He has traveled and worked
worldwide, including the Americas, Asia and Europe. Mr. Chi currently serves on
the board of administrators for a large lignite mine and power plant complex in
Leipzig, Germany. Mr. Chi has extensive experience in all aspects of mining and
development including gold and precious metals mining and previously served on
the board of NASDAQ-listed MK Gold Company.

Jeffrey L. Wilson, Vice-President - Exploration

Mr. Wilson has been appointed as our Vice President -
Exploration on May 25, 2004. Mr. Wilson has twenty-seven years of professional
exploration experience in the United States, Mexico and Central America with
emphasis on gold. He served as Director of Exploration for Echo Bay Exploration
Inc. for eleven years, first in western U.S. and later in Mexico and Central
America. He earlier served as Exploration Manager, Western U.S., with Tenneco
Minerals Company, with most projects in Nevada. Mr. Wilson earned his MSc. in
Geology from the University of Southern California.

We also have consulting relationships with other geologists and
persons that are included in our projects and properties from time to time.

TERMS OF OFFICE

Our directors are elected to hold office until the next annual
meeting of our shareholders and until their respective successors have been
elected and qualified. Our executive officers are appointed by our board of
directors to hold office until their successors are appointed.

AUDIT COMMITTEE

We have an audit committee of our board of directors comprised
of Andrew Milligan, our chairman, Steven Chi and Paul Saxton, our president,
chief executive officer and chief financial officer. Mr. Saxton is not
independent of our management.

35 of 43

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At present, there is no person on our board of directors who
would qualify as an audit committee expert. Accordingly, we anticipate that any
audit committee that is appointed by our board of directors will not include an
audit committee expert unless a new director who can meet these criteria is
appointed to our board of directors.

CODE OF ETHICS

We have presently not adopted a code of ethics due to the fact
that we are in the early stage of our operations and have only recently acquired
our mineral properties. We have received a draft code of ethics prepared by our
legal counsel for our review and consideration. Our board of directors is
currently reviewing this draft code of ethics and anticipates adopting a code of
ethics during the current fiscal year.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. Based on our review of the copies
of such forms received by us, we believe that during the fiscal year ended
December 31, 2006 all such filing requirements applicable to our officers and
directors were complied with.

|ITEM 10. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

Summary Compensation Table

The following table sets forth compensation information as to
our chief executive officer, Mr. Paul Saxton, for the our fiscal year ended
December 31, 2006. None of our executive officers earned more than $100,000
during our most recently completed fiscal year. Mr. Saxton is our named
executive officer. No other compensation was paid to any such officer or
directors other than the cash and stock option compensation set forth below.

Name and
      Principal Position
    Year
    Salary
      ($)
    Bonus
      ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non- Equity
      Incentive Plan Compen- sation
      ($)
    Non- qualified
      Deferred Compen- sation
      Earnings ($)
    All Other
      Compen- sation Compen- sation
      ($)
    Total
      ($)Paul Saxton (1)
    2006
    $20,545
    Nil
    Nil
    Nil
    Nil
    Nil
    -
    $20,545


|(1) | Mr. Saxton was appointed as a director and as our
      president, chief executive officer and chief financial officer on March
      26, 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

Option Grants

We did not grant any stock options to our officers and
directors during our fiscal year ended December 31, 2006

Oustanding Equity Awards

The following table summarizes the outstanding equity awards as
of December 31, 2006 for each of our officers and directors:

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Option Awards
    Stock AwardsName
    Number
      of Securities Underlying Unexercised
      Options (#) Exercisable
    Number
      of Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity
      Incentive Plan Awards: Number of
      Securities Underlying Unexercised
      Unearned Options (#)
    Option
      Exercise Price ($)
    Option
      Expiration Date
    Number
      of Shares or Units of Stock
      That Have Not Vested
      (#)
    Market Value
      of Shares or Units
      of Stock That Have
      Not Vested ($)
    Equity Incentive
      Plan Awards: Number of
      Unearned Shares, Units or
      Other Rights That HaveNot
      Vested (#)
    Equity Incentive
      Plan Awards: Market or Payout
      Value of Unearned Shares, Units
      or Other Rights **That Have**
      Not Vested ($)Paul Saxton Director, President, Chief
      Executive Officer and Chief Financial Officer
    430,000
    Nil
    Nil
    $0.60
    May 25, 2007
    N/A
    N/A
    N/A
    N/AAndrew Milligan Director
    430,000
    Nil
    Nil
    $0.60
    May 25, 2007
    N/A
    N/A
    N/A
    N/AJames Currie Director
    200,000
    Nil
    Nil
    $0.60
    May 25, 2007
    N/A
    N/A
    N/A
    N/AJames Chapman Director
    200,000
    Nil
    Nil
    $0.60
    May 25, 2007
    N/A
    N/A
    N/A
    N/AJeffrey Wilson Vice- President Exploration
    430,000
    Nil
    Nil
    $0.60
    May 25, 2007
    N/A
    N/A
    N/A
    N/A


