UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

(Mark one)

[ ]      Registration  Statement  Pursuant  to  Section  12(b)  or  (g)  of  the
         Securities Exchange Act of 1934

                                       or

[X]      Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

                                       or

[ ]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934
              For the transition period from _________ to _________

                                       or

[ ]      Shell Company Report  Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                        Commission file number: 001-32558

                              IMA EXPLORATION INC.
             (Exact name of Registrant as specified in its charter)

                              IMA EXPLORATION INC.
                 (Translation of Registrant's name into English)

                            BRITISH COLUMBIA, CANADA
                 (Jurisdiction of incorporation or organization)

   #709, 837 WEST HASTINGS STREET, VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2N6
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                      NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                           COMMON STOCK, NO PAR VALUE
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.
                                 NOT APPLICABLE
                                (Title of Class)

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report.
                52,013,064 COMMON SHARES AS OF DECEMBER 31, 2006

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

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

Note - Checking the box above will not relieve any  registrant  required to file
reports  pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
from their obligations under those Sections.

                                      -1-

<PAGE>


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

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

Indicate by check mark which financial statement item the registrant has elected
to follow.
Item 17   X       Item 18
        -----             -----

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



                                     - 2 -
<PAGE>

GENERAL INFORMATION:

Unless otherwise indicated, all references herein are to Canadian dollars.

The Company is required under Canadian law (National Instrument 43-101 Standards
Of Disclosure  For Mineral  Projects)  ("NI 43-101") to calculate and categorize
"mineral  reserve",  "proven  mineral  reserve",   "probable  mineral  reserve",
"mineral  resource",  "measured mineral resource",  "indicated mineral resource"
and  "inferred  mineral  resource"  under  the  Canadian   Institute  of  Mining
Metallurgy and Petroleum  ("CIM")  Standards on Mineral Resources and Reserves -
Definitions and Guidelines  dated December 11, 2005.  These standards  establish
definitions and guidelines for the reporting of exploration information, mineral
resources  and  mineral  reserves  in Canada.  These  definitions  have not been
adopted for use in the United States of America by the  Securities  and Exchange
Commission (the "SEC").  Under these  guidelines,  the CIM definitions of proven
and probable  mineral  reserves equate to the definitions of proven and probable
reserves as set out in Guide 7 of the Securities Act Industry  Guides adopted by
the SEC ("Guide 7"). In addition,  Canadian law requires  disclosure  of mineral
resources that equate to measured, indicated and inferred resources.


                                     PART I


ITEM 1.  DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.
--------------------------------------------------------------------------------
Not applicable.


ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.
--------------------------------------------------------------------------------
Not applicable.


ITEM 3.  KEY INFORMATION.
--------------------------------------------------------------------------------
SELECTED FINANCIAL DATA

The selected  financial data and the  information in the following  table of IMA
Exploration Inc. (the "Company") for the years ended December 31, 2006, 2005 and
2004 was derived from the consolidated financial statements of the Company which
have  been  audited  by   PricewaterhouseCoopers   LLP,  independent   Chartered
Accountants,  as indicated  in their report which is included  elsewhere in this
annual report.  The selected financial data set forth and the information in the
following  table for the years ended December 31, 2003 and 2002 are derived from
the Company's  audited  consolidated  financial  statements after reflecting the
carve out of Golden Arrow Resources Corporation not included herein.

The  information in the following  table should be read in conjunction  with the
information  appearing under the heading "Item 5. Operating and Financial Review
and Prospects".

Reference is made to Note 10 of the 2006  consolidated  financial  statements of
the  Company  included  herein  for a  discussion  of the  material  measurement
differences between Canadian Generally Accepted Accounting Principles ("Canadian
GAAP") and United States Generally Accepted Accounting Principles ("U.S. GAAP"),
and their effect on the Company's financial statements.

To date, the Company has not generated  sufficient  cashflow from  operations to
fund ongoing  operational  requirements  and cash  commitments.  The Company has
financed its operations  principally  through the sale of its equity securities.
The  Company  considers  that  it  has  adequate   resources  to  meet  property
commitments on its existing property holdings;  however, at present, the Company
may not have  sufficient  funds to conduct  exploration  programs  on all of its
existing properties and may need to obtain additional financing or joint venture
partners in order to initiate  any such  programs.  See "Item 5.  Operating  and
Financial Review and Prospects".


                                     - 3 -
<PAGE>


CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(CDN$ IN 000, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                          2006         2005         2004         2003          2002
                                                  -----------------------------------------------------------------
<S>                                              <C>              <C>           <C>          <C>           <C>

Revenue                                                      -            -            -            -             -
General Corporate Expenditures                          (3,452)      (6,092)      (4,084)      (2,276)         (330)
General Exploration Expenditures                          (499)(a)      (56)        (229)        (227)         (180)
Foreign Exchange Gain (Loss)                                (3)         233         (195)         (13)           (2)
Interest and Miscellaneous Income                          373          150          102           67            27
Provision for Marketable Securities                          -            -         (100)           -             -
Loss Allocated to Spin off Assets                            -            -         (131)        (969)         (955)
                                                  -----------------------------------------------------------------
Net Loss for the Year                                   (3,581)      (5,765)      (4,655)      (3,418)       (1,440)
                                                  =================================================================

Loss per Share from Continuing Operations                (0.07)       (0.12)       (0.11)       (0.08)        (0.02)
                                                  =================================================================

Loss per Share -Basic and Diluted                        (0.07)       (0.12)       (0.11)       (0.11)        (0.06)
                                                  =================================================================

Weighted Average Number of Shares Outstanding           51,264       46,197       40,939       32,252        23,188
                                                  =================================================================


Working Capital                                          9,060        7,489        5,053        4,747         1,431
Capital Assets                                               -            -           94           36            46
Mineral Properties                                           -       15,032        6,551        1,469           148
Navidad Interest                                        17,950            -            -            -             -
Spin-Off Assets                                              -            -            -        6,749         6,903
Long-Term Debt                                               -            -            -            -             -
Total Assets                                            27,246       23,498       12,222       13,419         8,637
Net Assets - Shareholder's Equity                       27,010       20,761       10,813       11,671         7,324
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  The 2006 General  Exploration  balance includes Navidad holding costs which
     are comprised of:
     i)   costs  incurred in order to maintain  basic  operations  in  Argentina
          subsequent  to the  transfer  of  control  of the  Navidad  project to
          Aquiline;
     ii)  costs  incurred in the period between the date of the judgment and the
          transfer  of control  of the  Navidad  project  to Aquline  that would
          normally have been included in mineral properties and deferred costs.


                                     - 4 -
<PAGE>



ADJUSTED TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Under U.S.  GAAP the  following  financial  information  would be adjusted  from
Canadian GAAP (references are made to Note 11 of the  accompanying  consolidated
audited financial statements):
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                              (CDN$ IN 000, EXCEPT PER SHARE DATA)
-------------------------------------------------------------------------------------------------------------------
                                                          2006         2005         2004         2003         2002
                                                     --------------------------------------------------------------
<S>                                              <C>              <C>           <C>          <C>           <C>

CONSOLIDATED STATEMENT OF OPERATIONS

Loss for the year under Canadian GAAP                  $(3,581)     $(5,765)     $(4,655)     $(3,418)      $(1,440)

Mineral property and deferred exploration costs
for the year, net of reversal of future income
tax and write down of marketable securities             (4,492)      (7,605)      (4,479)      (1,813)       (1,267)

Mineral property and deferred exploration costs
written off during the year which would have been
expensed in the year incurred                                -            -            -          777             -

Stock-based compensation                                     -            -            -         (144)         (102)
                                                     --------------------------------------------------------------
Loss for the year under US GAAP                        $(8,073)    $(13,370)     $(9,134)     $(4,598)     $(2,809)

Unrealized (loss) gains on
available-for-sale securities                               (3)           -         (387)         434            55
                                                     --------------------------------------------------------------
Comprehensive Loss for the year                        $(8,076)    $(13,370)     $(9,521)     $(4,164)      $(2,754)
                                                     ==============================================================

Loss per share under US GAAP                            $(0.16)      $(0.29)      $(0.22)      $(0.14)       $(0.12)
                                                     ==============================================================

Diluted Loss per share under US GAAP                    $(0.16)      $(0.29)      $(0.22)      $(0.14)       $(0.12)
                                                     ==============================================================

</TABLE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                          2006         2005         2004         2003          2002
                                                     --------------------------------------------------------------
<S>                                              <C>              <C>           <C>          <C>           <C>

SHAREHOLDERS' EQUITY

Balance per Canadian GAAP                              $27,010      $20,761      $10,813      $11,671        $7,324

Mineral property and deferred exploration costs
expensed net of reversal of future income tax          (17,764)     (13,272)      (5,666)      (6,884)       (5,848)

Accumulated other comprehensive income                      81           84           84          489            54
                                                     --------------------------------------------------------------
Balance per US GAAP                                     $9,327       $7,573       $5,231       $5,277        $1,530
                                                     ==============================================================
</TABLE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                          2006         2005         2004         2003          2002
                                                     --------------------------------------------------------------
<S>                                              <C>              <C>           <C>          <C>           <C>

MIENRAL PROPERTIES / NAVID INTEREST

Balance per Canadian GAAP                              $17,950      $15,032       $6,552       $8,214        $5,848

Mineral property and deferred exploration costs
expensed net of reversal of future income tax          (17,764)     (15,032)      (6,552)      (8,214)       (5,848)

Transfer of marketable Securities                           81            -            -            -             -
                                                     --------------------------------------------------------------
Balance per US GAAP                                       $267           $-           $-           $-            $-
                                                     ==============================================================
</TABLE>



                                     - 5 -
<PAGE>


<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                          2006         2005         2004         2003          2002
                                                     --------------------------------------------------------------
<S>                                              <C>              <C>           <C>          <C>           <C>
CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES

Cash used per Canadian GAAP                            $(3,785)     $(3,850)     $(2,962)     $(1,419)      $(1,306)
Mineral properties and deferred costs                   (4,492)      (7,025)      (4,578)      (1,851)       (1,267)
                                                     --------------------------------------------------------------
Cash used per US GAAP                                  $(8,277)    $(10,875)     $(7,540)     $(3,270)      $(2,573)
                                                     ==============================================================
INVESTING ACTIVITIES

Cash used per Canadian GAAP                            $(5,412)    $(10,259)     $(8,810)     $(1,873)      $(1,278)
Mineral properties and deferred costs                    4,492        7,026        4,579        1,851         1,267
                                                     --------------------------------------------------------------
Cash provided (used) per US GAAP                         $(920)     $(3,233)     $(4,232)        $(22)         $(11)
                                                     ==============================================================

FINANCING ACTIVITIES

Cash provided per Canadian and US GAAP                  $9,437      $13,478       $9,297       $6,278        $3,264
                                                     ==============================================================

</TABLE>

See Note 11 of the Company's consolidated financial statements.

EXCHANGE RATE HISTORY

The noon rate of exchange on February  28, 2007,  reported by the United  States
Federal  Reserve Bank of New York for the  conversion  of Canadian  dollars into
United States dollars was US$0.8547 (US$1.00 = CDN$1.1700).

The  following  table sets forth high and low  exchange  rates for one  Canadian
dollar  expressed  in terms of one U.S.  dollar for the  six-month  period ended
February 28, 2007.

        MONTH                             HIGH                    LOW

        September 2006                   0.9048                  0.8872
        October 2006                     0.8965                  0.8784
        November 2006                    0.8869                  0.8715
        December 2006                    0.8760                  0.8582
        January 2007                     0.8586                  0.8547
        February 2007                    0.8631                  0.8437

The following table sets forth the average exchange rate for one Canadian dollar
expressed in terms of one U.S. dollar for the past five fiscal years.

        PERIOD                                                  AVERAGE

        January 1, 2002 - December 31, 2002                      0.6368
        January 1, 2003 - December 31, 2003                      0.7206
        January 1, 2004 - December 31, 2004                      0.7682
        January 1, 2005 - December 31, 2005                      0.8254
        January 1, 2006 - December 31, 2006                      0.8818

Exchange  rates are based upon the noon  buying  rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York.


                                     - 6 -
<PAGE>


RISK FACTORS

Due to the nature of the Company's business and the present stage of exploration
on its mineral  resource  properties,  the  following  risk factors apply to the
Company's  operations  (see "Item 4.  Information  on the  Company - History and
Development of the Company"):

TITLE TO PROPERTIES RISK: On November 16, 2006 the Company transferred ownership
of its mineral  properties to Aquiline  Resources  Inc.  ("Aquiline")  under the
terms of an Interim  Project  Development  Agreement  (the "Interim  Agreement")
while the appeal of the Supreme Court of British  Columbia  decision of July 14,
2006 is heard and the Appeal Court's decision is rendered. In the event that the
Company is  unsuccessful  on appeal,  the Company  will be paid  $18,500,000  as
consideration  for these assets,  less legal costs Aquiline would be entitled to
in relation to the trial and the appeal.  In the event that the legal costs that
Aquiline may become entitled to are significant, the recoverability of the costs
reflected may be impaired.  Such  impairment  may be material.  However,  at the
current  time,  the Company is unable to determine  with any degree of certainty
what the final  outcome of the appeal  process  may be and if the  Company  will
regain its direct ownership of the mineral properties.  The Company has no other
mineral properties.

LIQUIDITY AND CASH FLOW: As at the date of this annual  report,  the Company has
not  generated  any  revenues  from  operations  to  fund  ongoing   operational
requirements  and cash  commitments.  The Company has  financed  its  operations
principally  through the sale of its equity securities.  As at February 28, 2007
the Company had working capital of approximately $8,500,000. Management believes
the Company has adequate  resources to maintain its ongoing  operations and will
require  additional  financing for  exploration  and development in the event it
regains operational control over the Navidad Project. See "Item 5. Operating and
Financial Review and Prospects - Liquidity and Capital Resources".

EXPLORATION STAGE COMPANY: An investment in a natural resources company involves
a high  degree of risk.  The degree of risk  increases  substantially  where the
company's properties are in the exploration stage.

ADDITIONAL  FINANCING:  The Company presently has sufficient financial resources
to meet  its  commitments.  The  Company  at  present  may  not,  however,  have
sufficient  funds to conduct  exploration and development  programs on all these
properties  and may need to obtain  additional  financing or find joint  venture
partners  in order  to  initiate  any  such  programs  in the  event it  regains
operational control over the Navidad Project.

The Company will continue to rely on successfully  completing  additional equity
financing and/or conducting joint venture arrangements to further exploration on
its properties. There can be no assurance that the Company will be successful in
obtaining the required  financing or negotiating joint venture  agreements.  The
Company's management may elect to acquire new projects, at which time additional
equity  financing may be required to fund overhead and maintain its interests in
current projects,  or may decide to relinquish certain of its properties.  These
decisions will be based on the results of ongoing  exploration  programs and the
response of equity  markets to the projects and  business  plan.  The failure to
obtain such financing or complete joint venture arrangements could result in the
loss or  substantial  dilution of the  Company's  interests  (as  existing or as
proposed to be acquired) in its properties as disclosed herein. The Company does
not have any  definitive  commitment  or agreement  concerning  any  investment,
strategic  alliance  or  related  effort,  on  any  of  the  Company's  material
properties.  The Company may seek joint venture  partners to provide funding for
further work on any or all of those other properties. Joint ventures may involve
significant  risks and the Company may lose any  investment  it makes in a joint
venture. Any investments, strategic alliances or related efforts are accompanied
by risks such as:


     1.   the difficulty of identifying  appropriate  joint venture  partners or
          opportunities;
     2.   the  time the  Company's  senior  management  must  spend  negotiating
          agreements and monitoring joint venture activities;
     3.   the possibility that the Company may not be able to reach agreement on
          definitive agreements, with potential joint venture partners;
     4.   potential  regulatory  issues  applicable  to the mineral  exploration
          business;
     5.   the investment of the Company's  capital or properties and the loss of
          control over the return of the Company's capital or assets;
     6.   the inability of management to capitalize on the growth  opportunities
          presented by joint ventures; and
     7.   the insolvency of any joint venture partner.



                                     - 7 -
<PAGE>

There are no assurances that the Company would be successful in overcoming these
risks or any other problems encountered with joint ventures, strategic alliances
or related efforts.

EXPLORATION RISKS: Mineral exploration is highly speculative in nature, involves
many risks and frequently is  nonproductive.  There can be no assurance that the
Company's   efforts  to  identify   resources  will  be  successful.   Moreover,
substantial  expenditures are required to establish  resources through drilling,
to  determine  metallurgical  processes to extract the metal from the ore and to
construct  mining  and  processing  facilities.  During  the  time  required  to
establish resources,  determine suitable  metallurgical  processes and construct
such mining and processing  facilities,  the economic  feasibility of production
may change because of fluctuating prices.

METAL  PRICE  RISK:  The  Company's  portfolio  of  properties  has  exposure to
predominantly  silver and lead. The prices of these metals,  especially  silver,
greatly  affect  the  value  of the  Company  and  the  potential  value  of its
properties and investments.

FINANCIAL  MARKETS RISK:  The Company is dependent on the equity  markets as its
sole source of operating working capital and the Company's capital resources are
largely  determined  by the strength of the junior  resource  markets and by the
status of the Company's  projects in relation to these markets,  and its ability
to compete for the investor support of its projects.

POLITICAL RISK: Exploration is presently carried out in Argentina.  This exposes
the Company to risks that may not  otherwise be  experienced  if all  operations
were  domestic.  Political  risks may adversely  affect the  Company's  existing
assets and operations.  Real and perceived  political risk in some countries may
also affect the Company's  ability to finance  exploration  programs and attract
joint venture partners, and future mine development opportunities.

CURRENCY RISK:  Business is transacted by the Company in a number of currencies.
Fluctuations  in exchange rates may have a significant  effect on the cash flows
of the Company.  Future  changes in exchange rates could  materially  affect the
Company's results in either a positive or negative direction.

ENVIRONMENTAL RISK: The Company seeks to operate within environmental protection
standards that meet or exceed  existing  requirements  in the countries in which
the Company  operates.  Present or future  laws and  regulations,  however,  may
affect the Company's operations.  Future environmental costs may increase due to
changing  requirements or costs  associated with exploration and the developing,
operating  and closing of mines.  Programs may also be delayed or  prohibited in
some  areas.  Although  minimal  at this  time,  site  restoration  costs  are a
component of exploration expenses.

PROJECT DELAY RISK:  The Company's  minerals  business is subject to the risk of
unanticipated  delays in permitting  its projects.  Such delays may be caused by
fluctuations in commodity prices,  mining risks,  difficulty in arranging needed
financing,  unanticipated  permitting  requirements or legal  obstruction in the
permitting  process  by  project  opponents.  In  addition  to adding to project
capital costs (and possibly operating costs), such delays, if protracted,  could
result in a write-off of all or a portion of the  carrying  value of the delayed
project.

PRICE  FLUCTUATIONS AND SHARE PRICE  VOLATILITY:  In recent years the securities
markets in Canada have  experienced a high level of price and volume  volatility
and the  market  price of  securities  of many  companies,  particularly  junior
mineral  exploration   companies,   like  the  Company,  have  experienced  wide
fluctuations   which  have  not  necessarily   been  related  to  the  operating
performance,  underlying  asset  values  or  prospects  of  such  companies.  In
particular,  the per  share  price of the  Company's  common  shares  on the TSX
Venture Exchange (the "TSX-V") fluctuated from a high of $3.96 to a low of $0.49
during the 12-month period ending  December 31, 2006.  There can be no assurance
that continual fluctuations in price will not occur.

OPERATING HAZARDS AND RISKS:  Mining operations involve many risks, which even a
combination of experience,  knowledge and careful  evaluation may not be able to
overcome. Operations in which the Company has a direct or indirect interest will
be subject to all the hazards and risks normally  incidental to exploration  for
metals, any of which could result in damage to or destruction of mines and other
producing  facilities,  damage to life and  property,  environmental  damage and
possible legal liability for any or all damage.  Although the Company  maintains
liability  insurance  in an amount which it  considers  adequate,  the nature of
these risks is such that liabilities  could exceed



                                     - 8 -
<PAGE>


policy  limits,  in which event the Company could incur  significant  costs that
could have a materially adverse effect upon its financial condition.