Compensation of Directors

We do not currently pay our directors any fees or other
compensation for acting as directors. We have not paid any fees or other
compensation to any of our directors for acting as directors to date.

Long-Term Incentive Plans

We do not have any long-term incentive plans, pension plans, or
similar compensatory plans for our directors or executive officers.

Employment Contracts

We do not have any employment contracts with any of our
officers or directors.

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|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND **MANAGEMENT.**
|-------- | -------------------------------------------------------------------------

The following table sets forth certain information concerning
the number of our common shares owned beneficially as of March 26, 2007 by: (i)
each person (including any group) known to us to own more than five percent (5%)
of our common stock, (ii) each of our directors and by each of our executive
officers, and (iii) our executive officers and directors as a group. Unless
otherwise indicated, the shareholders listed possess sole voting and investment
power with respect to the shares shown.

Title of Class
    Name and Address of Beneficial
      Owner
    Number of Shares of Common
      Stock
    Percentage of Common
      Stock(1)Directors and OfficersCommon Stock
    Paul F. Saxton, Director, President, Chief
      Executive Officer and Chief Financial Officer
    5,930,000(2)
    14.0%Common Stock
    Andrew F.B. Milligan, Director
    1,930,000(3)
    4.6%Common Stock
    James Chapman, Director
    900,000(4)
    2.1%Common Stock
    Andrew Bowering, Director
    Nil
    Nil%Common Stock
    Steven Chi, Director
    750,000(5)
    1.8%Common Stock
    Jeffrey Wilson, Vice President Exploration
    1,180,000(6)
    2.8%Common Stock
    All Directors and Executive Officers
      as a Group (6 persons)
    10,690,000(7)
    24.7%5% StockholdersCommon Stock
    Joe Eberhard, Dorfstrasse #15, CH 8903,
      Birmensdorf, Switzerland
    3,000,000 shares Direct
    7.2%Common Stock
    Michael Baybak (8),Suite
      305, 4515 Ocean Blvd., La Canada, California 91011
    3,166,666 shares Indirect
    6.0%Common Stock
    Sprott Asset Management Inc.(9)Suite 2700, South Tower, Royal Bank Plaza, Toronto,
      Ontario M5J 2J1 Canada
    3,400,000 shares
    7.8%


|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    | power, which includes the power to vote, or to direct the
      voting of shares; and (ii) investment power, which includes the power to
      dispose or direct the disposition of shares. Certain shares may be deemed
      to be beneficially owned by more than one person (if, for example, persons
      share the power to vote or the power to dispose of the shares). In
      addition, shares are deemed to be beneficially owned by a person if the
      person has the right to acquire the shares (for example, upon exercise of
      an option) within 60 days of the date as of which the information is
      provided. In computing the percentage ownership of any person, the amount
      of shares outstanding is deemed to include the amount of shares
      beneficially owned by such person (and only such person) by reason of
      these acquisition rights. As a result, the percentage of outstanding
      shares of any person as shown in this table does not necessarily reflect
      the persons actual ownership or voting power with respect to the number
      of shares of common stock actually outstanding on March 24, 2007. As of
      March 24, 2007, there were 43,656,666 shares issued and
  outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | Consists of 5,500,000 shares held by Mr. Saxton and
      430,000 shares that can be acquired by Mr. Saxton upon exercise of options
      to purchase shares held by Mr. Saxton within 60 days of the date
      hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | Consists of 1,500,000 shares held by Mr. Milligan and
      430,000 shares that can be acquired by Mr. Milligan upon exercise of
      options to purchase shares held by Mr. Milligan within 60 days of the date
      hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4) | Consists of 700,000 shares held by Mr. Chapman and
      200,000 shares that can be acquired by Mr. Chapman upon exercise of
      options to purchase shares held by Mr. Chapman within 60 days of the date
      hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(5) | Consists of 750,000 shares held by Mr. Chi.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(6) | Consists of 750,000 shares held by Mr. Wilson directly
      and 430,000 shares that can be acquired by Mr. Wilson upon exercise of
      options to purchase shares held by Mr. Wilson within 60 days of the date
      hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(7) | Consists of 9,200,000 shares held by our directors and
      executive officers and 1,490,000 shares that can be acquired by our
      directors and executive officers upon exercise of options to purchase
      shares held by our directors and executive officers within 60 days of the
      date hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(8) | Windsor Capital Corporation owns directly 2,500,000
      shares in the capital of the Company. Michael Baybak beneficially owns a
      100% interest in Windsor Capital Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(9) | Consists of 1,700,000 shares held by Sprott Asset
      Management Inc. and 1,700,000 shares issuable upon exercise of 1,700,000
      share purchase warrants held by Sprott Asset Management Inc. which are
      exercisable within 60 days hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Changes in Control