INSURABLE  RISKS AND  LIMITATIONS OF INSURANCE:  The Company  maintains  certain
insurance,  however,  such  insurance  is subject  to  numerous  exclusions  and
limitations.  The Company maintains a Total Office Policy in Canadian dollars on
its principal  offices.  Generally,  the Total Office  Policy  provides All Risk
Replacement  Cost  Coverage  on office  contents,  up to  $300,000,  with a $500
deductible.  In  addition,  the policy  provides  Commercial  General  Liability
coverage of up to $5,000,000  for Third Party Bodily Injury or Property  Damage,
per occurrence  and  $2,000,000  for Tenants Legal  Liability for any one leased
premises, with a $500 deductible.  The Company also has insurance coverage of up
to $5,000,000 for non-owned automobile liability.

The Company  maintains a Foreign  Commercial  General  Liability  policy in U.S.
dollars  which  provides  US$5,000,000  coverage  for bodily  injury or property
damage per occurrence and coverage up to  US$5,000,000  per offence for personal
injury or advertising  injury (libel,  slander,  etc.). The policy has a general
aggregate limit for all claims during each consecutive policy period, except for
those  resulting  from  product  hazards or  completed  operations  hazards,  of
US$5,000,000. The policy has a US$5,000,000 aggregate limit for each consecutive
policy period,  for bodily injury or property  damage  liability  arising out of
completed operations and products.  In addition,  the Foreign Commercial General
Liability  policy provides for coverage of up to US$10,000 in medical  expenses,
per person,  with a US$10,000 limit per accident,  and up to US$100,000 for each
occurrence of tenants' fire legal liability. The policy does not apply to injury
or damages occurring within Canada, the United States (including its territories
and  possessions),  Puerto Rico, any countries or territories  against which the
United States has an embargo,  sanction or ban in effect,  territorial waters of
any of the foregoing,  the Gulf of Mexico,  or international  waters or airspace
when an injury or damage occurs in the course of travel or transportation to any
country or place  included  in the  foregoing.  The  policy  also does not cover
asbestos  related  claims or  liability  for bodily  injury or property  damages
arising out of the  discharge,  dispersal,  release or escape of smoke,  vapors,
soot, fumes, acids, alkalis, toxic chemicals,  liquids or gases, waste materials
or  other  irritants,   contaminants  or  pollutants  into  or  upon  land,  the
atmosphere,  or any  water-course  or body of water.  The policy also contains a
professional  liability  exclusion  which  applies to bodily  injury or property
damage  arising  out of  defects  in  maps,  plans,  designs  or  specifications
prepared,  acquired  or  used  by the  Company  or  arising  out  of any  act of
negligence,  error,  mistake  or  omission  in  rendering  or  failing to render
professional  consulting  or  engineering  services,  whether  performed  by the
Company or other for whom the Company is responsible.

The Company maintains a Foreign Commercial Automobile Liability Insurance policy
on owned, leased,  hired and non-owned  automobiles with the following liability
limitations:

     o    $5,000,000 bodily injury liability for each person.
     o    $5,000,000 bodily injury liability for each occurrence.
     o    $5,000,000 property damage liability for each occurrence.
     o    $10,000 medical expense coverage, per person.
     o    $10,000 medical expense coverage, per accident.

The foregoing descriptions of the Company's insurance policies do not purport to
be complete and does not cover all of the exclusions to such policies.

The Company has an Executive and Organization Liability insurance policy for the
benefit of  directors  and  officers.  The  aggregate  limit of  liability is $5
million. The policy is renewable on a yearly basis.

MANAGEMENT:  The Company is  dependent  on the  services of Joseph  Grosso,  the
President  and a director of the Company.  The loss of Mr.  Grosso could have an
adverse  affect on the  Company.  Joseph  Grosso  provides  his  services to the
Company through Oxbow International  Marketing Corp. ("Oxbow").  The Company has
entered into a consulting agreement with Oxbow.

All of the Company's other officers are employed by Grosso Group Management Ltd.
("Grosso  Group").  See "Item 6.  Directors,  Senior  Management and Employees -
Directors and Senior  Management - Conflicts of Interest".  The Company does not
maintain "key-man" insurance in respect of any of its principals.


                                     - 9 -
<PAGE>



DEPENDENCE UPON OTHERS: The success of the Company's operations will depend upon
numerous factors, many of which are beyond the Company's control, including: (i)
the ability of the Company to regain its direct ownership of the Navidad Project
through the appeal process;  (ii) the ability to enter into strategic  alliances
through a  combination  of one or more joint  ventures,  mergers or  acquisition
transactions;  (iii) the ability to  discover  and  produce  minerals;  (iv) the
ability to attract and retain  additional  key personnel in investor  relations,
marketing, technical support, and finance; and (v) the ability and the operating
resources to develop and maintain the properties held by the Company.  These and
other  factors will require the use of outside  suppliers as well as the talents
and efforts of the Company. There can be no assurance of success with any or all
of these factors on which the Company's operations will depend.

CONFLICTS OF INTEREST:  Several of the Company's  directors are also  directors,
officers or shareholders of other companies.  Such associations may give rise to
conflicts of interest from time to time. Such a conflict poses the risk that the
Company may enter into a transaction on terms which could place the Company in a
worse  position  than if no conflict  existed.  The directors of the Company are
required  by law to act  honestly  and in good  faith  with a view  to the  best
interest of the Company and to disclose any interest which they many have in any
project or  opportunity  of the Company.  However,  each  director has a similar
obligation to other  companies  for which such director  serves as an officer or
director.  The Company has no specific  internal policy  governing  conflicts of
interest.  See "Item 6. Directors,  Senior  Management and Employees - Directors
and Senior Management - Conflicts of Interest".

FOREIGN COUNTRIES AND REGULATORY REQUIREMENTS: The projects in which the Company
has an  interest  are  located  in  Argentina.  Mineral  exploration  and mining
activities  in  Argentina  may be  affected  in  varying  degrees  by  political
instability  and government  regulations  relating to the mining  industry.  Any
changes in regulations or shifts in political  conditions are beyond the control
of the Company  and may  adversely  affect its  business.  The Company  does not
maintain and does not intend to purchase  political risk  insurance.  Operations
may be affected in varying  degrees by  government  regulations  with respect to
restrictions  on production,  price  controls,  export  controls,  income taxes,
expropriations  of property,  environmental  legislation  and mine  safety.  The
status of Argentina as a developing  country may make it more  difficult for the
Company to obtain any  required  exploration  financing  for its  projects.  The
effect of all of these factors cannot be accurately predicted.

Argentina has recently  experienced  some  economic and  political  instability.
Management  believes the new democratic elected government is making progress in
the   domestic   economy  and  it  is   improving   the  image  of  the  country
internationally.  Additionally,  management  believes  the  economic  crisis  of
December 2001 has been  overcome,  and although the country had defaulted on its
loans,  it has repaid its debt to the  International  Monetary  Fund in December
2005.  The  Company  maintains  the  majority  of its funds in  Canada  and only
forwards sufficient funds to meet current obligations and overhead in Argentina.
The Company does not believe that any current currency restrictions which may be
imposed in Argentina will have any immediate impact on the Company's exploration
activities.

IMPACT OF  GOVERNMENT  REGULATIONS  ON THE COMPANY'S  BUSINESS:  The projects in
which the Company has an interest are located in Argentina.

ARGENTINA

MINING INDUSTRY

Mineral  companies  are  subject  to various  federal  and  provincial  laws and
regulations  including  specific  mining and  environmental  rules.  The Company
believes it is in material compliance with all applicable legislation.

THE RIGHT TO EXPLORE A PROPERTY (A "CATEO")  AND THE RIGHT TO EXPLOIT (A "MINA")
ARE GRANTED BY ADMINISTRATIVE OR JUDICIAL  AUTHORITIES VIA CONCESSIONS.  FOREIGN
INDIVIDUALS  AND  CORPORATIONS  MAY APPLY FOR AND HOLD CATEOS AND MINAS,  AT THE
SAME LEVEL AS LOCAL  INVESTORS  WITHOUT  DIFFERENCES  OF ANY NATURE.  CATEOS AND
MINAS ARE FREELY  TRANSFERABLE  UPON  REGISTRATION  WITH THE  PROVINCIAL  MINING
REGISTRY WHERE TITLE TO THE CATEO OR MINA WAS FIRST  REGISTERED.  UPON THE GRANT
OF A LEGAL  CONCESSION  OF A CATEO OR A MINE,  PARTIES HAVE THE RIGHT TO EXPLORE
THE LAND OR TO OWN THE MINE AND THE RESOURCES EXTRACTED THEREFROM.


                                     - 10 -
<PAGE>


REGULATORY ENVIRONMENT

Management  believes  the  present  government  is  committed  to opening up the
economy and there has been progress in reducing  import duties and export taxes.
For decades  local  industry has been  protected  and the  transition to greater
international competitiveness will take some time.

Importers and exporters  must be registered  with  Argentinean  Customs  office.
Except  for a limited  list of items  requiring  the  previous  approval  of the
authorities there are no import restrictions. Import of pharmaceuticals,  drugs,
foodstuffs,  defense  material and some other items  require the approval of the
applicable government  authority.  Import duties are being progressively reduced
in accordance with the free enterprise and free-trade  policy being  implemented
by the government in order to achieve greater international competitiveness.  To
illustrate,  duties currently range between zero and 20 percent. Restrictions on
exports are not generally imposed,  although there are export taxes currently in
place including mineral products.

POLITICAL ENVIRONMENT AND ECONOMY

In recent years Argentina has experienced a number of changes to its government.
The current president,  Nestor Kirchner, came to power in May 2003. The economic
performance  of the  country  has been  troubled  and  uncertain  since the late
1990's.  Management  believes there are positive  indications  that the economic
situation continues to improve.

ENVIRONMENTAL REGULATIONS: The Company's operations are subject to environmental
regulations promulgated by government agencies from time to time.  Environmental
legislation  provides for restrictions  and prohibitions on spills,  releases or
emissions of various  substances  produced in  association  with certain  mining
industry  operations,  such as seepage from tailings disposal areas, which would
result in  environmental  pollution.  A breach of such legislation may result in
the imposition of fines and penalties.  At present, the Company does not believe
that compliance  with  environmental  legislation  and  regulations  will have a
material  affect  on  the  Company's   operations;   however,   any  changes  in
environmental  legislation or  regulations,  or in the Company's  business,  may
cause  compliance  with such  legislation  and/or  regulation to have a material
impact on the  Company's  operations.  In addition,  certain types of operations
require  the  submission  and  approval  of  environmental  impact  assessments.
Environmental   legislation  is  evolving  in  a  manner  which  means  stricter
standards,  and  enforcement,  fines and penalties for  non-compliance  are more
stringent.  Environmental  assessments  of proposed  projects carry a heightened
degree of  responsibility  for companies and directors,  officers and employees.
The cost of compliance with changes in governmental  regulations has a potential
to reduce the profitability of operations. The Company intends to ensure that it
complies fully with all environmental  regulations relating to its operations in
Argentina.

The provincial  government of Chubut  Province,  Argentina,  has enacted certain
anti-mining  laws banning the use of cyanide in metallic  mineral  extraction in
the Province of Chubut and  open-pit  mining is subject to, a yet to be defined,
zoning  process.  The provincial  legislation is more  restrictive  than current
federal Argentinean mining laws. Certain authorities believe that the provincial
legislation may be unconstitutional. However, there can be no assurance that the
provincial legislation will be repealed.

CURRENCY FLUCTUATIONS:  The Company's operations in Argentina and Canada make it
subject to foreign  currency  fluctuations  and such  fluctuation  may adversely
affect the Company's  financial  position and results.  Certain of the Company's
expenses are  denominated  in U.S.  dollars.  As such,  the Company's  principal
foreign  exchange  exposure is related to the conversion of the Canadian  dollar
into U.S. dollars. The Canadian dollar varies under market conditions. Continued
fluctuation  of the Canadian  dollar  against the U.S.  dollar will  continue to
affect the Company's  operations and financial  position.  The Company's foreign
subsidiaries   comprise  a  direct  and  integral  extension  of  the  Company's
operations.  These  subsidiaries  are also entirely  reliant upon the Company to
provide financing in order for them to continue their activities.  Consequently,
the functional  currency of these subsidiaries is considered by management to be
the Canadian  dollar and  accordingly  exchange gains and losses are included in
net  income.  Management  does not  believe  the  Company is subject to material
exchange rate  exposure from any  fluctuation  of the  Argentine  currency.  The
Company  does not  engage in  hedging  activities.  See "Item 5.  Operating  and
Financial Review and Prospects".

NO DIVIDENDS: The Company has not paid out any cash dividends to date and has no
plans to do so in the immediate future.



                                     - 11 -
<PAGE>


PENNY STOCK  REGULATION:  The SEC has adopted rules that regulate  broker-dealer
practices in connection with  transactions in "penny stocks".  Generally,  penny
stocks are  equity  securities  with a price of less than  US$5.00  (other  than
securities  registered on certain national securities exchanges or quoted on the
NASDAQ system).  Since the Company's shares are traded for less than US$5.00 per
share,  the shares are  subject to the SEC's penny stock  rules.  The  Company's
shares  will be  subject  to the penny  stock  rules  until such time as (1) the
issuer's net tangible assets exceed US$5,000,000 during the issuer's first three
years of continuous  operations or  US$2,000,000  after the issuer's first three
years of continuous operations;  or (2) the issuer has had average revenue of at
least   US$6,000,000   for  three  years.   The  penny  stock  rules  require  a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure  document prescribed by the
SEC that  provides  information  about penny  stocks and the nature and level of
risks in the  penny  stock  market.  The  broker-dealer  must  obtain a  written
acknowledgement   from  the  purchaser  that  the  purchaser  has  received  the
disclosure  document.  The  broker-dealer  also must provide the  customer  with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and  its  salesperson  in the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account. In addition,  the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the  broker-dealer  must
make a  special  written  determination  that  the  penny  stock  is a  suitable
investment for the purchaser and receive the  purchaser's  written  agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules.  Such rules and regulations may make it difficult for holders
to sell the  common  stock of the  Company,  and they may be  forced  to hold it
indefinitely.

ENFORCEMENT  OF LEGAL  PROCESS:  It may be difficult to bring and enforce  suits
against the Company.  The Company is incorporated in British  Columbia,  Canada.
Only one of the Company's  directors is a resident of the United States and all,
or a substantial  portion, of the other directors' assets are located outside of
the United  States.  As a result,  it may be difficult  for U.S.  holders of the
Company's common shares to effect service of process on these persons within the
United States or to enforce  judgments  obtained in the U.S.  based on the civil
liability  provisions of the U.S. federal securities laws against the Company or
their officers and directors.  In addition, a shareholder should not assume that
the courts of Canada (i) would  enforce  judgments  of U.S.  courts  obtained in
actions  against the Company or their officers or directors  predicated upon the
civil liability  provisions of the U.S. federal securities laws or other laws of
the United  States,  or (ii) would  enforce,  in original  actions,  liabilities
against the  Company or their  officers or  directors  predicated  upon the U.S.
federal securities laws or other laws of the United States.

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

     1.   where  the  U.S.   court  where  the  judgment  was  rendered  had  no
          jurisdiction according to applicable Canadian law;
     2.   the judgment was subject to ordinary remedy  (appeal,  judicial review
          and any other  judicial  proceeding  which  renders the  judgment  not
          final,  conclusive  or  enforceable  under the laws of the  applicable
          state) or not final,  conclusive or enforceable  under the laws of the
          applicable state;
     3.   the  judgment  was  obtained  by fraud or in any  manner  contrary  to
          natural justice or rendered in contravention of fundamental principles
          of procedure;
     4.   a dispute  between the same parties,  based on the same subject matter
          has given rise to a judgment  rendered in a Canadian court or has been
          decided  in a third  country  and the  judgment  meets  the  necessary
          conditions for recognition in a Canadian court;
     5.   the outcome of the judgment of the U.S.  court was  inconsistent  with
          Canadian public policy;
     6.   the judgment enforces  obligations  arising from foreign penal laws or
          laws that deal with  taxation  or the taking of  property by a foreign
          government; or
     7.   there has not been  compliance  with  applicable  Canadian law dealing
          with the limitation of actions.


                                     - 12 -
<PAGE>


ITEM 4.   INFORMATION ON THE COMPANY.
--------------------------------------------------------------------------------

HISTORY AND DEVELOPMENT OF THE COMPANY

Since 1996,  the  Company has been  engaged,  through its  subsidiaries,  in the
acquisition  and  exploration  of mineral  properties,  with a primary  focus in
Argentina and Peru. The Company was  incorporated in British  Columbia under the
COMPANY ACT (British  Columbia,  Canada) (the  "Company  Act") on September  17,
1979, as Gold Star  Resources  Ltd. On May 1, 1990, the Company filed an Altered
Memorandum  to reflect its name  change to EEC  Marketing  Corp.  On January 13,
1992,  the  Company  filed an Altered  Memorandum  to reflect its name change to
Amera  Industries  Corp.  From its date of inception  to January 31,  1992,  the
Company was inactive.  Between January 31, 1992 and August 31, 1994, the Company
was involved in the eyewear and optical  products  industry.  Subsequently,  the
Company again became inactive and began seeking a new business opportunity.  The
Company  filed  another  Altered  Memorandum on February 9, 1995, to reflect its
name change to  International  Amera  Industries Corp. On February 20, 1996, the
Company  filed  an  Altered  Memorandum,  changing  its  name  to  IMA  Resource
Corporation,  and became engaged in the  acquisition  and exploration of mineral
properties.

In September of 1995 the Company formed IMPSA Resources Corporation ("IMPSA") in
order to pursue  opportunities  in Peru.  At that time,  exploration  efforts by
other companies in Peru were beginning in earnest.  Management believed Peru was
a favorable  country for mineral  exploration  due to the country's  geology and
strong  mining  culture.   In  addition,   management  believed  that  Peru  was
under-explored.

Management   believed  the  amount  of  capital   necessary  to  fully   exploit
opportunities in Peru was greater than what the Company sought to invest.  Since
the  Company  had an ongoing  exploration  program  in  Argentina,  the  Company
initially limited the funding of its Peruvian projects to $250,000.  The Company
established  IMPSA  and used the  Company's  $250,000  capital  contribution  to
establish  an  infrastructure   and  initiate  property  reviews.  A  number  of
consultants were retained and detailed property assessments were initiated.  The
Company  determined that in order to further develop IMPSA,  additional  funding
would be required.

The Company  initially  received 500,000 common shares,  or 30.76%,  of the then
issued  and  outstanding  common  shares  of  IMPSA,  for its  $250,000  capital
contribution.  As a result of issuing  375,000 shares to IMPSA's  management and
key employees,  and the completion of two private  placements  (resulting in the
issuance of a total of 1,528,000 common shares of IMPSA),  the Company's initial
investment  in IMPSA was  diluted  to  20.76%.  However,  in order to assure the
Company an ongoing  interest in the assets of IMPSA,  the Company retained a 20%
participating  interest in IMPSA (BVI) and  retained the right to maintain a 20%
ownership  interest in IMPSA.  During  fiscal 1998,  the Company  increased  its
investment in IMPSA by purchasing 990,963 shares,  which increased the Company's
percentage  ownership  of IMPSA from  20.76% to 43.81%.  In  January  1999,  the
Company acquired an additional 6,500,000 common shares of IMPSA,  increasing its
equity  interest from 43.81% to 80.69%.  During 2001, the Company  completed the
reorganization  of its  corporate  structure  to  continue  the  funding  of the
Company's  Peruvian  exploration  activities.  On August 20,  2001,  the Company
entered into an agreement with IMPSA,  its 80.69% owned  subsidiary,  to acquire
IMPSA's  80%  interest  in IMPSA  (BVI) and  IMPSA's  advances to IMPSA (BVI) of
approximately  US$1.536  million,  in exchange for $850,000 plus a 2% fee on any
net revenue or proceeds from the disposition of certain properties held by IMPSA
(BVI). See "Item 4. Information on the Company - Organizational  Structure." The
fee is limited to a maximum of  $1,400,000.  This  transaction  was  approved by
IMPSA's  shareholders  on  September  4, 2001.  IMPSA used the cash  proceeds to
retire its debt to the Company.  Rio Tabaconas  (formerly  known as  Tamborapa),
IMPSA's  principal  property,  is for the most part an early  stage  exploration
property and involves a high degree of risk.

On April 3, 1996,  the Company  acquired IMA Holdings Corp.  ("IHC"),  a British
Columbia  company.  The acquisition of IHC by the Company resulted in the former
shareholders  of IHC  acquiring  control  of the  Company.  At the  time  of the
acquisition,  the Company had two common directors with IHC.  Generally accepted
accounting  principles  required the  transaction  to be treated for  accounting
purposes as a reverse-takeover. In accounting for this transaction:

   (i)   IHC was deemed to be the  purchaser and parent  company for  accounting
         purposes.  Accordingly,  its net assets are  included in the  Company's
         consolidated balance sheet at their historical book value; and



                                     - 13 -
<PAGE>



  (ii)   control of the net assets and  business  of the  Company  was  acquired
         effective  April  3,  1996.  The  transaction  was  accounted  for as a
         purchase of the assets and  liabilities  of the Company by IHC at their
         fair values.

IHC's  primary  asset  was a 50%  joint  venture  interest  in Minas  Argentinas
(Barbados)  Inc.  ("Minas  Barbados").  Oro Belle  Resources  Corporation  ("Oro
Belle"),  a third party, held the remaining 50% interest in Minas Barbados.  The
sole asset of Minas  Barbados  is its 100%  interest  in Minas  Argentinas  S.A.
("MASA").  MASA is an Argentine  company whose main activity is  exploration  of
mineral properties in Argentina.  During 1998, the Company held discussions with
Oro  Belle  and  its  majority   shareholder,   Viceroy   Resource   Corporation
("Viceroy"), to restructure the arrangement and facilitate the funding of future
financial requirements of MASA.

In May 1998, the Company entered into an arrangement (the "Plan of Arrangement")
with  Viceroy  whereby the Company  agreed to exchange its 50% interest in Minas
Barbados for 2,200,000  common shares of Viceroy (the  "Viceroy  Shares"),  at a
price of $2.25 per Viceroy  Share (being the market value of the Viceroy  Shares
on the date of the transaction),  a 1% net smelter returns royalty interest (the
"MASA  NSR")  in  the  mineral   property   interests  held  by  MASA,  and  the
extinguishment  of all debts owing by the Company to MASA. No value was ascribed
to the MASA NSR for the purpose of calculating the total consideration  received
at the date of exchange.

The Company also  restructured  its share capital to facilitate the distribution
of  1,540,000  Viceroy  Common  Shares  to  the  Company's   shareholders.   The
transaction was accomplished as follows:

     i)  each issued and  outstanding  common share of the Company was exchanged
         for one  Class A common  share  and one Class B  preferred  share  (the
         "Preferred Shares") of the Company;

    ii)  the holders of the Preferred Shares received  1,540,000  Viceroy Common
         Shares,  directly  from  Viceroy,  in exchange for all of the Preferred
         Shares;

   iii)  the Company  relinquished  its ownership  interest in Minas Barbados to
         Viceroy  in  exchange  for the  Preferred  Shares,  the MASA  NSR,  the
         extinguishment  of all debts to MASA and 660,000  Viceroy  Shares.  The
         Preferred Shares were then canceled by the Company; and

    iv)  all options  and  warrants  to  purchase  common  shares of the Company
         became  exercisable to purchase Class A common shares on the same basis
         as the common shares.

The  transaction   became  effective  July  7,  1998,  upon  filing  an  Altered
Memorandum, and the Company changed its name to IMA Exploration Inc. As a result
of the transaction,  the Company  consolidated its share capital on the basis of
four old shares for one new share.

On June 30, 1999, the  shareholders  of the Company passed a Special  Resolution
approving a redesignation of the Class A Common Shares to common shares.

In August  1999,  the Company  completed a private  placement  with Barrick Gold
Corporation  ("Barrick").  Barrick  was granted an option to earn an interest in
either the  Potrerillos or Rio de Taguas  property.  The funds were spent on the
drilling  program on the  Potrerillos  property.  Proceeds were spent on further
exploration of the Company's  properties in the Valle de Cura region of San Juan
Province,  Argentina from October 2000 to March 2001. As a result of the private
placement  Barrick became the Company's  largest  shareholder.  During September
2003 Barrick reduced its shareholding to 1,000,000 shares.

The  Company  agreed  to spend a  minimum  of  $1,125,000  on its  Valle de Cura
properties  out of the  proceeds  from  the  Barrick  private  placement.  As of
December 31, 2003 this  requirement had been met. On December 15, 2003,  Barrick
served  notice  that it would not be  exercising  the option and the Company has
begun pursuing other partners for the continued exploration of these drill ready
projects.

In 2002, the Company began to acquire properties in Chubut Province,  Argentina.
In 2003,  the Company  significantly  increased  its focus on  activities in the
Chubut region. The Company has entered into a number of joint venture agreements
which resulted in the farm-out of several of its non-core properties.



                                     - 14 -
<PAGE>



In early 2003, the Company focused its efforts on its Navidad property in Chubut
Province located in southern  Argentina.  The preliminary results of its initial
exploration  efforts were very  encouraging.  The first phase of a drill program
commenced in late 2003. The Company  continued its  exploration  and development
program until mid 2006.

On March 29,  2004,  the new British  Columbia  BUSINESS  CORPORATIONS  ACT (the
"BCBCA")  came into force in British  Columbia and  replaced the former  Company
Act, which is the statute that  previously  governed the Company.  See "Item 10.
Additional Information - Memorandum and Articles of Association."

On  May  3,  2004,  the  Company  announced  its  intention  to  proceed  with a
reorganization  of the  Company  which had the result of  dividing  its  present
mineral  resource  assets  between  two  separate  public  companies.  Under the
reorganization,    the   Company's   most   advanced   project,    the   Navidad
silver-lead-copper  project and certain other Navidad area properties in central
Chubut Province,  Argentina (the "Navidad Properties")  continued to be owned by
the Company,  while the  Company's  non-Navidad  mineral  properties  along with
$750,000 of  operating  cash and the joint  venture  agreements  (including  the
marketable securities) relating to the transferred properties  (collectively the
"Transferred  Assets") were  transferred  to Golden Arrow,  a new public company
formed to effect the  reorganization.  The Company  retained the Navidad project
and focused on:

     1.   a significantly  expanded drill program on the numerous targets within
          Navidad;
     2.   more detailed regional exploration for Navidad style targets;
     3.   pursuing a listing on major U.S. and Canadian stock exchanges;
     4.   completing a bankable  feasibility  study on the Navidad  project in a
          timely fashion; and
     5.   exploring  the Navidad  related  properties  directly or through joint
          ventures.

However,  there are no assurances  that the Company will be able to successfully
complete any of the foregoing.

The reorganization was implemented by a Plan of Arrangement under the BCBCA. The
Company's shareholders and optionholders approved the Plan of Arrangement at the
Company's  Annual  General  Meeting  that was held on June 22,  2004.  All other
approvals were subsequently received.

The  common  shares of Golden  Arrow were  distributed  to  shareholders  of the
Company in proportion to their  shareholdings in the Company on July 7, 2004 and
on the basis of one Golden Arrow share for every 10 shares of the Company  held.
The  reorganization  was intended to enhance  shareholder value by enabling each
company  to focus on the  development  of its own  properties,  and by  allowing
shareholders to hold an interest in Golden Arrow which reflects the value of the
Company's portfolio of exploration projects.

In March 2004,  Aquiline  commenced  an action  against  the  Company  seeking a
constructive trust over the Navidad  properties and damages.  The trial was held
in Vancouver,  British Columbia commencing in October 2005, and continuing until
mid-December 2005.

On July 14, 2006 the Supreme Court of British Columbia  released its judgment in
Aquiline's  lawsuit  against the Company.  The Company was not successful in its
defense and the court found in Aquiline's favour.

         The Order reads in part:

         "(a)  that  Inversiones  Mineras  Argentinas SA ("IMA SA") transfer the
               Navidad Claims and any assets related  thereto to Minera Aquiline
               or its nominee within 60 days of this order;

          (b)  that IMA  take  any and all  steps  required  to cause  IMA SA to
               comply with the terms of this order;

          (c)  that the  transfer of the Navidad  Claims and any assets  related
               thereto  is subject  to the  payment to IMA SA of all  reasonable
               amounts expended by IMA SA for the acquisition and development of
               the Navidad Claims to date; and

          (d)  any accounting  necessary to determine the  reasonableness of the
               expenditures  referred to in (c) above shall be by  reference  to
               the Registrar of this court."

The Company has filed an appeal of this judgment  which is scheduled to be heard
by the British  Columbia Court of Appeal on April 10, 2007. While the Company is
confident of a favourable  result from its appeal it recognizes  that


                                     - 15 -
<PAGE>


this could take a substantial  period of time and the costs will be significant,
with no guarantee of a successful outcome for the Company.

On October 18, 2006, the Company and Aquiline reached a definitive agreement for
the orderly  conduct of the Navidad  Project  pending the  determination  of the
appeal.  The transactions  outlined in the Interim Agreement will constitute due
compliance  by both parties with the Order.  Control of the Navidad  Project was
transferred  to Aquiline  in trust for the  ultimately  successful  party in the
appeal, on November 16, 2006.

As a condition of the reorganization Golden Arrow became a party to the Aquiline
action.  The Company has  provided an indemnity to Golden Arrow for any costs or
losses that might be incurred by Golden Arrow in connection with this matter.

ACQUISITION AND DISPOSITION OF MINERAL PROPERTY INTERESTS DURING THE THREE PRIOR
FISCAL YEARS

The Company has made  additions  to mineral  properties  and  deferred  costs of
$2,731,414  and capital  assets of $Nil,  $8,480,509  and $Nil,  $5,082,572  and
$93,650  for  the  fiscal  years  ended  December  31,  2006,   2006  and  2004,
respectively.  As at December 31, 2006,  the Company's  mineral  properties  and
deferred  costs had been  reclassified  as a component  of the Navidad  interest
balance of  $17,949,521,  comprised of mineral  properties and deferred costs of
$17,763,521 and marketable  securities of $186,000 which are subject to transfer
to Aquiline under the terms of the Interim Agreement.

The Company has not made any write down to the value of its Navidad  interest or
mineral  properties and deferred costs.  The Company and Aquiline have agreed to
the costs spent  developing  the Navidad  Project in the amount of  $18,500,000.
Aquiline  has paid  $7,500,000  of the costs into trust and the balance  will be
expended by Aquiline in developing the Navidad  Project during the period of the
appeal  and  secured  under  the terms of the trust  conditions  of the  Interim
Agreement.  In the event that the Company is unsuccessful on appeal, the Company
will be paid the $18,500,000,  less legal costs Aquiline would be entitled to in
relation to the trial and the appeal.

PLANNED EXPLORATION EXPENDITURES AND PROPERTY PAYMENTS

The Company  considers  that it has  adequate  resources to maintain its ongoing
operations  but  currently  may not  have  sufficient  working  capital  to fund
exploration and  development  work in the event it regains  operational  control
over the Navidad  Project.  The Company  will  continue to rely on  successfully
completing   additional   equity  financing  and/or   conducting  joint  venture
arrangements to conduct further  exploration on its properties.  There can be no
assurance  that  the  Company  will be  successful  in  obtaining  the  required
financing or negotiating  joint venture  agreements.  The failure to obtain such
financing  or  joint  venture  agreements  could  result  in  the  loss  of,  or
substantial  dilution of the Company's interest in its properties.  See "Item 4.
Information  on the  Company -  Properties,  Plants and  Equipment  -  Principal
Properties - Argentinean  Properties and "Item 7. Major Shareholders and Related
Party Transactions - Related Party Transactions."

BUSINESS OVERVIEW

The  Company  is  a  natural   resource  company  engaged  in  the  business  of
acquisition,  exploration and development of mineral properties in Argentina. At
present, the Company has no producing properties and consequently has no current
operating income or cash flow. As of the date of this annual report, the Company
is an  exploration  stage company and has not generated any revenues from mining
operations.  There is no assurance  that a commercially  viable mineral  deposit
exists on any of the Company's  properties.  Further  exploration and evaluation
will be  required  before a final  determination  as to the  economic  and legal
feasibility of any of the properties is determined.

GOVERNMENT REGULATIONS

The  Company's   operations  are  subject  to  certain   governmental  laws  and
regulations. See "Item 3. Key Information - Risk Factors - Foreign Countries and
Regulatory  Requirements",  "Item 3. Key  Information - Risk Factors - Impact of
Government Regulations on the Company's Business" and "Item 3. Key Information -
Risk Factors - Environmental Regulations."



                                     - 16 -
<PAGE>


ORGANIZATIONAL STRUCTURE

The Company has one direct wholly-owned subsidiary, IMA Holdings Corp. ("IHC").

IHC has a direct  wholly-owned  subsidiary,  IMA Latin America Inc.  ("IMA Latin
America"), a British Virgin Islands company.

IMA Latin America has one direct  wholly-owned  subsidiary,  Punto Dorado SA ,an
Argentine company.

The  Company's  current  corporate  structure  is depicted  below.  See "Item 4.
Information on the Company - History and Development of the Company."

Unless otherwise  indicated  herein,  the term "Company" means  collectively the
Company and its subsidiaries.

                               CORPORATE STRUCTURE


                       ----------------------------------
                              IMA Exploration Inc.
                       ----------------------------------
                                       |
                                       |
                                      100%
                                       |
                                       |
                       ----------------------------------
CANADA                         IMA Holdings Corp.
                       ----------------------------------
                                       |
                                       |
                                      100%
                                       |
                                       |
                       ----------------------------------
BVI                         IMA Latin America Inc.
                       ----------------------------------
                                       |
                                       |
                                      100%
                                       |
                                       |
                       ----------------------------------
                                Punto Dorado S.A.
                       ----------------------------------


PROPERTIES, PLANTS AND EQUIPMENT

The Company's  principal  business is the acquisition and exploration of mineral
properties.  As of the  date  of  this  annual  report,  all  of  the  Company's
properties  are  without  known  reserves  and  the  Company's   operations  are
exploratory in nature. See "Item 4. Navidad Property - Estimated Resources."




                                     - 17 -
<PAGE>


PRINCIPAL PROPERTIES

ARGENTINEAN PROPERTIES

During the fiscal years ending  December 31, 2006, 2005 and 2004 the Company had
capitalized and expensed costs on all of its properties as follows:

                                                General             Aggregate
                                              Exploration             Amount
                          Amount              Expensed in         Written-off In
Fiscal Year Ending     Capitalized           Fiscal Year(a)         Fiscal Year
------------------     -----------           ------------         --------------

December 31, 2004       $6,551,598               $228,961              $ Nil
December 31, 2005      $15,032,107                $55,914              $ Nil
December 31, 2006      $17,763,521               $498,921              $ Nil

(a)  In fiscal 2006,  this amount  includes  $312,349 in Navidad  holding  costs
     which is comprised of:
     (i)  costs  incurred in order to maintain  basic  operations  in  Argentina
          subsequent  to the  transfer  of  control  of the  Navidad  project to
          Aquiline; and
     (ii) costs  incurred in the period between the date of the judgment and the
          transfer  of control  of the  Navidad  project  to Aquline  that would
          normally have been included in mineral properties and deferred costs.

PRINCIPAL OFFICE

The Company's  principal  office is located at #709 - 837 West Hastings  Street,
Vancouver, British Columbia, V6C 3N6. On January 1, 2005 the Company engaged the
Grosso  Group to  provide  office  facilities  and  management  services.  Until
December  31,  2006,  the  Company  leased a portion  of its  office  space from
Beauregard Holdings Corp. ("Beauregard"),  which was sub-leased to Grosso Group.
See "Item 7. Major  Shareholders and Related Party  Transactions - Related Party
Transactions."



ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
--------------------------------------------------------------------------------

The  following  discussion  of the results of  operations of the Company for the
fiscal  years  ended  December  31,  2006,  2005  and  2004  should  be  read in
conjunction  with the  consolidated  financial  statements  of the  Company  and
related notes included therein.

CRITICAL ACCOUNTING POLICIES

Reference should be made to significant  accounting policies contained in Note 3
of the  December  31,  2006  consolidated  financial  statements  of the Company
attached hereto.  These accounting policies can have a significant impact of the
financial performance and financial position of the Company.

LEGAL PROCEEDINGS

On March 5, 2004, Aquiline Resources Inc. ("Aquiline"),  through its subsidiary,
Minera  Aquiline  Argentina  SA,  filed a claim in the Supreme  Court of British
Columbia  against  the  Company  seeking a  constructive  trust over the Navidad
properties  and  damages.  The  trial  was held in  Vancouver  British  Columbia
commencing in October 2005 and ended on December 12, 2005.

On July 14, 2006 the court  released its judgment on the claim.  The Company was
not successful in its defense and the court found in Aquiline's favour.

The Order reads in part:

         "(a)  that  Inversiones  Mineras  Argentinas SA ("IMA SA") transfer the
               Navidad Claims and any assets related  thereto to Minera Aquiline
               or its nominee within 60 days of this order;

          (b)  that IMA  take  any and all  steps  required  to cause  IMA SA to
               comply with the terms of this order;



                                     - 18 -
<PAGE>


          (c)  that the  transfer of the Navidad  Claims and any assets  related
               thereto  is subject  to the  payment to IMA SA of all  reasonable
               amounts expended by IMA SA for the acquisition and development of
               the Navidad Claims to date; and
          (d)  any accounting  necessary to determine the  reasonableness of the
               expenditures  referred to in (c) above shall be by  reference  to
               the Registrar of this court."

On October 18, 2006, the Company and Aquiline reached a definitive agreement for
the orderly  conduct of the Navidad  Project  pending the  determination  of the
appeal by the Company against the judgment of the trial court.  The parties have
agreed that the  transactions  outlined in the agreement are in  satisfaction of
the Order referenced  above. The principal terms and conditions of the agreement
are as follows:

     (i)      control of the Navidad  Project will be transferred to Aquiline in
              trust for the ultimately successful party in the appeal;

     (ii)     the  Company and  Aquiline  have agreed to the costs spent to date
              developing the Navidad Project in the amount of $18,500,000.  Upon
              transfer  of control of the  Navidad  Project,  Aquiline  will pay
              $7,500,000  of the  costs  into  trust  and  the  balance  will be
              expended by Aquiline in developing the Navidad  Project during the
              period  of the  appeal  and  secured  under the terms of the trust
              conditions;

     (iii)    in the event that the  Company  is  unsuccessful  on  appeal,  the
              Company  will be paid such  $18,500,000  amount,  less legal costs
              Aquiline  would be  entitled  to in  relation to the trial and the
              appeal.

     (iv)     in the event that the Company's appeal is successful,  it will pay
              Aquiline's  qualifying  costs  expended on developing  the Navidad
              Project  during the  period of the  appeal,  less legal  costs the
              Company  would be  entitled  to in  relation  to the trial and the
              appeal, and control of the Navidad Project will then revert to the
              Company; and

     (v)      pending the finalization of the appeal process, neither party will
              attempt a hostile takeover of the other.

The effective date of the transfer of the Navidad project was November 16, 2006.
A copy of the  agreement  has been  posted  on the SEDAR  website  as one of the
Company's  public   documents  and  is  titled  "Interim   Project   Development
Agreement".