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

EQUITY COMPENSATION PLAN INFORMATION.

As at December 31, 2006, we had two equity compensation plans
under which our common shares have been authorized for issuance to our officers,
directors, employees and consultants, namely our 2004 Stock Option Plan and our
2005 Stock Option Plan. Neither our 2004 Stock Option Plan nor our 2005 Stock
Option Plan has not been approved by our shareholders. We do not have any equity
compensation plans that have been approved by our shareholders.

The following summary information is presented for our 2004
Stock Option Plan and our 2005 Stock Option Plan as of December 31, 2006.

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Number of Securities to
      be Issued Upon Exercise of Outstanding Options,
      Warrants and Rights
    Weighted-Average
      Exercise Price of Outstanding Options,
      Warrants and Rights
    Number of Securities Remaining
      Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected
      in column (a))Plan Category
    (a)
    (b)
    (c)Equity Compensation Plans Approved By Security
      Holders
    Not Applicable
    Not Applicable
    Not ApplicableEquity Compensation Plans Not Approved By Security
      Holders
    2,390,000 Shares of Common Stock
    $0.60 per Share
    2,110,000 Shares


|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS.
|-------- | -----------------------------------------------------

None of the following persons has any direct or indirect
material interest in any transaction to which we were or are a party during the
past two years, or in any proposed transaction to which the Company proposes to
be a party:

|(A) | any director or officer;                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                       
|(B) | any proposed nominee for election as a
director;                                                                                                                                                      
|    |                                                                                                                                                                                                       
|(C) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or                                              
|    |                                                                                                                                                                                                       
|(D) | any relative or spouse of any of the foregoing persons,
      or any relative of such spouse, who has the same house as such person or
      who is a director or officer of any parent or
subsidiary.

|ITEM 13. | EXHIBITS
|-------- | --------

The following exhibits are attached to this Annual Report on
Form 10-KSB:

Exhibit Number
    Description of Exhibit3.1
    Articles of Incorporation
      (1)3.2
    Bylaws, as amended
      (1)3.3
    Articles of Merger between
      Braden Technologies Inc. and Lincoln Gold Corp. (3)4.1
    Form of Series A Warrant
      Certificate (7)4.2
    Form of Series B Warrant
      Certificate (7)4.3
    Form of Subscription Agreement
      (7)10.1
    Form of Share Purchase
      Agreement dated March 15, 2004 between the Company and the U.S.
      Shareholders of Lincoln Gold Corp. (2)10.2
    Form of Share Purchase
      Agreement dated March 15, 2004 between the Company and the Non- U.S.
      Shareholders of Lincoln Gold Corp. (2)