The Company has filed an appeal of this judgment.  The appeal is scheduled to be
heard by the  British  Columbia  Court of Appeal on April  10,  2007.  While the
Company is confident of a favourable  result from its appeal it recognizes  that
this will take a substantial  period of time and the costs will be  significant,
with no guarantee of a successful  outcome for the Company.  The Company has not
provided  for any future  legal  costs and will  expense  the legal costs of the
appeal as they occur

USE OF ESTIMATES

The  preparation  of financial  statements  in  conformity  with  Canadian  GAAP
requires  management to make estimates and assumptions  that affect the reported
amount of assets  and  liabilities  and  disclosure  of  contingent  assets  and
liabilities at the date of the financial  statements and the reported  amount of
revenues and expenses during the period.  Significant areas requiring the use of
management  estimates relate to the  determination of environmental  obligations
and  impairment of mineral  properties  and deferred  costs.  Actual results may
differ from these estimates.

MINERAL PROPERTIES AND DEFERRED COSTS

Consistent  with the  Company's  accounting  policy  disclosed  in Note 3 of the
consolidated  financial statements attached hereto,  direct costs related to the
acquisition and exploration of mineral  properties held or controlled by it have
been capitalized on an individual  property basis. It is the Company's policy to
expense any  exploration  associated  costs not related to specific  projects or
properties.   Management   periodically   reviews  the   recoverability  of  the
capitalized  mineral  properties.  Management takes into  consideration  various
information  including,  but not limited to, results of  exploration  activities
conducted to date,  estimated  future metal prices,  and reports and opinions of
outside geologists, mine engineers and consultants. When it is determined that a
project or property will be abandoned then the costs are written-off,  or if its
carrying value has been impaired, then the costs are written down


                                     - 19 -
<PAGE>


to fair  value.  In respect to the  Navidad  project  and the  related  Aquiline
litigation,  at the  current  time the Company is unable to  determine  with any
degree of  certainty  what the  final  outcome  of the  appeal  process  may be.
Accordingly,  the Company has not made any  adjustments to the carrying value of
the Navidad project at December 31, 2006.

The carrying value of the components of the Navidad  project will be reviewed in
subsequent  periods and adjusted if  circumstances  suggest that the full amount
may not be recoverable  and an appropriate  amount  expensed for impairment when
such amounts can be reasonably determined.  Additionally,  in 2005 no impairment
of long-lived assets was identified.

The Company's  operations and results are subject to a number of different risks
at any given time.  These  factors,  include  but are not limited to  disclosure
regarding   exploration,   additional   financing,   project  delay,  titles  to
properties,  price  fluctuations and share price volatility,  operating hazards,
insurable  risks and limitations of insurance,  management,  foreign country and
regulatory  requirements,  currency  fluctuations and environmental  regulations
risks. See "Item 3. Key Information - Risk Factors."

The Company's consolidated financial statements were prepared on a going concern
basis  which  assumes  that it will be able  to  realize  assets  and  discharge
liabilities in the normal course of business.

The Company's  consolidated  financial statements are in Canadian dollars (CDN$)
and are prepared in accordance  with Canadian GAAP, the application of which, in
the case of the  Company,  conforms  in all  material  respects  for the periods
presented with U.S. GAAP except for the measurement  differences  referred to in
Note 10 of the consolidated financial statements of the Company included herein.
The effects of inflation and price changes have not had a material impact on the
Company's income or net sales revenues during the past three years.

The Company and its  subsidiaries'  functional  currency is the Canadian dollar.
The majority of the Company's cash deposits and accounts are in Canadian  funds.
The Canadian dollar varies under market conditions, the continued fluctuation of
the  Canadian  dollar  against  the U.S.  dollar  will  continue  to affect  the
Company's operations and financial position. See "Item 3. Key Information - Risk
Factors - Currency Fluctuations".

OVERVIEW

The  Company  is  a  natural   resource  company  engaged  in  the  business  of
acquisition,  exploration and development of mineral properties in Argentina. At
this stage the Company has no producing  properties  and,  consequently,  has no
current operating income or cash flow.

The Company's accounting policy under Canadian GAAP is to defer all direct costs
related to the  acquisition,  exploration and development of mineral  properties
held  or  controlled  by the  Company  on an  individual  property  basis  until
viability  of a  property  is  determined.  Under US GAAP,  the  costs  would be
expensed. General exploration costs are expensed as incurred. When a property is
placed in  commercial  production,  such deferred  costs are depleted  using the
units-of-production  method.  Management of the Company periodically reviews the
recoverability  of the capitalized  mineral  properties.  Management  takes into
consideration  various  information  including,  but not limited to,  results of
exploration  activities  conducted to date,  estimated future metal prices,  and
reports and opinions of outside geologists, mine engineers and consultants. When
it is determined that a project or property will be abandoned then the costs are
written-off,  or if its  carrying  value has been  impaired,  then the costs are
written down to fair value.  At December 31, 2006,  the Company had  capitalized
$17,763,521 (2005 - $15,032,107,  2004 - $6,551,598) on its Argentine properties
(In 2006 the mineral  properties  and deferred costs balance was classified as a
component of the Navidad interest balance).

During the year ended  December  31,  2004,  the  Company  completed  a brokered
private  placement  of  1,500,000  units at $3.10  per  unit,  for  proceeds  of
$4,307,500 net of costs of $411,237. Each unit consisted of one common share and
one half common share purchase warrant. Each full warrant entitled the holder to
purchase  one  additional  common  share  for  one  year  at  $3.70  per  share.
Underwriters were paid a commission of 6% cash and 200,000 compensation options.
The  compensation  options were exercisable at a price of $3.25 per compensation
option, for a period of twelve months,  into one share and one half warrant with
the  warrants  having  the same  terms as  described  above.  The  underwriters'
compensation  options  were  exercisable  for a period  of twelve  months.  This
financing closed February 23, 2004.


                                     - 20 -
<PAGE>


During the year ended  December  31,  2005,  the  Company  completed  a brokered
private  placement  of  3,333,340  units at $3.00  per  unit,  for  proceeds  of
$9,263,283  net of $600,001  agent's  commission  and $136,736 of related  issue
costs.  Each  unit  consisted  of one  common  share and one half  common  share
purchase warrant.  Each full warrant entitles the holder thereof to purchase one
additional  common  share in the  capital of the Company at a price of $3.45 per
share  until  September  14,  2009.  In  addition  to the  cash  commission  the
underwriters were paid a commission of 7% (233,334) underwriter's warrants. Each
underwriter's  warrant is exercisable  for one share at a price of $3.25,  for a
period of twenty four months,  expiring on September  12,  2007.  The  financing
closed on September 12, 2005.

During the year ended  December 31, 2005, the Company  issued  1,663,517  common
shares on the exercise of options,  warrants and agents warrants for $4,361,011.
As of December 31, 2005,  the Company had reserved  1,900,004  common shares for
issuance upon the exercise of outstanding warrants. As of December 31, 2004, the
Company had reserved  1,422,017  common shares for issuance upon the exercise of
outstanding warrants.

During the year ended December 31, 2006, Company completed a syndicated brokered
private  placement  financing of 2,865,000 special warrants at $3.50 per warrant
for gross proceeds of $10,027,500.  Each special warrant  entitled the holder to
acquire  one unit  consisting  of one  common  share and one half  common  share
purchase  warrant without payment of any additional  consideration.  All special
warrants were converted into common shares and common share purchase warrants on
May 25,  2006.  Each full warrant  entitles  the holder  thereof to purchase one
additional  common  share in the  capital of the Company at a price of $3.80 per
share  until  March  21,  2010.  In  addition  to a  cash  commission  of 6% the
underwriters  were granted  171,900  agents'  warrants,  representing  6% of the
number of special warrants  issued.  Each agents' warrant is exercisable for one
share at a price of $3.80, for a period of twenty four months, expiring on March
21, 2008. As of February 28, 2007 no common share  purchase  warrants or agents'
warrants had been  exercised.  During the year ended December 31, 2006,  335,000
common shares were issued on exercise of options for proceeds of $280,950.

Cash on hand at February 28, 2007 was approximately $8,400,000.

RESULTS OF OPERATIONS

The  following  discussion  of the results of  operations of the Company for the
fiscal  years  ended  December  31,  2006,  2005  and  2004  should  be  read in
conjunction with the consolidated  financial  statements of the Company attached
hereto and related notes included therein.

YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005

For the year ended December 31, 2006, the Company  reported a consolidated  loss
of  $3,581,360  ($0.07 per  share),  a decrease of  $2,183,514  from the loss of
$5,764,874  ($0.12 per share) for the year ended December 31, 2005. The decrease
in the loss in 2006,  compared to 2005 amount,  can primarily be attributed to a
$2,196,370 decrease in operating expenses.

The  Company's  operating  expenses  for the year ended  December  31, 2006 were
$3,951,504 an decrease of $2,196,370 from $6,148,234 in 2005.

Professional  fees  decreased  $1,088,046  to $1,124,144 in 2006, as the Company
incurred  significant legal costs incurred in connection with the Aquiline legal
action during and preceding the initial trial in 2005.  The Company's 2006 legal
fees primarily  consist of costs  incurred in preparing and proceeding  with the
appeal of the Aquiline  judgment and costs relating to the  establishment of the
Interim Project  Development  Agreement.  In 2006 the Company recorded  non-cash
stock based  compensation of $393,120  compared to $2,380,000 in 2005, for stock
options granted to its employees,  consultants and directors,  of which $393,120
is included in expenses in 2006  compared to  $1,800,000  in 2005.  In 2006 $Nil
compared  to  $580,000  in 2005 is  included  in  capitalized  mineral  property
expenditures.

Other notable changes in the operating expenses are:

(i)      Administrative and management  services increased by $166,725 primarily
         as a result of increased fees paid for the services of the president of
         the Company (see discussion on related party transactions below).


                                     - 21 -
<PAGE>


(ii)     Corporate  development  and  investor  relations  decreased by $167,759
         primarily as a result of the Company's  termination of its  third-party
         investor relation contracts in 2006.

(iii)    General  exploration  increased $130,658 as a result of higher activity
         levels of evaluating potential exploration projects.

(iv)     Travel and  accommodation  decreased  $162,643 due to decreased Navidad
         Project  related  travel by Company  staff  subsequent  to the Aquiline
         judgment.

(v)      Salaries increased $66,970 due to higher staff costs in the year.

(vi)     Navidad  holding  costs of $312,349  were  incurred in 2006 compared to
         $Nil in 2005 as a result of:
         a)       costs  incurred  in  order to  maintain  basic  operations  in
                  Argentina subsequent to the transfer of control of the Navidad
                  project to Aquiline; and
         b)       costs  incurred in the period between the date of the judgment
                  and the transfer of control of the Navidad  project to Aquline
                  that would  normally have been included in mineral  properties
                  and deferred costs.

In 2006 the Company recorded interest income of $373,009 compared to $150,406 in
2005,  primarily  as a result of increase of funds on deposit.  A loss of $2,865
for foreign  exchange was recorded in 2006 compared to gain of $232,954 in 2005.
The small foreign exchange adjustment in 2006 is a result of the relatively flat
exchange rate between the Canadian and US dollars  during the year. In 2005, the
large gain was a result of  strengthening  of the Canadian dollar compared to US
dollar and due to the exchange  movements between expenses being incurred in US$
and amounts exchanged to settle such payables.

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

For the year ended December 31, 2005, the Company  reported a consolidated  loss
of  $5,764,874  ($0.12 per share),  an increase of  $1,109,811  from the loss of
$4,655,063  ($0.11 per share) for the year ended December 31, 2004. The increase
in the loss in 2005,  compared to 2004 amount, was due to a number of factors of
which  $1,835,618  can be  attributed  to increases  in  operating  expenses and
$725,807 decrease in other items.

The  Company's  prior period  financial  statements  have been  reclassified  in
accordance  with Canadian GAAP. The net assets  transferred to Golden Arrow were
described  as  "Spin-Off  Assets  Transferred"  and the  allocated  expenses are
described as "Loss Allocated to Spin-Off Assets" in the  consolidated  financial
statements.  This  reclassification  did not change  previously  reported  total
losses.  The  allocation of expenses was calculated on the basis of the ratio of
the  specific  assets  transferred  to assets  retained.  A loss of $131,231 was
allocated to spin-off assets in the 2004 period.

The  Company's  operating  expenses  for the year ended  December  31, 2005 were
$6,148,234 an increase of $1,835,618  from  $4,312,616 in 2004.  $339,516 of the
2004 operating  expenses had been  reclassified  as "Loss  Allocated to Spin-Off
Assets" which relate to the assets  transferred to Golden Arrow.  The allocation
was calculated on the basis of the ratio of the specific  assets  transferred to
assets retained. Certain "Other Income and Expense" items have been allocated to
spin-off assets on a cost specific basis.

Professional fees increased  $1,432,498 to $2,327,278 in 2005,  primarily due to
legal costs  incurred in  connection  with the Aquiline  legal action as well as
increased costs of compliance. In 2005 the Company recorded non-cash stock based
compensation  of $2,380,000  compared to  $1,972,860 in 2004,  for stock options
granted to its  employees,  consultants  and directors,  of which  $1,800,000 is
included in expenses in 2005 compared to $1,972,860 in 2004 and $580,000 in 2005
compared  to  $Nil  in  2004  is  included  in  capitalized   mineral   property
expenditures.  Other notable changes in the operating expenses are: (i) Salaries
increased $272,151 due to staff increases (salaries in 2005 are a portion of the
monthly fee charged for  services by the Grosso  Group while in 2004 the Company
directly  employed  its staff);  (ii)  Administrative  and  management  services
decreased by $89,744 due to some of the services provided by consultants in 2004
were  provided by  employees of the Grosso Group during 2005 and are included in
salaries (iii) there are no cost recoveries (for shared administrative costs and
rent)  from  Amera or  Golden  Arrow in 2005;  (iv)  Corporate  development  and
investor relations increased $207,951,  as the Company has made its shareholders
and others more aware of its Navidad  project and its potential,  (v) Office and
Sundry



                                     - 22 -
<PAGE>


increased  $40,337  mainly due to the  increase  in  insurance  premiums  and an
increase in activity, (vi) Transfer agent and regulatory fees increased $141,972
mainly due to the costs of the Company's listing on the American Stock Exchange,
(vii) General  exploration  decreased by $173,047 as the  Company's  focus is on
Navidad  property for which costs are included in capitalized  mineral  property
expenditures,   (viii)  Travel  increased  $52,444  due  to  travel  related  to
conferences and investor presentations as well as to South America.

In 2005 the Company recorded interest income of $150,406 compared to $101,589 in
2004,  primarily as a result of increase of funds on deposit. In 2005 there were
no reorganization costs recorded by the Company, in 2004 reorganization costs of
$346,103  were  recorded.  There was no gain on the  optioning of  properties to
other mining exploration  companies,  in 2004 a gain of $328,346 was recognized.
No  write  down for the  carrying  value of  marketable  securities  in 2005 was
recognized  while a $99,762  write  down for the  carrying  value of  marketable
securities  was recorded in 2004.  A gain of $232,954  for foreign  exchange was
recorded in 2005  compared to loss of  $195,285  in 2004.  The foreign  exchange
adjustment  in 2005 is a result of a  continued  strengthening  of the  Canadian
dollar compared to US dollar and due to the exchange  movements between expenses
being incurred in US$ and amounts exchanged to settle such payables.  No gain or
loss was  allocated to spin-off  assets in 2005,  in 2004 a loss of $131,232 was
recorded.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

The Company  reported a  consolidated  loss of  $4,655,063  ($0.11 per share) in
2004, an increase of $1,236,645 from the loss of $3,418,418 ($0.11 per share) in
2003. The increase in the loss in 2004, compared to 2003, was due to a number of
factors of which $1,148,400 can be attributed to operating  expenses and $88,245
to other expense items.

The  Company's  prior period  financial  statements  have been  reclassified  to
reflect the  reorganization  in accordance  with Canadian  GAAP.  The net assets
transferred to Golden Arrow are described as "Spin-Off  Assets  Transferred" and
the allocated  expenses are described as "Loss Allocated to Spin-Off  Assets" in
the consolidated  financial  statements.  This  reclassification  did not change
previously  reported  total  losses.  The  allocation  of certain  expenses  was
calculated  on the  basis of the ratio of the  specific  assets  transferred  to
assets retained.  The following  discussion of the 2004 expenses compared to the
2003 expenses is based on expenses as originally reported.

The Company's 2004 operating  expenses were $4,312,616 an increase of $1,148,400
from the $3,164,216 originally reported for 2003. $661,175 of the 2003 operating
expense has been  reclassified  as "Loss  Allocated  to Spin-Off  Assets"  which
relate  to the  assets  transferred  to  Golden  Arrow.  In 2004,  $131,232  was
allocated to the Loss from  Spin-Off  Assets  compared to $969,175 in 2003.  The
allocation  was  calculated  on the  basis of the ratio of the  specific  assets
transferred  to assets  retained.  Certain "Other Income and Expense" items have
been  allocated  to spin-off  assets on the basis of the nature of the income or
expense.  In 2004  expenses  increased as a result of increased  activity at the
Navidad project and the support required at the corporate office.

Professional fees increased $597,017 to $894,780 in 2004, primarily due to legal
costs incurred in connection with the Aquiline legal action as well as increased
costs of  compliance.  During  2004 the Company  recorded a non-cash  expense of
$1,972,860  for stock  based  compensation  for  stock  options  granted  to its
employees  and  directors,  an  increase of $485,625  from 2003.  Other  notable
changes in the operating  expenses are: (i) Salaries  increased  $113,998 due to
staff  increases  (in 2004 the  Company  had an average  of seven  people on its
payroll compared to three in 2003);  (ii) Travel increased  $97,641due to travel
to conferences as well as to South America;  (iii) Cost  recoveries  (for shared
administrative  costs and  rent)  from  Amera  and  Golden  Arrow  increased  by
$114,161;  (iv) Corporate  development and investor relations decreased $62,026,
as  2003  was a more  active  year  in  which  the  Company  developed  investor
awareness.

In 2004 the  Company  recorded a gain of $328,346  on the  optioning  of certain
properties  to  other  mining  exploration  companies  (plus  $433,960  of gains
relating to the Spin-Off  Assets) compared to $481,779 in total in 2003. In 2004
a  write-down  of $99,762  (2003 - $nil) for the  carrying  value of  marketable
securities  was  recognized.  Reorganization  costs of $346,103 were recorded in
2004. An expense of $195,285 for foreign  exchange was recorded in 2004 compared
to  $25,916  in 2003.  The  foreign  exchange  adjustment  is as a result of the
continued strengthening of the Canadian dollar compared to the US dollar and due
to the exchange  movements  between the date of recognition of expenses incurred
in US$ and the date of  settlement.  Interest  and other  income was $101,589 in
2004, an increase of $35,028 from 2003,  primarily as a result of an increase of
funds on deposit.


                                     - 23 -
<PAGE>


On March  5,  2004  Minera  Aquiline  Argentina  SA, a  subsidiary  of  Aquiline
Resources  Inc.  commenced an action against the Company  seeking  damages and a
constructive  trust over the Navidad  Area  Properties.  See "Item 8.  Financial
Information - Legal Proceedings."

LIQUIDITY AND CAPITAL RESOURCES

The Company's  cash  position at December 31, 2006 was $391,420,  an increase of
$240,025 from December 31, 2005.  Short-term  investments  increased $920,000 to
$8,500,000  at December 31, 2006 from  $7,580,000  at December  31, 2005.  Total
assets  increased  to  $27,246,146  at  December  31, 2006 from  $23,497,994  at
December  31,  2005.  This  increase  is mainly due to the  increase  in Navidad
carrying value and in cash balance.

During fiscal 2006,  Company  completed a syndicated  brokered private placement
financing of 2,865,000  special warrants at $3.50 per warrant for gross proceeds
of  $10,027,500.  Each special  warrant  entitled the holder to acquire one unit
consisting of one common share and one half common share purchase  warrant.  All
special  warrants were converted  into common shares on May 25, 2006.  Each full
warrant  entitles the holder thereof to purchase one additional  common share in
the capital of the  Company at a price of $3.80 per share until March 21,  2010.
In addition to a cash  commission of 6% the  underwriters  were granted  171,900
agents' warrants, representing 6% of the number of special warrants issued. Each
agent's warrant is exercisable  for one share at a price of $3.80,  for a period
of twenty four  months,  expiring on March 21, 2008.  At December  31, 2006,  no
common share purchase warrants or agent's warrants had been exercised.

Stock options were exercised  which resulted in cash proceeds of $280,950 during
2006. No warrants were exercised in 2006.

The Company has received  $Nil from the  exercise of options and  warrants  from
January 1 to February 28, 2007. As at February 28, 2007, the Company had working
capital of approximately $8,500,000.

The Company  considers  that it has  adequate  resources  to  maintain  its core
operations  for the next  fiscal  year.  The  Company  will  continue to rely on
successfully  completing  additional equity financing to further exploration and
development of mineral exploration projects.  There can be no assurance that the
Company will be successful in obtaining the required financing.

Except  as  disclosed  the  Company  does  not  know  of  any  trends,   demand,
commitments, events or uncertainties that will result in, or that are reasonably
likely to result in, its liquidity either materially increasing or decreasing at
present  or in the  foreseeable  future.  Material  increases  or  decreases  in
liquidity  are  substantially  determined  by  the  success  or  failure  of the
exploration  programs and by the final  outcome of the  Company's  appeal of the
judgment of the Aquiline litigation.

The Company  does not now and does not expect to engage in  currency  hedging to
offset any risk of currency fluctuations.

The  Company's  management  may elect to  acquire  new  projects,  at which time
additional  equity  financing  may be required to fund overhead and maintain its
interests  in  current  projects,  or may  decide to  relinquish  certain of its
properties.  These decisions will be based on the results of ongoing exploration
programs and the response of equity markets to the projects and business plan.

Except  as  otherwise  disclosed,  the  Company  knows of no  other  contractual
obligations during the period from January 1, 2007 through December 31, 2007.


                                     - 24 -
<PAGE>



OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any material off balance sheet  arrangements that have
or are  reasonably  likely to have a current or future  effect on the  Company's
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations, liquidity, capital expenditures or capital resources.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>

                                            -----------------------------------------------------------------------
                                                                     Payments Due by Period
                                            -----------------------------------------------------------------------
                                                           Less than 1                                  More than 5
                                               Total           Year        1-3 Years      3-5 Years        Years
                                            -----------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>            <C>

Contractual Obligations                            $Nil           $Nil           $Nil           $Nil           $Nil

Long-term Debt Obligations                         $Nil           $Nil           $Nil           $Nil           $Nil

Capital (Finance) Lease Obligations                $Nil           $Nil           $Nil           $Nil           $Nil

Operating Lease Obligations                        $Nil           $Nil           $Nil           $Nil           $Nil

Purchase Obligations                               $Nil           $Nil           $Nil           $Nil           $Nil

Other Long-Term Liabilities Reflected in
the Company's Balance Sheet under the
GAAP of the Primary Financial Statements           $Nil           $Nil           $Nil           $Nil           $Nil
                                            -----------    -----------    -----------    -----------    -----------
Total                                              $Nil           $Nil           $Nil           $Nil           $Nil
                                            ===========    ===========    ===========    ===========    ===========
</TABLE>



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
--------------------------------------------------------------------------------

DIRECTORS AND SENIOR MANAGEMENT

The name,  positions  held with the Company  and  principal  occupation  of each
director,  officer and  executive  officer of the Company  within the five years
preceding the date of this annual report are as follows:


<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                                          PRINCIPAL OCCUPATION DURING PAST             PERIOD OF SERVICE AS A
NAME, AGE AND POSITION(1)                              FIVE YEARS                          DIRECTOR/OFFICER
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                          <C>

GERALD G. CARLSON                         President and Director of Copper Ridge       Chairman and Director since February
Chairman and Director                     Exploration Inc., a public British           1999 to present.
Age 61                                    Columbia mineral exploration company
                                          from March 1999 to present.
                                          President of Nevada Star Resources
                                          Corp, from March 2002 to September
                                          2004.  President of Golden Aria Corp.
                                          from March 2005 to present.

---------------------------------------------------------------------------------------------------------------------------

JOSEPH GROSSO                             Director, President and CEO of the           Director, President and CEO since
President, Chief Executive                Company since February 1990.                 February 1990 to present.
Officer and Director
Age 69

---------------------------------------------------------------------------------------------------------------------------

ARTHUR LANG                               CFO of the Company since April 2,            Director,  Vice-President  and CFO
Chief Financial Officer,                  2004.  Consultant providing financial        since April 2004 to present.
Corporate  Secretary and                  management  services to various              Corporate  Secretary since  August
Director                                  clients from 1999 to April 2004              2005 to present.
Age 63                                    through ArthurG Lang Inc., a private
                                          BC company.

---------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                     - 25 -
<PAGE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                                          PRINCIPAL OCCUPATION DURING PAST             PERIOD OF SERVICE AS A
NAME, AGE AND POSITION(1)                              FIVE YEARS                          DIRECTOR/OFFICER
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                          <C>

NIKOLAOS CACOS                            President, CEO and director of Amera         Vice President since June, 2005 to
Vice President                            Resources Corporation, a public              present.
Age 40                                    British Columbia company, since April        Corporate Secretary June 1998 to
                                          2000.                                        January 2005.

---------------------------------------------------------------------------------------------------------------------------

SEAN HURD                                 Corporate Communications Manager for         Vice President, Corporate
Vice President, Corporate                 the Grosso Group since 2005 and for          Communications since March 2005 to
Communications                            the Company from February 1999 to            present.
Age 40                                    present.                                     Director September 2000 to October
                                                                                       2004.

---------------------------------------------------------------------------------------------------------------------------

ROBERT STUART (TOOKIE) ANGUS              Independent Business Adviser to the          Director since May 2003 to present.
Director                                  mining industry since January 2006.
Age 58                                    Managing Director, Mergers and
                                          Acquisitions, Endeavour Financial
                                          Ltd., November 2003 to December  2005.
                                          Partner in law firm, Fasken Martineau
                                          DuMoulin LLP from February 2001 to
                                          October 2003.

---------------------------------------------------------------------------------------------------------------------------

CHET IDZISZEK                             President, CEO and director of Madison        Director since May 2003 to present.
Director                                  Minerals Inc. from 1993 to present.
Age 59                                    Director of Lund Gold Ltd. from May
                                          1997 to present, President and CEO
                                          since December 1998 to present.
                                          President and CEO of Oromin
                                          Explorations Ltd. from June 1999 to
                                          present.

---------------------------------------------------------------------------------------------------------------------------

DAVID TERRY                               Vice President for the Company since         Director since May 2004 to present.
Director, Vice President,                 June 2004 to present.  Vice President,       Vice President for the Company since
Exploration                               Exploration for the Grosso Group from        June 2004 to present.
Age 41                                    January 2005 to present. Regional
                                          geologist with the British Columbia
                                          Ministry of Energy and Mines in
                                          Cranbrook, British Columbia from May
                                          2001 to March 2004.

---------------------------------------------------------------------------------------------------------------------------

DAVID HORTON                              Senior Vice-President and Director of        Director since June 2004 to present.
Director                                  Canaccord Capital Corporation from
Age 70                                    1996 to present.

---------------------------------------------------------------------------------------------------------------------------

LEONARD HARRIS                            Retired Mining Consultant since 1995.        Director since August 2005 to
Director                                                                               present.
Age 79

---------------------------------------------------------------------------------------------------------------------------

CARLOS D'AMICO                            President of Punto Dorado S.A. since         President since November 2006 to
President (of subsidiary)                 November 2006 to present.  President         present.  President from February,
Age 49                                    since February 2005 and General              2005 to November 2006 of former
                                          Manager   since  2003  to  November          subsidiary.
                                          2006 of Inversiones Mineras
                                          Argentinas S.A., a former subsidiary
                                          of the Company, 2000-2003 President
                                          of Independent Construction Company.
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Officers and  Directors of the Company may also serve as directors of other
     companies. See "Conflicts of Interest" below.


                                     - 26 -
<PAGE>




There are no family relationships between any directors or executive officers of
the Company.  There are no known  arrangements or understandings  with any major
shareholders,  customers,  suppliers  or  others,  pursuant  to which any of the
Company's  officers or  directors  was selected as an officer or director of the
Company.  See "Item 7. Major  Shareholders  and  Related  Party  Transactions  -
Related Party Transactions."

CONFLICTS OF INTEREST

There are no existing or potential conflicts of interest among the Company,  its
directors, officers or promoters as a result of their outside business interests
with the  exception  that  certain  of the  Company's  directors,  officers  and
promoters serve as directors,  officers and promoters of other  companies,  and,
therefore,  it is possible  that a conflict may arise  between their duties as a
director,  officer or promoter of the Company and their  duties as a director or
officer of such other companies.

The  directors  and  officers of the Company are aware of the  existence of laws
governing accountability of directors and officers for corporate opportunity and
requiring disclosures by directors of conflicts of interest and the Company will
rely upon such laws in respect of any  directors'  and  officers'  conflicts  of
interest  or in  respect  of any  breaches  of duty by any of its  directors  or
officers.  All such conflicts will be disclosed by such directors or officers in
accordance with the BCBCA, and they will govern themselves in respect thereof to
the best of their ability in accordance with the  obligations  imposed upon them
by law.

All of the Company's  directors are also directors,  officers or shareholders of
other  companies  that are engaged in the business of acquiring,  developing and
exploiting natural resource properties  including  properties in countries where
the Company is conducting its  operations.  Such  associations  may give rise to
conflicts of interest from time to time. Such a conflict poses the risk that the
Company may enter into a transaction on terms which place the Company in a worse
position than if no conflict existed.  The directors of the Company are required
by law to act honestly and in good faith with a view to the best interest of the
Company  and to  disclose  any  interest  which they may have in any  project or
opportunity of the Company.  However,  each director has a similar obligation to
other  companies for which such director  serves as an officer or director.  The
Company has no specific internal policy governing conflicts of interest.

The following table  identifies the name of each director of the Company and any
company,  which is a reporting  issuer in Canada or the United  States,  and for
which such director currently serves as an officer or director:


<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR                NAME OF COMPANY                         POSITION              TERM OF SERVICE
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                      <C>                   <C>

Gerald G. Carlson               Copper Ridge Explorations               President/Director    Mar/99 to present
                                Golden Aria Corp                        President/Director    Mar/05 to present
                                Almaden  Minerals Ltd.                  Director              Jul/98 to present
                                Amera Resources Corporation             Director              Nov/06 to present
-------------------------------------------------------------------------------------------------------------------

Arthur Lang                     Golden Arrow Resources Corporation      Director, CFO ,VP     Jul/04 to present
                                Amera Resources Corporation             CFO & Secretary       Mar/05 to present
                                Astral Mining Corporation               CFO                   Feb/07 to present
-------------------------------------------------------------------------------------------------------------------

Joseph Grosso                   Amera Resources Corporation             Chairman/Director     Feb/04 to present
                                Golden Arrow Resources Corporation      Chairman/President/   Jul/04tto present
                                                                        CEO/Director
                                Gold Point Energy Corp.                 Chairman/Director     April/06 to present
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(Table continued on next page)


                                     - 27 -
<PAGE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR                NAME OF COMPANY                         POSITION              TERM OF SERVICE
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                      <C>                   <C>

Robert Stuart (Tookie) Angus    Wildcat Silver Corporation              Director              May/06 to present
                                Uranium North Resources Corp.           Director              May/06 to present
                                United Bolero Development Corp          Director              March/06 to present
                                Crescent Gold Limited                   Director              Nov/05 to present
                                Tsodilo Resources Limited               Director              Sep/04 to present
                                CMQ Resources Inc.                      Director              Dec/03 to present
                                Nevsun Resources Ltd.                   Director              Jan/03 to present
                                Plutonic Power Corporation              Director              Jun/99 to present
                                Blackstone Ventures Inc.                Director              Sept/97 to present
                                Dynasty Gold Corp.                      Director              Jan/06 to present
                                                                        Chairman              Oct/99 to present
                                Polaris Minerals Corporation            Director              Sept/03 to present
-------------------------------------------------------------------------------------------------------------------

Chet Idziszek                   Madison Minerals Inc.                   Director              Nov/93 to present
                                                                        President             Nov/93 to Nov/99 &
                                                                                              Reappointed Aug/01
                                                                                              to present
                                                                        CEO                   Apr/97 to present
                                                                        Chairman              Nov/99 to present

                                Lund Gold Ltd.                          Director              May/97 to present
                                                                        CEO & President       Dec/98 to present

                                Oromin Explorations Ltd.                Director              Feb/94 to present
                                                                        President             May/95 to Oct/97 &
                                                                                              Reappointed Jun/99
                                                                                              to present

                                Surge Global Energy Inc.                Director              Aug/02 to present

                                Yukon Gold Corporation, Inc.            Director              Nov/05 to present
-------------------------------------------------------------------------------------------------------------------

David Terry                     Amera Resources Corporation             VP Exploration        Mar/04 to present
                                Golden Arrow Resources Corporation      Director &            Jul/04 to present
                                                                        VP Exploration
                                Astral Mining Corporation               Director              Mar/05 to present
-------------------------------------------------------------------------------------------------------------------

David Horton                    Golden Arrow Resources Corporation      Director              July/04 to present
-------------------------------------------------------------------------------------------------------------------

Leonard Harris                  Solitario Resources Corp.               Director              Jun/98 to present
                                Cardero Resource Corp.                  Director              Feb/00 to present
                                Canarc Resource Corp.                   Director              Jun/01 to present
                                Sulliden Exploration Inc.               Director              Sep/03 to present
                                Endeavour Silver Corp.                  Director              Jul/03 to present
                                Alamos Gold Inc.                        Director              Nov/03 to present
                                Morgain Minerals Inc.                   Director              Jun/04 to present
                                Indico Technologies Ltd.                Director              Apr/06 to present
                                Aztec Metals Corp.                      Director              Feb/07 to present
-------------------------------------------------------------------------------------------------------------------
</TABLE>

COMPENSATION

During the fiscal year ended  December 31, 2006,  the  directors and officers of
the Company, as a group, had received or charged the Company a total of $533,917
(2005-$241,088;  2004-$476,226)  for  services  rendered  by the  directors  and
officers or companies owned by the individuals.

The Company is required,  under applicable securities  legislation in Canada, to
disclose to its shareholders  details of compensation  paid to its directors and
officers.  The  following  fairly  reflects all material  information  regarding


                                     - 28 -
<PAGE>


compensation  paid  by  the  Company  to  its  directors  and  officers,   which
information has been disclosed to the Company's  shareholders in accordance with
applicable Canadian law.

EXECUTIVE COMPENSATION

"Named Executive Officers" means the Chief Executive Officer and Chief Financial
Officer  of the  Company,  regardless  of the  amount  of  compensation  of that
individual,  and each of the Company's  four most highly  compensated  executive
officers,  other than the Chief Executive  Officer and Chief Financial  Officer,
who were serving as executive officers at the end of the most recent fiscal year
and whose total  salary and bonus  amounted to  $150,000 or more.  In  addition,
disclosure  is also  required  for any  individual  whose total salary and bonus
during the most recent  fiscal year was at least  $150,000,  whether or not they
were an executive officer at the end of the most recent fiscal year.

During the year ended  December  31, 2006,  the Company had two Named  Executive
Officers:  Joseph Grosso, President and Chief Executive Officer and Arthur Lang,
Chief Financial  Officer (the "Named Executive  Officers").  The following table
sets forth all annual and long-term  compensation  awarded, paid to or earned by
the Company's Named Executive Officers during the financial years ended December
31, 2004, 2005 and 2006.

                                                      SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                    ---------------------------------------
                                                                             LONG TERM COMPENSATION
                                  ------------------------------    ---------------------------------------
                                      ANNUAL COMPENSATION                     AWARDS                PAYOUTS
                                  ------------------------------    ----------------------------    -------    ---------
                                                         OTHER                       RESTRICTED
------------------                                       ANNUAL      SECURITIES      SHARES OR                 ALL OTHER
    NAME AND            ----                             COMPEN-    UNDER OPTIONS/   RESTRICTED      LTIP        COMPEN-
PRINCIPAL POSITION     YEAR(1)    SALARY      BONUS      SATION     SARS GRANTED     SHARE UNITS    PAYOUTS      SATION
                                    ($)        ($)         ($)          (#)(2)            (#)         ($)          ($)
------------------      ----      ------------------------------    ----------------------------    -------    ---------
<S>                   <C>        <C>          <C>        <C>       <C>                  <C>         <C>          <C>

Joseph Grosso(3)        2006      $200,667    $150,000      -          48,000             -             -           -
President and           2005      $102,000        -         -         150,000             -             -           -
Chief Executive         2004      $102,000        -         -         150,000             -             -           -
Officer
------------------      ----      ------------------------------    ----------------------------    -------    ---------

Arthur Lang, Chief      2006       $59,400(4)  $50,000(4)   -          35,000             -             -           -
Financial Officer       2005       $68,927(5)     -         -         100,000             -             -           -
                        2004       $58,671        -         -          50,000             -             -           -
------------------      ----      ------------------------------    ----------------------------    -------    ---------

</TABLE>

(1)  Fiscal years ended  December 31, 2006,  2005 and 2004.
(2)  See "Options and Stock Appreciation Rights".
(3)  See description of termination  payment for Mr. Grosso in Item 6, agreement
     dated July 1, 1999 with Oxbow International Marketing Corp.
(4)  During the year ended December 31, 2006 Mr. Lang's total  compensation from
     the Grosso  Group was  $134,000,  of which  $59,400  was  allocated  to the
     Company as part of the Grosso Group fees for the year. Additionally, during
     the year ended  December  31,  2006 a bonus of $50,000 was paid to Mr. Lang
     directly by the Company.
(5)  During the year ended December 31, 2005 Mr. Lang's total  compensation from
     the Grosso Group was $94,667, of which $68,927 was allocated to the Company
     as part of the Grosso Group fees for the year.

LONG TERM INCENTIVE PLAN AWARDS

Long Term Incentive Plan Awards  ("LTIP") means any plan providing  compensation
intended to serve as an incentive for  performance to occur over a period longer
than one fiscal year whether  performance  is measured by reference to financial
performance  of the  Company or an  affiliate  of the  Company,  or the price of
shares of the Company but does not include option or stock  appreciation  rights
plans or plans for compensation  through restricted shares or units. The Company
has not  granted  any  LTIP's to the Named  Executive  Officers  during the most
recently completed fiscal year.

OPTIONS AND STOCK APPRECIATION RIGHTS

Stock Appreciation  Rights ("SAR's") means a right,  granted by an issuer or any
of its subsidiaries as compensation for services  rendered or in connection with
office or  employment,  to receive a payment of cash or an issue or



                                     - 29 -
<PAGE>

transfer of  securities  based wholly or in part on changes in the trading price
of the shares of the Company. No SAR's were granted to or exercised by the Named
Executive Officers or directors during the most recently completed fiscal year.

OPTION GRANTS

The following  table sets forth stock options  granted by the Company during the
financial  year ended December 31, 2006 to the Named  Executive  Officers of the
Company:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                 Market Value
                                        % of Total Options                      of Securities
                     Securities Under       Granted in        Exercise or     Underlying Options
Name                 Options Granted     Financial Year(1)   Base Price(2)    on Date of Grant      Expiration Date
                           (#)                                ($/Security)       ($/Security)
-------------------------------------------------------------------------------------------------------------------
<S>                    <C>                 <C>                <C>               <C>                <C>

Joseph Grosso             48,000               17.6%             $3.21              $3.21             June 22, 2011
-------------------------------------------------------------------------------------------------------------------
Arthur Lang               35,000               12.8%             $3.21              $3.21             June 22, 2011
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Percentage of all options granted during the financial year.
(2)  The exercise  price of stock  options was set according to the rules of the
     TSX-V.  The  exercise  price of stock  options  may only be adjusted in the
     event that specified events cause dilution of the Company's share capital.