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Exhibit Number
    Description of Exhibit10.3
    Convertible Note executed by Lincoln Gold Corp. in favour
      of Alexander Holtermann dated January 28, 2004 (3)10.4
    Hercules Joint Venture Agreement dated April 18, 2004
      between the Company and Miranda U.S.A. Inc. and Miranda Gold
      Corp.(3)10.5
    2004 Stock Option Plan (3)10.6
    Letter Agreement on Mining Lease Terms for Buffalo Valley
      Property dated July 9, 2004 (4)10.7
    Letter Agreement on Mining Lease Terms for the Jenny Hill
      Project dated September 28, 2004 (5)10.8
    Property Option Agreement for the Hannah project between
      Lincoln Gold Corp. and Larry McIntosh and Susan K. McIntosh dated December
      24, 2003 (6)10.9
    Property Option Agreement for the Lincoln Flat project
      between Lincoln Gold Corp. and Larry McIntosh and Susan K. McIntosh dated
      December 24, 2003 (6)10.10
    2005 Stock Option Plan LLP (7)23.1
    Consent of Independent Auditors,
          Manning Elliott (8)31.1
    Certification of Chief Executive
          Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the
          Exchange Act (8)32.1
    Certification of Chief Executive
          Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the
          Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section
          906 of the Sarbanes-Oxley Act of 2002 (8)


|(1) | Previously filed with the Securities and Exchange Commission
        as an exhibit to the Registrants Form 10- SB Registration Statement
        originally filed on April 20, 1999, as amended.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an exhibit to the Companys
        Current Report on Form 8-K filed on March 16, 2004.                                                                                      
|(3) | Previously Filed as an Exhibit to the Quarterly Report
        on Form 10-QSB filed May 24, 2004.                                                                                                
|(4) | Previously filed with the Securities and Exchange Commission
        as an exhibit to the Companys Form 10QSB originally filed August
        6, 2004.                                          
|(5) | Previously filed as an Exhibit to the Companys
        Quarterly Report on Form 10-QSB filed November 15, 2004.                                                                                 
|(6) | Previously filed as an Exhibit to our Annual Report
        on Form 10-KSB for the year ended December 31, 2004 filed on April 18,
        2005.                                                 
|(7) | Previously filed as an Exhibit to our Annual Report
        on Form 10-KSB for the year ended December 31, 2005 filed on March 31,
        2006.                                                 
|(8) | Filed as an Exhibit to this Annual Report on Form 10-KSB.                                                                                                                                        

|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The following table sets forth information regarding the amount
billed to us by our independent auditor, Manning

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Elliott LLP, for our fiscal years ended December 31, 2006 and
2005.

Years
      ended December 312006
    2005Audit Fees:
    $15,350
    $21,037Audit Related Fees:
    Nil
    NilTax Fees:
    Nil
    NilAll Other Fees:
    Nil
    NilTotal:
    $15,350
    $21,037


Audit Fees

Audit Fees are the aggregate fees billed by our independent
auditor for the audit of our consolidated annual financial statements, reviews
of interim financial statements and attestation services that are provided in
connection with statutory and regulatory filings or engagements.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

The policy of our Audit Committee is to pre-approve all audit
and permissible non-audit services to be performed by our independent auditors
during the fiscal year.

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SIGNATURES

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

LINCOLN GOLD CORPORATION

|Per: | /s/ Paul F. Saxton                                        | 
|---- | --------------------------------------------------------- | 
|     | Paul F. Saxton, President                                 | 
|     | Chief Executive Officer and Chief
      Financial Officer | 
|     | Director                                                  | 
|     | Date: March 29, 2007                                      | 

In accordance with the Securities 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.

|Per: | /s/ Paul F. Saxton                                                   | 
|---- | -------------------------------------------------------------------- | 
|     | Paul F. Saxton, President                                            | 
|     | Chief Executive Officer and Chief Financial Officer                  | 
|     | (Principal Executive Officer)                                        | 
|     | (Principal Financial Officer and Principal Accounting
      Officer) | 
|     | Director                                                             | 
|     | Date: March 29, 2007                                                 | 
|     |                                                                      | 
|     |                                                                      | 
|Per: | /s/ Andrew
      Milligan                                            | 
|     | Andrew Milligan                                                      | 
|     | Director                                                             | 
|     | Date: March 29, 2007                                                 | 
|     |                                                                      | 
|     |                                                                      | 
|Per: | /s/ Andrew
      Bowering                                            | 
|     | Andrew Bowering                                                      | 
|     | Director                                                             | 
|     | Date: March 29, 2007                                                 | 
|     |                                                                      | 
|     |                                                                      | 
|Per: | /s/ James Chapman                                                    | 
|     | James Chapman                                                        | 
|     | Director                                                             | 
|     | Date: March 29, 2007                                                 | 

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