AGGREGATED OPTION EXERCISES AND OPTION VALUES

The following  table sets forth details of all exercises of stock options by the
Named Executive  Officers during the most recently completed fiscal year and the
fiscal year-end value of unexercised options on an aggregated basis:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                               Value of Unexercised
                         Securities                               Unexercised Options         In-the-Money Options
Name                     Acquired on        Aggregate Value         at Fiscal Year-End          Fiscal Year-End(2)
                         Exercise(1)           Realized(2)      Exercisable/Unexercisable    Exercisable/Unexercisable
                             (#)                  ($)                      (#)                         ($)
---------------------------------------------------------------------------------------------------------------------

<S>                       <C>                  <C>                  <C>                         <C>

Joseph Grosso                Nil                  Nil                 592,500 / Nil                 $4,750 / N/A
---------------------------------------------------------------------------------------------------------------------

Arthur Lang                  Nil                  Nil                 150,000 / Nil                     $0 / N/A
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All options are exercisable to acquire the Company's Common Shares.
(2)  Value of  unexercised  in-the-money  options  calculated  using the closing
     price of the  Company's  Common  Shares on the TSX-V on December  31, 2006,
     $0.60 less the exercise price per share of in-the-money stock options.

PENSION PLAN

The Company  does not provide  retirement  benefits  for  directors or executive
officers.

TERMINATION OF EMPLOYMENT, CHANGES IN RESPONSIBILITY AND EMPLOYMENT CONTRACTS

The Company has no plans or arrangements in respect of remuneration  received or
that may be  received by the Named  Executive  Officers  in the  Company's  most
recently completed fiscal year or current fiscal year in respect of compensating
such  officers  in the  event of  termination  of  employment  (as a  result  of
resignation,   retirement,   change   of   control,   etc.)  or  a   change   in
responsibilities  following  a  change  of  control,  where  the  value  of such
compensation exceeds $100,000, except as disclosed in "Item 6. Directors, Senior
Management and Employees - Compensation - Management Contracts."

COMPENSATION OF DIRECTORS

There are no arrangements  under which directors were compensated by the Company
during the most recently  completed  financial  year ended December 31, 2006 for
their services in their capacity as directors.



                                     - 30 -
<PAGE>


During the last completed  financial year ending  December 31, 2006, the Company
paid directly  $133,250 and indirectly  $57,400 (as part of the allocated Grosso
Group monthly fees) to its directors who are not Named Executive Officers,  as a
group,  for  salaries  and  professional  services  rendered.  See also "Item 6.
Directors,   Senior   Management  and  Employees  -  Compensation  -  Management
Contracts."


OPTION GRANTS

The following table sets forth  information  concerning stock options granted to
directors,  as a group,  who are not Named  Executive  Officers  during the most
recently completed fiscal year:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                              % of Total                        Market Value
                           Securities      Options Granted                      of Securities
                         Under Options            in           Exercise or    Underlying Options
Name                       Granted(1)     Financial Year(2)   Base Price(3)   on Date of Grant      Expiration Date
                              (#)                              ($/Security)       ($/Security)
-------------------------------------------------------------------------------------------------------------------
<S>                        <C>               <C>               <C>                <C>              <C>

Directors as a group
who are not Named
Executive Officers          120,000              44%              $3.21             $3.21            June 22, 2011
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All options are for the Company's Common Shares.
(2)  Percentage of all options granted in the year.
(3)  The  exercise  price of the option is set at not less than the market value
     of the  Company's  Common  Shares  on the date of  grant,  less a  discount
     allowed by the TSX-V.  The  exercise  price may be adjusted  under  certain
     circumstances, subject to regulatory acceptance.

AGGREGATED OPTION EXERCISES AND OPTION VALUES

The following table sets forth details of all securities acquired, the aggregate
value  realized  and the  fiscal  year  end  number  and  value  of  unexercised
options/SARs  held  by  directors,  as a  group,  who are  not  Named  Executive
Officers:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                                                                               Value of Unexercised
                         Securities                               Unexercised Options        In-the-Money Options at
Name                     Acquired on        Aggregate Value         at Fiscal Year-End          Fiscal Year-End(2)
                         Exercise(1)           Realized         Exercisable/Unexercisable    Exercisable/Unexercisable
                             (#)                  ($)                      (#)                         ($)
<S>                       <C>                  <C>                  <C>                         <C>
----------------------------------------------------------------------------------------------------------------------

Directors, as a
group, who are not
Named Executive
Officers                     Nil                  Nil                 1,260,000 / N/A                 $0 / N/A
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All options are exercisable to acquire the Company Common Shares.
(2)  Value of  unexercised  in-the-money  options  calculated  using the closing
     price of the  Company's  Common  Shares on the TSX-V on  December  31, 2006
     $0.60, less the exercise price per share of in-the-money stock options.

PROPOSED COMPENSATION

The Company has no bonus,  profit  sharing or similar plans in place pursuant to
which cash or non-cash compensation is proposed to be paid or distributed to the
Named Executive Officers in the current or subsequent fiscal years other than as
disclosed herein.


                                     - 31 -
<PAGE>


MANAGEMENT CONTRACTS

GROSSO GROUP MANAGEMENT LTD.

Effective  January 1, 2005, the Company engaged Grosso Group to provide services
and  facilities  to the  Company.  On May 6, 2005,  an  Administration  Services
Agreement was  finalized  and executed by the Company and the Grosso Group.  The
Grosso Group is a private  company which is owned by the Company,  Golden Arrow,
Amera,  Astral Mining  Corporation  ("Astral"),  Gold Point Energy Corp.  ("Gold
Point"),  and Blue Sky Uranium  Corp.  ("Blue Sky") each of which own one share.
The Grosso Group provides its shareholder  companies with geological,  corporate
development,  administrative and management services.  The Grosso Group staff is
available to the  shareholder  companies on a cost  recovery  basis  without the
expense of full time personnel.  The  shareholder  companies pay monthly fees to
the Grosso  Group.  The fee is based upon a reasonable  pro-rating of the Grosso
Group's  costs  including  its staff and overhead  costs among each  shareholder
company  with regard to the  mutually  agreed  average  annual level of services
provided to each shareholder  company.  During fiscal 2006, the Company incurred
fees of $724,902 (2005 - $730,802) to the Grosso Group. In addition, included in
the accounts  receivable,  prepaids and deposits is a $205,000 (2005 - $205,000)
deposit to the Grosso Group.  The deposits from the member  companies  were used
for the purchase of  equipment  and  leasehold  improvements  and for  operating
working capital.

The Administration Services Agreement may be terminated by a shareholder company
after January 1, 2007, upon 30 days written notice to the Grosso Group.

It  is  anticipated  that  upon  termination  of  the  Administration   Services
Agreement,  each of the  shareholder  companies  will agree to resell its common
share back to the Grosso Group for $1.00 and the shareholder  companies will not
be able to sell,  transfer or otherwise dispose of or encumber such share during
the term of the Administration Services Agreement.

The Grosso Group's areas of experience encompass financing,  marketing, property
acquisition,  community relations,  socioeconomic issues, regulatory compliance,
government relations, property exploration and investor relations.
Additionally  the  Grosso  Group  has a  number  of other  support  staff at its
corporate  office and  arrangements  with contract  providers of accounting  and
administrative  services at the country  operations'  offices in  Argentina  and
Peru.

The members of the board of directors  of the Grosso Group are  appointed by the
shareholder  companies,  with each  shareholder  company  appointing  one of its
directors to serve as a director of the Grosso  Group.  As of February 28, 2007,
the  directors of the Grosso Group are Nikolaos  Cacos,  Joseph  Grosso,  Arthur
Lang, Manfred Kurschner, Nick DeMare and .Sean Hurd. Messrs. Lang and Grosso are
officers and  directors  of the Company.  Mr. Lang is an officer and director of
Golden  Arrow and an officer of Amera and Astral.  Mr.  Grosso is an officer and
director of Golden Arrow and of Amera and  director of Gold Point.  Mr. Cacos is
an  officer  of IMA, a  director  and  officer  of Golden  Arrow and Amera and a
director of Blue Sky.  Mr.  Kurschner is an officer and director of Astral and a
director of Golden Arrow and Mr. DeMare is an officer and director of Gold Point
and Blue Sky.  Mr.  DeMare  indirectly  owns 100% of Chase  Management  Ltd.,  a
company which provides consulting services to the Company and other Grosso Group
shareholder companies.  Mr. Hurd is an officer of IMA and President and Director
of Blue Sky.

Each of the public  company  shareholders  of the Grosso Group will have its own
separate board of directors  (whose members may include persons  employed by the
Grosso Group);  however, some directors will serve on multiple boards and on the
board of directors of companies which are not shareholders of the Grosso Group.

In connection with the formation and establishment of the Grosso Group, Mr. Nick
DeMare  was  issued  the  initial  share of the  Grosso  Group  and acted as the
President,  Secretary and sole director of the Grosso Group.  Effective February
6, 2004, Mr. DeMare  transferred the sole outstanding  share of the Grosso Group
to Joseph Grosso,  the Chairman and a director and principal  shareholder of the
Company.  Mr. DeMare also resigned as a director and the President and Secretary
of the Grosso Group effective February 6, 2004 and Mr. Grosso was appointed as a
director  and the  President  and  Secretary  of the Grosso  Group.  Mr.  Grosso
returned the sole outstanding  share of the Grosso Group to the Grosso Group for
cancellation and one share was issued to the Company.

The Board of  Directors  of the Company  approved  the  Administration  Services
Agreement.


                                     - 32 -
<PAGE>


JOSEPH GROSSO

By agreement,  made effective as of July 1, 1999, Oxbow International  Marketing
Corp., a private  company owned by Joseph  Grosso,  was paid a consulting fee of
$8,500 per month for making available the services of Joseph Grosso as President
and Chief  Executive  Officer  of the  Company.  During  the  fiscal  year ended
December 31, 2006 Oxbow was paid $350,667  (2005 - $102,000).  On April 12, 2006
the  Board  accepted  the  recommendation  from the  Compensation  Committee  to
increase the monthly  consulting fee effective May 1, 2006 to $20,833  ($250,000
per annum) and to pay a bonus of $150,000.

Pursuant to the terms of the agreement, in the event the agreement is terminated
by the Company as a result of Mr. Grosso's death or permanent  disability  while
providing  services to the Company,  or by Mr.  Grosso as a result of a material
breach or default by the  Company,  Oxbow is entitled to a bonus  payment in the
amount of $461,500.

In the event the agreement is  terminated  by the Company  without cause or as a
result of a change of control, Oxbow is entitled to (i) any monthly compensation
due to the date of  termination,  (ii)  options  as  determined  by the board of
directors,  (iii) three years of Mr. Grosso's monthly compensation (which may be
adjusted annually), and (iv) a bonus payment of $461,500.

NIKOLAOS CACOS

By agreement  dated January 1, 1996, as amended  January 5, 2004,  Mr. Cacos was
paid a fee paid of $1,375 per month.  Mr.  Cacos  resigned  as a director of the
Company in October 2004.  During fiscal 2006, Mr. Cacos was paid directly by the
Company  $Nil (2005 - nil,  2004 -  $17,600).  On  January  1, 2005 Mr.  Cacos's
contract  with the Company was  cancelled  and replaced with a contract with the
Grosso  Group.  During the year ended  December  31,  2006,  Mr.  Cacos's  total
compensation from the Grosso Group was $22,500, of which $9,225 was allocated to
the Company as part of the Grosso Group fees for the year.

SEAN HURD

By agreement  dated June 11, 2001, as extended,  Mr. Hurd, a former  director of
the  Company,  was paid  $4,000 per month for  professional  services  rendered.
During the fiscal year ended  December 31, 2006,  Mr. Hurd was paid  directly by
the Company $Nil (2005 - nil,  2004 - $73,800).  Mr. Hurd resigned as a director
in October  2004.  In January  2005,  Mr.  Hurd became an employee of the Grosso
Group.  During the year ended December 31, 2006,  Mr. Hurd's total  compensation
from the Grosso  Group was  $112,000,  of which  $45,920  was  allocated  to the
Company as part of the Grosso Group fees for the year. the year.

ARTHUR LANG

By agreement dated April 23, 2004,  Arthur Lang, the Chief Financial Officer and
a  director  of  the  Company,  was  paid a  salary  of  $80,000  per  year  for
professional services rendered.  Mr. Lang is also reimbursed for certain monthly
club dues.  During the fiscal year ended  December 31,  2004,  Mr. Lang was paid
$58,671.  Mr.  Lang  became an  employee  of the Grosso  Group in January  2005.
Effective May 1, 2005 Mr. Lang's annual salary was increased to $102,000. During
the year ended December 31, 2005, Mr. Lang's total  compensation from the Grosso
Group was $94,667,  of which $68,927 was allocated to the Company as part of the
Grosso  Group  fees for the year.  On April  12,  2006 the  Board  accepted  the
recommendation  from the  Compensation  Committee to increase Mr.  Lang's annual
salary to $150,000  effective May 1, 2006 and to pay a bonus of $50,000.  During
the year ended December 31, 2006, Mr. Lang's total compensation from the Company
was $109,400 of which $59,400 was allocated to the Company as part of the Grosso
Group  fees  and  $50,000  was  paid  directly  as a  bonus.  Mr.  Lang's  total
compensation from the Grosso Group was $134,000.



                                     - 33 -

<PAGE>


DAVID TERRY

Mr. Terry, an officer and a director of the Company,  had a consulting agreement
with Amera dated  February  16,  2004,  amended  June 1, 2004,  which called for
monthly  payments of $10,000.  The Company had agreed to reimburse Amera for 50%
of these fees.  In the fiscal  year ended  December  31,  2004 the Company  paid
$43,000  as a result  of this  arrangement.  On  January  1,  2005  Mr.  Terry's
agreement with Amera was replaced by a similar  agreement with the Grosso Group.
During the year ended December 31, 2005, Mr. Terry's total compensation from the
Grosso Group was $120,000, of which $63,600 was allocated to the Company as part
of the Grosso Group fees during the year.  On April 12, 2006 the Board  accepted
the  recommendation  from the  Compensation  Committee to increase  Mr.  Terry's
monthly fee to $12,500  ($150,000  annually)  effective May 1, 2006 and to pay a
bonus of $50,000.  During the year ended  December 31, 2006,  Mr.  Terry's total
compensation from the Company was $107,400 of which $57,400 was allocated to the
Company as part of the Grosso  Group fees and  $50,000  was paid  directly  as a
bonus. Mr. Terry's total compensation from the Grosso Group was $140,000.

CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES

Other than as disclosed  herein, no director or officer of the Company is or has
been,  within the preceding 10 years,  a director or officer of any other issuer
that, while that person was acting in that capacity:

(a)  was the subject of a cease  trade  order or similar  order or an order that
     denied the other issuer access to any  exemptions for a period of more than
     30 consecutive days, or

(b)  became  bankrupt,  made  a  proposal  under  any  legislation  relating  to
     bankruptcy or insolvency or was subject to or instituted  any  proceedings,
     arrangement,  or  compromise  with  creditors  or had a receiver,  receiver
     manager or trustee appointed to hold its assets.

PENALTIES OR SANCTIONS

No director or officer of the Company is or has, within the past 10 years:

(a)  been subject to any penalties or sanctions  imposed by a court  relating to
     Canadian securities legislation or Canadian securities regulatory authority
     or has  entered  into a  settlement  agreement  with a Canadian  securities
     regulatory authority, or

(b)  been  subject to any other  penalties  or  sanctions  imposed by a court or
     regulatory  body  that  would be  likely to be  considered  important  to a
     reasonable investor making an investment decision.

INDIVIDUAL BANKRUPTCIES

No director or officer of the Company is or has,  within the preceding 10 years,
become bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or been subject to or instituted  any  proceedings,  arrangement,  or
compromise  with  creditors  or had a  receiver,  receiver  manager  or  trustee
appointed to hold the assets of that individual.

BOARD PRACTICES

COMPENSATION COMMITTEE

The board of directors of the Company has adopted  procedures to ensure that all
employment,  consulting or other compensation agreements between the Company and
any  director  or senior  officer of the  Company or between  any  associate  or
affiliate of the Company and any director or senior  officer are  considered and
approved by the  disinterested  members of the board of directors or a committee
of independent directors.

The  Company's  Compensation  Committee  must  be  comprised  of  at  least  two
independent directors, who are not employees,  control persons or members of the
management of the Company or any of its associates or affiliates. As of the date
of this  report,  Messrs.  Horton  and Angus  are  members  of the  Compensation
Committee.   The  board  of  directors


                                     - 34 -
<PAGE>

of the  Company,  after  each  annual  shareholder's  meeting  must  appoint  or
re-appoint a compensation committee.


               TERMS OF REFERENCE FOR THE COMPENSATION COMMITTEE

GENERAL

The  Compensation  Committee  is a committee of the Board to which the Board has
delegated its  responsibility  for oversight of the Corporation's  overall human
resources policies and procedures. This includes reviewing the adequacy and form
of the compensation  paid to the  Corporation's  executives and key employees to
ensure that such compensation  realistically  reflects the  responsibilities and
risks of such positions.

The Compensation  Committee's  objectives are to assist the Board in meeting its
responsibilities  in respect of overall human resources  policies and procedures
including recruitment,  performance management,  compensation, benefit programs,
resignation/terminations,  training  and  development,  succession  planning and
organizational  planning  and  design,  to  ensure  a broad  plan  of  executive
compensation  is  established  that is  competitive  and  motivating in order to
attract,  retain and inspire executive management and other key employees and to
review all compensation and benefit proposals for the  Corporation's  executives
and make recommendations to the Board.

COMPOSITION AND PROCESS

1.   The Compensation Committee will be comprised of a minimum of two directors,
     all of whom will be independent.

2.   Compensation  Committee members will be appointed by the Board on an annual
     basis for a one-year  term and may serve any number of  consecutive  terms,
     which are encouraged to ensure continuity of experience.

3.   The Chair of the Compensation Committee will be appointed by its members on
     an annual basis for a one-year term and may serve any number of consecutive
     terms. The Compensation Committee Chair will arrange for an alternate chair
     for a specific meeting if he or she is planning to be absent.

4.   The Compensation Committee Chair will establish the agenda for Compensation
     Committee  meetings and ensure that properly  prepared agenda materials are
     circulated  to the members  with  sufficient  time for review  prior to the
     meeting.

5.   The  Compensation  Committee will meet at least twice per year and may call
     special  meetings as  required.  A quorum at  meetings of the  Compensation
     Committee will be one of its members.  The Compensation  Committee may hold
     its  meetings,  and  members  of  the  Compensation  Committee  may  attend
     meetings, by telephone conference call.

6.   At all  meetings  of the  Compensation  Committee  every  question  will be
     decided by a majority of the votes  cast.  In case of an equality of votes,
     the  Compensation  Committee  Chair will forward the matter to the Board of
     Directors for resolution.

7.   The minutes of Compensation  Committee  meetings will document the date and
     time of the meetings.

8.   The Compensation Committee will have the authority to retain (or terminate)
     any outside  counsel,  advisors or consultants  it determines  necessary to
     assist it in discharging its functions,  independently of the Board,  Chair
     or CEO. The  Compensation  Committee  will be provided  with the  necessary
     funding to compensate any counsel, advisors or consultants it retains.

9.   The  CEO  may  attend  and  participate  in  meetings  of the  Compensation
     Committee, except when his compensation is the subject matter.


                                     - 35 -
<PAGE>


RESPONSIBILITIES

1.   The Compensation  Committee will review  management  prepared  policies and
     make recommendations to the Board regarding the following matters:
2.   Compensation,  philosophy,  policies and guidelines for senior officers, as
     well as supervisory  and management  personnel of the  Corporation  and any
     subsidiary companies.
3.   Corporate  benefits  for  senior  management  (i.e.  car  insurance,   life
     insurance, retirement plan, expense accounts, etc.).
4.   Incentive  plans,  along with global  payment  information as it applies to
     senior management bonus and discretionary bonus plans.
5.   Review and approval of Corporate  goals and objectives  relevant to CEO and
     other senior management compensation.
6.   Evaluation  of the  performance  of the CEO and other senior  management in
     light of corporate  goals and  objectives and making  recommendations  with
     respect to compensation levels based on such evaluations.
7.   Policies  regarding the  Corporation's  Incentive Stock Option Plan and the
     granting of stock  options to  Directors,  management  and employees of the
     Corporation.
8.   Policies   regarding  the  development  and   implementation  of  incentive
     compensation plans and equity based compensation plans.
9.   Compensation  levels for  directors and  committee  members,  including the
     compensation of the Chair and the Chair of any Board committees,  to ensure
     compensation  realistically reflects the responsibilities and risk involved
     in being an effective  director.  Compensation  should be commensurate with
     the time spent by  directors  in meeting  their  obligations  and should be
     transparent and easy for shareholders to understand.
10.  Succession  plan for the CEO and other  executives and key employees of the
     Corporation, in conjunction with the CEO.
11.  Any material changes in human resources policy, procedure, remuneration and
     benefits.
12.  Review  of  executive  compensation  disclosure  in all  public  disclosure
     documents.
13.  The  Compensation  Committee  will  review and  assess  its  effectiveness,
     contribution  and these  Terms of  Reference  annually  and  recommend  any
     proposed changes thereto to the Board.
14.  Perform any other activities  consistent with these Terms of Reference,  as
     the Compensation Committee or the Board deems necessary or appropriate.
15.  The Compensation Committee will have the authority to delegate any specific
     tasks to individual Compensation Committee members.

AUDIT COMMITTEE

The Company's Audit Committee must be comprised of at least three directors, who
are not employees,  control  persons or members of the management of the Company
or any of its associates or affiliates.  As of the date of this report,  Messrs.
Horton,  Angus,  Idziszek  are  members  of the  Audit  Committee.  The board of
directors of the Company,  after each annual shareholder's  meeting must appoint
or re-appoint an audit committee.

The Audit Committee must review the annual  financial  statements of the Company
before they are approved by the board of directors of the Company.  The board of
directors of the Company must review, and if considered appropriate, approve the
annual  financial   statements  of  the  Company  before   presentation  to  the
shareholders  of the Company.  In addition,  the Audit  Committee is responsible
for:

     -    retaining the external  auditors and  communicating  to them that they
          are  ultimately  accountable  to the  Committee  and the  Board as the
          representatives of the shareholders;
     -    reviewing  the  external  audit  plan and the  results  of the  audit,
          approves  all audit  engagement  fees and terms and  pre-approves  all
          non-audit services to be performed by the external auditor;
     -    reviewing the Company's financial  statements and related management's
          discussion  and analysis of financial  and  operating  results; and
     -    having direct communication channels with the Company's auditors.

The Audit  Committee's  mandate  requires that all of the members be financially
literate and at least one member have accounting or related financial management
expertise.  The mandate of the Committee empowers it to retain legal, accounting
and other advisors.



                                     - 36 -
<PAGE>


The Audit Committee's Charter is attached as an Exhibit.

EMPLOYEES

As of December  31, 2006,  the Company  uses the  services of the Grosso  Group,
which  had  twenty-four  full-time  employees  in the  area  of  management  and
administration  compared  with  twenty  full-time  employees  that  the  Company
employed directly in the areas of management and  administration at December 31,
2005 compared to nine full-time  employees and three part-time  employees in the
area  of  management  and  administration  at  December  31,  2004.  Exploration
activities are conducted by consultants,  laborers and technicians hired for the
duration of the exploration program.

SHARE OWNERSHIP

As of February 28, 2007,  the Company had  52,013,065  shares  outstanding.  The
following  table sets forth details of all employee share ownership and includes
information  regarding the date of expiration or any options or warrants held by
each employee;  the exercise price of the particular option or warrant held; the
total number of options and warrants held by each employee;  the total number of
shares held by each employee; and each employee's percentage of ownership:

The following table sets forth certain  information  regarding  ownership of the
Company's  shares by the  Company's  officers  and  directors as of February 28,
2007.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                                                                      SHARES AND RIGHTS
                                                                    BENEFICIALLY OWNED OR
TITLE OF CLASS           NAME                                           CONTROLLED (1)         PERCENT OF CLASS(1)
--------------------------------------------------------------------------------------------------------------------
<S>                    <C>                                         <C>                           <C>

Common Stock             Joseph Grosso                                  1,641,167(2)                  3.2%
Common Stock             Nikolaos Cacos                                   188,151(3)                  0.4%
Common Stock             Sean Hurd                                        310,000(4)                  0.6%
Common Stock             Gerald Carlson                                   291,000(5)                  0.6%
Common Stock             David Terry                                      202,000(6)                  0.4%
Common Stock             Chet Idziszek                                    245,000(7)                  0.5%
Common Stock             Robert Stuart (Tookie) Angus                     260,000(8)                  0.5%
Common Stock             Arthur Lang                                      185,000(9)                  0.4%
Common Stock             David Horton                                     160,000(10)                 0.3%
Common Stock             Leonard Harris                                   105,000(11)                 0.2%
--------------------------------------------------------------------------------------------------------------------
Common Stock     Officers and Directors (as a group, 10 persons)        3,587,318(12)                 6.9%
--------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common stock through the exercise of outstanding  options,  these
     additional shares are deemed to be outstanding for the purpose of computing
     the percentage of common stock owned by such persons, but are not deemed to
     be  outstanding  for the purpose of computing the  percentage  owned by any
     other person.  Based on 52,013,065 shares of common stock outstanding as of
     February 28, 2007.
(2)  Includes the following  shares,  options and warrants  held by Mr.  Grosso,
     Evelyn Grosso (Mr. Grosso's wife) and Mr. Grosso's private  companies:
     (a)  585,543 shares held by Mr. Grosso;
     (b)  7,500 shares held by Beauregard (50%);
     (c)  27,564 shares held by Mr. Grosso's wife (50%);
     (d)  348,448 shares held by Oxbow (50%);
     (e)  9,612 shares held by Threadco (50%);
     (f)  592,500  Options held by Mr.  Grosso to acquire  592,500  shares.  See
          "Item  6.  Directors,  Senior  Management  and  Employees  -  Options,
          Warrants and Other Rights to Acquire Securities - Stock Options."; and
     (g)  70,000 shares held in Mr. Grosso's RRSP account.
(3)  Includes  13,151  shares held by Mr. Cacos and 175,000  options held by Mr.
     Cacos to acquire an  additional  175,000  shares.  See "Item 6.  Directors,
     Senior  Management  and  Employees - Options,  Warrants and Other Rights to
     Acquire Securities - Stock Options."
(4)  Includes 310,000 options held by Mr. Hurd to acquire an additional  310,000
     shares. See "Item 6. Directors,  Senior Management and Employees - Options,
     Warrants and Other Rights to Acquire Securities - Stock Options."
(5)  Includes  88,500  shares held by Mr.  Carlson and 47,500 shares held by KGE
     Management Ltd., a private company owned by Mr. Carlson and options held by
     Mr.  Carlson  to  acquire  an  additional  155,000  shares.  See  "Item  6.
     Directors,  Senior  Management and Employees - Options,  Warrants and Other
     Rights to Acquire Securities - Stock Options."


                                     - 37 -
<PAGE>

(6)  Includes  2,000  shares held by Mr.  Terry and options held by Mr. Terry to
     acquire  an  additional  200,000  shares.  See "Item 6.  Directors,  Senior
     Management  and  Employees - Options,  Warrants and Other Rights to Acquire
     Securities - Stock Options."
(7)  Mr. Idziszek holds 245,000 options to acquire 245,000 shares.  See "Item 6.
     Directors,  Senior  Management and Employees - Options,  Warrants and Other
     Rights to Acquire Securities - Stock Options."
(8)  260,000 options held by Mr. Angus to acquire  260,000 shares.  See "Item 6.
     Directors,  Senior  Management and Employees - Options,  Warrants and Other
     Rights to Acquire Securities - Stock Options."
(9)  Includes  10,000  shares and  185,000  options  held by Mr. Lang to acquire
     185,000 shares.  See "Item 6. Directors,  Senior Management and Employees -
     Options, Warrants and Other Rights to Acquire Securities - Stock Options."
(10) Includes options held by Mr. Horton to acquire 160,000 shares. See "Item 6.
     Directors,  Senior  Management and Employees - Options,  Warrants and Other
     Rights to Acquire Securities - Stock Options."
(11) Includes  5,000  shares and options held by Mr.  Harris to acquire  100,000
     shares. See "Item 6. Directors,  Senior Management and Employees - Options,
     Warrants and Other Rights to Acquire Securities - Stock Options."
(12) Includes the shares, options, and warrants set forth in footnotes 2 through
     11  above.  See "Item 6.  Directors,  Senior  Management  and  Employees  -
     Options, Warrants and Other Rights to Acquire Securities - Stock Options."

OPTIONS, WARRANTS AND OTHER RIGHTS TO ACQUIRE SECURITIES

As of February  28,  2007,  the  Company had granted a number of stock  options,
issued a number of warrants and entered into a number of agreements  pursuant to
which up to 8,123,404 common shares of the Company may be issued.  The following
is a brief summary of these stock options and warrants currently outstanding and
agreements.

STOCK OPTIONS

The TSX-V requires all TSX-V listed  companies to adopt stock options plans, and
such plans must  contain  certain  provisions.  At the annual and  extraordinary
general  meeting of  shareholders  of the  Company  held on June 26,  2003,  the
shareholders approved the Company's stock option plan (the "Stock Option Plan").
At the annual and extraordinary  general meetings of shareholders of the Company
held on June 24, 2004, June 23, 2005 and June 14, 2006 shareholders approved and
ratified by ordinary resolution the 2003 Stock Option Plan to make a total of up
to 10% of the issued and outstanding  shares of IMA available for issuance.  The
purpose  of the Stock  Option  Plan is to  provide  incentive  to the  Company's
employees,  officers,  directors,  and consultants responsible for the continued
success of the Company. The following is a summary of the Stock Option Plan.

ADMINISTRATION OF THE STOCK OPTION PLAN

The Stock Option Plan  provides  that it will be  administered  by the Company's
board  of  directors  (the  "Board"),  or by  the  Compensation  Committee  (the
"Committee")  of the  Company's  Board  consisting  of not less  than two of its
members. The Stock Option Plan is currently administered by the Committee.

DESCRIPTION OF STOCK OPTION PLAN

The effective  date (the  "Effective  Date") of the Stock Option Plan is June 2,
2003,  the date the Board of Directors  approved  the Stock Option Plan,  and it
will terminate ten years from the Effective Date.

The Stock  Option Plan  provides  that  options may be granted to any  employee,
officer, director or consultant of the Company or a subsidiary of the Company.

The options  issued  pursuant to the Stock Option Plan will be  exercisable at a
price not less than the market value of the Company's  common shares at the time
the option is granted. "Market Value" means:

(a)      for each  organized  trading  facility  on which the common  shares are
         listed,  Market Value will be the closing  trading  price of the common
         shares  on the day  immediately  preceding  the  grant  date  less  any
         discounts permitted by the applicable regulatory authorities;
(b)      if the  Company's  common  shares are listed on more than one organized
         trading  facility,  the  Market  Value  shall  be the  Market  Value as
         determined in accordance  with  subparagraph  (a) above for the primary
         organized  trading  facility on which the common shares are listed,  as
         determined  by the  Board  (or a  committee  thereof),  subject  to any
         adjustments  as may be  required  to secure  all  necessary  regulatory
         approvals;
(c)      if the  Company's  common  shares are  listed on one or more  organized
         trading  facilities  but have not traded  during the ten  trading  days
         immediately  preceding  the grant date,  then the Market  Value will be
         determined


                                     - 38 -
<PAGE>



         by  the Board (or a committee  thereof),  subject to any adjustments as
         may  be required to secure all necessary regulatory approvals; and
(d)      if the  Company's  common  shares are not listed for trading on a stock
         exchange or over the counter  market,  the value which is determined by
         the  Board  (or a  committee  thereof)  to be  the  fair  value  of the
         Company's common shares, taking into consideration all factors that the
         Board (or a committee  thereof) deems appropriate,  including,  without
         limitation,  recent  sale and  offer  prices of the  Company  shares in
         private transactions negotiated at arms' length.

Options  under the Stock Option Plan will be granted for a term not to exceed 10
years from the date of their grant, provided that if the Company is then a "Tier
2"  company  listed on the TSX-V,  the term of the option  will be not more than
five years.

Options under the Stock Option Plan will be subject to such vesting  schedule as
the  Committee  may  determine.  In the event that an option is to be terminated
prior to expiry of its term due to certain  corporate  events,  all options then
outstanding  shall  become  immediately  exercisable  for 10 days  after  notice
thereof, notwithstanding the original vesting schedule.

Options will also be  non-assignable  and  non-transferable,  provided that they
will be exercisable by an optionee's legal heirs,  personal  representatives  or
guardians for up to 12 months  following the death or termination of an optionee
due to disability,  or up to 12 months following the death of an employee if the
employee  dies  within 12  months of  termination  due to  disability.  All such
options  will  continue  to vest  in  accordance  with  their  original  vesting
schedule.

The maximum  number of common shares to be reserved for issuance under the Stock
Option Plan, including options currently outstanding, will not exceed 10% of the
number of common shares of the Company issued and  outstanding on the applicable
date of grant.

If a material  alteration  in the capital  structure of the Company  occurs as a
result of a recapitalization,  stock split, reverse stock split, stock dividend,
or otherwise,  the Committee shall make adjustments to the Stock Option Plan and
to the options  then  outstanding  under it as the  Committee  determines  to be
appropriate  and  equitable  under  the  circumstances,   unless  the  Committee
determines  that it is not  practical  or  feasible to do so, in which event the
options granted under the Stock Option Plan will terminate as set forth above.

The TSX-V  requires all TSX-V  listed  companies  who have adopted  stock option
plans  which  reserve a  maximum  of 10% of the  number of common  shares of the
Company  issued  and  outstanding  on the  applicable  date of grant,  to obtain
shareholder approval to the Stock Option Plan on an annual basis.

As of February  28,  2007,  the Company  has issued  4,619,000  non-transferable
incentive stock options to purchase  common shares  outstanding to the following
persons:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                                                                 MARKET VALUE ON
                            NATURE                      NUMBER       EXERCISE     EXPIRATION       DATE OF GRANT
OPTIONEE                  OF OPTION(1)                OF SHARES        PRICE         DATE          OR REPRICING
----------------------------------------------------------------------------------------------------------------

<S>                     <C>                          <C>            <C>          <C>               <C>

N. Cacos                  Officer                       110,000        $3.10      Mar. 24/09          $3.10
                                                         50,000        $4.16      Mar. 16/10          $4.16
                                                         15,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
J. Grosso                 Director                       47,500        $0.50      Sept. 23/07         $0.50
                                                        200,000        $1.87      Aug. 27/08          $1.87
                                                        150,000        $3.10      Mar. 24/09          $3.10
                                                        150,000        $4.16      Mar. 16/10          $4.16
                                                         48,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
S. Hurd                   Officer                       100,000        $1.87      Aug. 27/08          $1.87
                                                        130,000        $3.10      Mar. 24/09          $3.10
                                                         60,000        $4.16      Mar. 16/10          $4.16
                                                         20,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
</TABLE>



                                     - 39 -
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                                                                 MARKET VALUE ON
                            NATURE                      NUMBER       EXERCISE     EXPIRATION       DATE OF GRANT
OPTIONEE                  OF OPTION(1)                OF SHARES        PRICE         DATE          OR REPRICING
----------------------------------------------------------------------------------------------------------------

<S>                     <C>                          <C>            <C>          <C>               <C>

G. Carlson                Director                       50,000        $1.87      Aug. 27/08          $1.87
                                                         85,000        $3.10      Mar. 24/09          $3.10
                                                         20,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
N. DeMare                 Consultant                     25,000        $0.84      Mar. 07/08          $0.84
                                                         50,000        $1.87      Aug. 27/08          $1.87
                                                         50,000        $3.10      Mar. 24/09          $3.10
                                                         30,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
E. Grosso(2)              Consultant                     67,500        $0.50      Sept. 23/07         $0.50
                                                         75,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
K. Patterson              Consultant                     25,000        $3.10      Mar. 24/09          $3.10
                                                         25,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
D. Terry                  Director                       50,000        $3.10      Mar. 24/09          $3.10
                                                         80,000        $4.16      Mar. 16/10          $4.16
                                                         70,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
C. Idziszek               Director                      150,000        $0.90      May 30/08           $0.90
                                                         75,000        $3.10      Mar. 24/09          $3.10
                                                         20,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
J. C. Berretta            Consultant                     25,000        $3.10      Mar. 24/09          $3.10
                                                         75,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
W. Lee(3)                 Consultant                     75,000        $1.87      Aug. 27/08          $1.87
                                                         30,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
R. Angus                  Director                      150,000        $0.90      May 30/08           $0.90
                                                         40,000        $3.10      Mar. 24/09          $3.10
                                                         30,000        $4.16      Mar. 16/10          $4.16
                                                         40,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
D. Dorval                 Consultant                     60,000        $3.10      Mar. 24/09          $3.10
                                                         30,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
J. Denee                  Employee                       10,000        $3.10      Mar. 24/09          $3.10
                                                          5,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
C. Sandoval               Employee                       10,000        $3.10      Mar. 24/09          $3.10
                                                         15,000        $4.16      Mar. 16/10          $4.16
                                                          5,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
C. D'Amico(5)             Director (of                  220,000        $1.87      Aug. 27/08          $1.87
                          subsidiary-exempted            75,000        $3.10      Mar. 24/09          $3.10
                          from reporting)
----------------------------------------------------------------------------------------------------------------
C. Timossi                Consultant                     75,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
S. Phillips               Consultant                    300,000        $1.87      Aug. 27/08          $1.87
                                                         50,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
J. Faccin                 Consultant                     10,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
</TABLE>


                                     - 40 -
<PAGE>


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                                                                 MARKET VALUE ON
                            NATURE                      NUMBER       EXERCISE     EXPIRATION       DATE OF GRANT
OPTIONEE                  OF OPTION(1)                OF SHARES        PRICE         DATE          OR REPRICING
----------------------------------------------------------------------------------------------------------------

<S>                     <C>                          <C>            <C>          <C>               <C>

M. De Simone              Director (of                   59,500        $0.50      May 02/07           $0.50
                          subsidiary-exempted            80,000        $3.10      Mar. 24/09          $3.10
                          from reporting)
----------------------------------------------------------------------------------------------------------------
I. Chiarantano            Consultant                     59,500        $0.50      May 02/07           $0.50
----------------------------------------------------------------------------------------------------------------
D. Horton                 Director                      100,000        $3.10      Mar. 24/09          $3.10
                                                         30,000        $4.16      Mar. 16/10          $4.16
                                                         30,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
A. Lang                   Director                       50,000        $3.10      Mar. 24/09          $3.10
                                                         75,000        $4.16      Mar. 16/10          $4.16
                                                         25,000        $2.92      Nov. 16/10          $2.92
                                                         35,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
G. James                  Consultant                      7,000        $3.10      Mar. 24/09          $3.10
----------------------------------------------------------------------------------------------------------------
A. Colucci                Consultant                    120,000        $1.87      Aug. 27/08          $1.87
----------------------------------------------------------------------------------------------------------------
P. Hedblom                Consultant                     30,000        $1.87      Aug. 27/08          $1.87
                                                         20,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
J. Wong                   Consultant                     25,000        $1.87      Aug. 27/08          $1.87
----------------------------------------------------------------------------------------------------------------
D. Tindale                Employee                        5,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
F. Riedl                  Consultant                     30,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
A. Beartl                 Consultant                    150,000        $4.16      Mar. 16/10          $4.16
                                                        150,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
I. Thomson                Consultant                     10,000        $4.16      Mar. 16/10          $4.16
----------------------------------------------------------------------------------------------------------------
L. Harris                 Director                       50,000        $2.92      Nov. 16/10          $2.92
                                                         50,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
C. Smyth                  Consultant                      5,000        $2.92      Nov. 16/10          $2.92
----------------------------------------------------------------------------------------------------------------
L. McClusky               Employee                       10,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
B. Dubowska               Employee                        5,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
L. Carter                 Employee                       25,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
J. Barnes                 Employee                       25,000        $3.21      Jun. 22/11          $3.21
----------------------------------------------------------------------------------------------------------------
TOTAL                                                 4,619,000
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Officers and directors, as a group (10 persons)(4)    2,528,000
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

</TABLE>

(1)  Pursuant to the rules of the TSX-V, the Company has issued stock options to
     employees,  directors,  officers and consultants.  "Employee" refers to the
     employees  of the Grosso  Group  providing  administrative  and  management
     services to the Company.
(2)  Evelyn Grosso is the wife of Joseph Grosso.
(3)  The Company  granted Mr. Lee options to acquire  common  shares  during his
     tenure as  director.  Mr. Lee  resigned as an officer  and  director of the
     Company  effective  April 2, 2004 and currently  remains as a consultant to
     the Company.
(4)  Includes options held by Joseph Grosso's wife, Evelyn Grosso.
(5)  The Company granted Mr. D'Amico options to acquire common shares during his
     tenure as director of a subsidiary.


                                     - 41 -

<PAGE>


WARRANTS AND OTHER COMMITMENTS

As of February  28, 2007,  there were  3,504,404  non-transferable  common share
purchase warrants exercisable.

As of February 28, 2007,  the  Company's  officers  and  directors,  as a group,
including  entities  controlled or under  significant  influence of officers and
directors  of the Company,  did not hold any warrants to purchase the  Company's
common shares.

There are no  assurances  that the options,  warrants or other rights  described
above will be exercised in whole or in part.


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
--------------------------------------------------------------------------------

PRINCIPAL HOLDERS OF VOTING SECURITIES

To the best of the  Company's  knowledge  there are no persons who  beneficially
own, directly or indirectly, or exercise control or direction, over more than 5%
of the issued and outstanding common shares of the Company other than that which
is described below.

CHANGES IN OWNERSHIP BY MAJOR SHAREHOLDERS

In August 1999 Barrick Gold Corporation ("Barrick") acquired,  through a private
placement, 1.5 million units at a price of $1.00 per unit. Each unit consists of
one common  share in the capital  stock of the Company and one  non-transferable
share purchase warrant, entitling Barrick to purchase an additional common share
for a period  of one year at a price of $1.50  per  share.  On April  19,  2000,
Barrick exercised  warrants at $1.50 to purchase an additional 350,000 shares of
the Company. On August 16, 2000, Barrick exercised its remaining warrants to buy
1,150,000  common  shares of the  Company.  As of April 30, 2003  Barrick  owned
3,000,000  common  shares of the Company  (9.22%).  To the best of the Company's
knowledge,  subsequent  to April 30,  2003,  Barrick  sold common  shares of the
Company and is no longer a major shareholder.

On April 28,  2003,  Prudent  Bear Funds,  Inc.  advised the Company that it had
acquired  control  and  direction,  through  Prudent  Bear Fund,  a mutual  fund
controlled by it, over 818,500 of the Company's common shares.  This resulted in
Prudent  Bear  Funds,  Inc.  having  ownership  of and  control  over a total of
3,209,637 common shares together with warrants to purchase an additional 754,137
common  shares.  As of April 30, 2003, if such warrants were  exercised  Prudent
Bear Funds,  Inc. would have control and direction of 3,963,774 common shares of
the Company (12.18%). To the best of the Company's knowledge, as of December 31,
2006, Prudent Bear Funds Inc. is no longer a major shareholder of the Company.

SHARES HELD IN THE UNITED STATES

As of February 28, 2007, there were  approximately 189 registered holders of the
Company's  shares in the United  States,  with  combined  holdings of  7,354,240
shares (14.14% of the 52,013,065 outstanding shares at February 28, 2007).

CHANGE OF CONTROL

As of February 28, 2007,  there were no arrangements  known to the Company which
may, at a subsequent date, result in a change of control of the Company.

CONTROL BY OTHERS

To the  best  of the  Company's  knowledge,  the  Company  is  not  directly  or
indirectly owned or controlled by another  corporation,  any foreign government,
or any other natural or legal person, severally or jointly.


                                     - 42 -
<PAGE>


RELATED PARTY TRANSACTIONS

Other than as disclosed  below,  from January 1, 2004 through February 28, 2007,
the Company did not enter into any transactions or loans between the Company and
any  (a)   enterprises   that  directly  or  indirectly   through  one  or  more
intermediaries,  control or are  controlled by, or are under common control with
the Company; (b) associates;  (c) individuals owning, directly or indirectly, an
interest  in the  voting  power  of the  Company  that  gives  them  significant
influence over the Company,  and close members of any such individual's  family;
(d) key management personnel and close members of such individuals' families; or
(e)  enterprises  in which a substantial  interest in the voting power is owned,
directly or indirectly by any person  described in (c) or (d) or over which such
a person is able to exercise significant influence.

1.       Effective  January 1, 2005, the Company engaged Grosso Group to provide
         services  and   facilities   to  the  Company.   On  May  6,  2005,  an
         Administrative  Services  Agreement  was  finalized and executed by the
         Company and the Grosso  Group.  The Grosso  Group is a private  company
         which is owned by the Company,  Golden  Arrow,  Amera,  Astral and Gold
         Point Energy.,  each of which own one share.  The Grosso Group provides
         its  shareholder  companies  with  geological,  corporate  development,
         administrative  and  management  services.  The Grosso  Group  staff is
         available to the shareholder companies on a cost recovery basis without
         the  expense of full time  personnel.  The  shareholder  companies  pay
         monthly  fees to the Grosso  Group.  The fee is based upon a reasonable
         pro-rating of the Grosso Group's costs including its staff and overhead
         costs among each shareholder company with regard to the mutually agreed
         average annual level of services provided to each shareholder  company.
         During  fiscal  2006,  the Company  incurred  fees of $724,902  (2005 -
         $730,802) to the Grosso  Group.  In addition,  included in the Accounts
         receivable,  prepaids  and  deposits  is a $205,000  (2005 -  $205,000)
         deposit to the Grosso  Group.  The deposits  from the member  companies
         were used for the purchase of equipment and leasehold  improvements and
         for operating working capital.

         The   Administration   Services   Agreement  may  be  terminated  by  a
         shareholder  company after January 1, 2007, upon 30 days written notice
         to the Grosso Group.

2.       Prior to the signing of the Administrative  Services Agreement with the
         Grosso  Group in 2005 the Company  shared  office  facilities,  capital
         assets and personnel with Amera. Joseph Grosso,  Nikolaos Cacos, Arthur
         Lang and David Terry,  officers  and/or  directors of the Company,  are
         officers,  directors and/or employees of Amera.  During the fiscal year
         ended December 31, 2006 the Company  received $Nil (2005 - $Nil, 2004 -
         $66,390) from Amera for reimbursement of expenses.

3.       The Company  leased a portion of its office  space from  Beauregard,  a
         private  company owned by Mr.  Grosso's wife,  Mrs.  Evelina Grosso and
         subleased these premises to the Grosso Group in 2005 for the balance of
         the  existing  lease term.  Effective  January 1, 2007  Beauregard  and
         Grosso  Group  executed  a lease for the  office  premises.  During the
         fiscal  year  ended  December  31,  2006,  the  Company  paid  rent  to
         Beauregard in the amount of $141,203 (2005 - $128,722, 2004 - $74,870).
         The Company  subleases  the premises to the Grosso Group and  recovered
         the 2006 and 2005 rent it had paid. - See "Item 4.  Information  on the
         Company - Properties, Plants and Equipment - Principal Office".

4.       The Company  executed an  agreement  with Oxbow,  pursuant to which Mr.
         Grosso,  an officer and director of the Company,  provides  services to
         the Company. See "Item 6. Directors,  Senior Management and Employees -
         Compensation  -  Management  Contracts".  During the fiscal  year ended
         December 31, 2006,  Oxbow was paid  $350,667  (2005 - $102,000,  2004 -
         $102,000).

5.       The Company's  officers and directors have been granted incentive stock
         options  enabling them to purchase  common  shares of the Company.  See
         "Item 6. Directors, Senior Management and Employees - Share Ownership".

6.       By  agreement  dated  April  1,  2004,  between  the  Company  and  KGE
         Management  Ltd.  ("KGE"),  a  private  company  owned by Mr.  Carlson,
         Chairman of the board of directors of the Company,  this new agreement,
         which replaced a prior  agreement,  provided for a monthly  retainer of
         $2,000  per  month  plus a fee of $600 per day for  additional  days in
         excess of 3 days per month.  This agreement  expired March 31, 2005 and
         was renewed for six months  with the same terms.  Effective  January 1,
         2006 the  Company  agreed to pay KGE a



                                     - 43 -
<PAGE>

         fee of $600 per day if services were required and the former  agreement
         was not renewed.  During the fiscal year ended  December 31, 2006,  the
         Company paid $3,300 to KGE (2005 - $24,000 2004 - $34,749).

7.       On December 16, 2003 and November 16, 2004, the Company entered into an
         agreement with Endeavour Financial Ltd. a company of which Mr. Angus, a
         director of the Company,  was a shareholder.  A monthly fee of US$5,000
         for services was payable under this  agreement for a minimum  period of
         one year.  On July 4, 2005,  the  agreement was amended to increase the
         monthly  fee to  US$10,000  per  month  effective  June  1,  2005.  The
         agreement  includes a  provision  for a nominee  from  Endeavour  to be
         nominated  to the  board  and for  fees to be  paid  to  Endeavour,  in
         addition  to  the  monthly  fee,  in the  event  of  certain  specified
         transactions.  Effective  December  31,  2005 Mr.  Angus  retired  from
         Endeavour  and the monthly fee was reduced to US$5,000  per month.  The
         agreement was terminated by mutual consent effective February 28, 2006.
         During the fiscal year ended  December  31,  2006,  Endeavour  was paid
         $11,600 (2005 - $115,088, 2004 - $78,637).

8.       On February  14, 2006 and  effective  January 1, 2006,  the Company has
         entered into an agreement with RSA Holdings Ltd., pursuant to which Mr.
         Angus, a director of the Company,  provides advisory services including
         participation  on various  committees of the Company.  A monthly fee of
         US$5,000 for  services is payable  under this  agreement  for a minimum
         period of six months. The Company paid RSA $68,350 in 2006.

9.       Mr.  Terry had a  consulting  agreement  with Amera dated  February 16,
         2004,  amended  June 1, 2004,  which  called for  monthly  payments  of
         $10,000.  The  Company had agreed to  reimburse  Amera for 50% of these
         fees.  In the fiscal year ended  December  31,  2004 the  Company  paid
         $43,000 as a result of this arrangement. On January 1, 2005 Mr. Terry's
         agreement  with  Amera was  replaced  by a similar  agreement  with the
         Grosso  Group.  During the year ended  December 31, 2005,  Mr.  Terry's
         total compensation from the Grosso Group was $120,000, of which $63,600
         was  allocated  to the Company as part of the Grosso  Group fees during
         the year. On April 12, 2006 the Board accepted the recommendation  from
         the  Compensation  Committee  to increase  Mr.  Terry's  monthly fee to
         $12,500 ($150,000 annually) effective May 1, 2006 and to pay a bonus of
         $50,000.  During the year ended  December  31, 2006 Mr.  Terry's  total
         compensation  from the Grosso Group was $140,000,  of which $57,400 was
         allocated to the Company. See "Item 6. Directors, Senior Management and
         Employees - Compensation - Management Contracts."

10.      The Company has entered  into an agreement  dated April 23, 2004,  with
         Mr.  Lang,  Chief  Financial  Officer  and a director  of the  Company,
         pursuant  to which  Mr.  Lang  provides  services  to the  Company.  By
         agreement  dated  April 23,  2004,  Arthur  Lang,  the Chief  Financial
         Officer and a director of the Company,  is paid a salary of $80,000 per
         year for professional  services  rendered.  Mr. Lang is also reimbursed
         for certain  monthly club dues.  During the fiscal year ended  December
         31, 2004, Mr. Lang was paid $58,671. Mr. Lang became an employee of the
         Grosso Group in January  2005.  Effective May 1, 2005 Mr. Lang's annual
         salary was  increased to $102,000.  During the year ended  December 31,
         2005, Mr. Lang's total  compensation from the Grosso Group was $94,667,
         of which  $68,927  was  allocated  to the Company as part of the Grosso
         Group  fees for the year.  On April 12,  2006 the  Board  accepted  the
         recommendation  from the Compensation  Committee to increase Mr. Lang's
         annual  salary to $150,000  effective May 1, 2006 and to pay a bonus of
         $50,000.  During the year  ended  December  31,2006  Mr.  Lang's  total
         compensation  from the Grosso Group was  $134,000 of which  $54,940 was
         allocated to the Company. See "Item 6. Directors, Senior Management and
         Employees - Compensation - Management Contracts."

11.      The Company  entered into an  Arrangement  Agreement  with Golden Arrow
         pursuant  to which the  Company  transferred  certain  assets to Golden
         Arrow as part of a reorganization of the Company completed in 2004. See
         "Item 4.  Information  on the Company - History and  Development of the
         Company."  The Company  entered  into an indemnity  agreement,  for any
         costs or losses incurred by Golden Arrow in respect of the legal action
         commenced by a Minera Aquiline Argentina S.A. against the Company.  See
         "Item 8. Financial Information - Legal Proceedings."



                                     - 44 -
<PAGE>




ITEM 8.  FINANCIAL INFORMATION.
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

FINANCIAL STATEMENTS

DESCRIPTION                                                                 PAGE
-----------                                                                 ----
Consolidated Financial Statements for the Years Ended
     December 31, 2006, 2005 and 2004.                                F-1 - F-27

SIGNIFICANT CHANGES

There are no  significant  changes to report  between the year end  December 31,
2006 and the date of this annual report.

LEGAL PROCEEDINGS

On March 5, 2004, Aquiline Resources Inc. ("Aquiline"),  through its subsidiary,
Minera  Aquiline  Argentina  SA,  filed a claim in the Supreme  Court of British
Columbia  against  the  Company  seeking a  constructive  trust over the Navidad
properties  and  damages.  The  trial  was held in  Vancouver  British  Columbia
commencing in October 2005 and ended on December 12, 2005.

On July 14, 2006 the court  released its judgment on the claim.  The Company was
not successful in its defense and the court found in Aquiline's favour.

         The Order reads in part:

         " (a)    that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
                  Navidad  Claims  and any  assets  related  thereto  to  Minera
                  Aquiline or its nominee within 60 days of this order;

           (b)    that IMA take any and all  steps  required  to cause IMA SA to
                  comply with the terms of this order;

           (c)    that the transfer of the Navidad Claims and any assets related
                  thereto is subject to the payment to IMA SA of all  reasonable
                  amounts expended by IMA SA for the acquisition and development
                  of the Navidad Claims to date; and
           (d)    any accounting  necessary to determine the  reasonableness  of
                  the  expenditures  referred  to  in  (c)  above  shall  be  by
                  reference to the Registrar of this court."

The Company has filed an appeal of this judgment  which is scheduled to be heard
by the British  Columbia Court of Appeal on April 10, 2007. While the Company is
confident of a favourable  result from its appeal it recognizes  that this could
take a  substantial  period of time and the costs will be  significant,  with no
guarantee of a successful outcome for the Company.

On October 18, 2006, the Company and Aquiline reached a definitive agreement for
the orderly  conduct of the Navidad  Project  pending the  determination  of the
appeal by the Company against the judgment of the trial court.  The parties have
agreed that the  transactions  outlined in the agreement are in  satisfaction of
the Order referenced  above. The principal terms and conditions of the agreement
are as follows:

         (a)      control of the Navidad project will be transferred to Aquiline
                  in trust for the ultimately successful party in the appeal;

         (b)      the  Company  and  Aquiline  have agreed to the costs spent to
                  date   developing  the  Navidad   Project  in  the  amount  of
                  $18,500,000.  Upon transfer of control of the Navidad project,
                  Aquiline  paid  $7,500,000  of the  costs  into  trust and the
                  balance will be expended by Aquiline in developing the Navidad
                  Project  during the period of the appeal and secured under the
                  terms of the trust conditions;



                                     - 45 -
<PAGE>


         (c)      in the event that the Company is unsuccessful  on appeal,  the
                  Company will be paid such $18,500,000 amount, less legal costs
                  Aquiline would be entitled to in relation to the trial and the
                  appeal.

         (d)      in the event that the Company's appeal is successful,  it will
                  pay  Aquiline's  qualifying  costs  expended on developing the
                  Navidad  Project  during the period of the appeal,  less legal
                  costs the  Company  would be  entitled  to in  relation to the
                  trial and the appeal,  and control of the Navidad Project will
                  then revert to the Company; and

         (e)      pending the finalization of the appeal process,  neither party
                  will attempt a hostile takeover of the other.

The effective date of the transfer of the Navidad project was November 16, 2006.
A copy of the  agreement  has been  posted  on the SEDAR  website  as one of the
Company's  public   documents  and  is  titled  "Interim   Project   Development
Agreement".

As a condition of the reorganization Golden Arrow became a party to the Aquiline
action.  The Company has  provided an indemnity to Golden Arrow for any costs or
losses that might be incurred by Golden Arrow in connection with this matter.

DIVIDEND POLICY

The Company has not paid any  dividends on its common shares and does not intend
to pay dividends on its common shares in the immediate  future.  Any decision to
pay  dividends  on its common  shares in the future will be made by the board of
directors on the Company on the basis of earnings,  financial  requirements  and
other such conditions that may exist at that time.


ITEM 9.   THE OFFER AND LISTING
--------------------------------------------------------------------------------

PRICE HISTORY

The  Company's  common  shares are listed on the TSX-V.  From April 15,  1996 to
November 28,  1999,  the  Company's  shares were listed on the  Vancouver  Stock
Exchange (the "VSE"). Effective November 29, 1999, the VSE and the Alberta Stock
Exchange  (the  "ASE")  merged  and began  operations  as the  Canadian  Venture
Exchange or CDNX. On August 1, 2001,  the CDNX was acquired by the Toronto Stock
Exchange and became known as the TSX-V.  The Company is  classified  as a Tier I
company on the TSX-V and trades under the symbol "IMR".  Companies which satisfy
the minimum initial listing  requirements of the TSX-V are designated as Tier II
companies and are subject to listing  requirements which are stricter than those
for companies which are designated as Tier I companies.

The following table lists the volume of trading and high and low sales prices on
the TSX-V (or  predecessor),  for shares of the  Company's  common stock for the
last five fiscal years,  each quarterly  period during the last two fiscal years
and each month from September 2006 through February 2007.

          TSX VENTURE EXCHANGE (OR PREDECESSOR) STOCK TRADING ACTIVITY


                                                            SALES PRICE
                                                   ----------------------------
YEAR ENDED                       VOLUME                HIGH             LOW

December 31, 2006            52,243,300                $3.96           $0.49
December 31, 2005            18,584,000                $4.45           $2.56
December 31, 2004            37,199,200                $4.80           $1.73
December 31, 2003            50,625,400                $2.54           $0.49
December 31, 2002            17,609,200                $0.94           $0.34



                                     - 46 -
<PAGE>



                                                            SALES PRICE
                                                   ----------------------------
QUARTER ENDED                    VOLUME                HIGH             LOW

December 31, 2006            15,052,600                $0.66           $0.49
September 30, 2006           22,456,700                $3.49           $0.50
June 30, 2006                 5,606,400                $3.75           $2.86
March 31, 2006                9,127,600                $3.96           $2.84
December 31, 2005             5,453,800                $3.96           $2.56
September 30, 2005            3,780,700                $3.95           $2.65
June 30, 2005                 2,949,100                $4.00           $2.61
March 31, 2005                6,400,400                $4.45           $3.40


                                                            SALES PRICE
                                                   ----------------------------
MONTH ENDED                      VOLUME                HIGH             LOW

February 28, 2007             1,499,300                $0.95           $0.70
January 31, 2007              1,546,900                $0.72           $0.57
December 31, 2006             2,541,300                $0.66           $0.56
November 30, 2006            10,470,500                $0.62           $0.49
October 31, 2006              2,040,800                $0.64           $0.49
September 30, 2006            3,483,400                $0.72           $0.61


       AMERICAN STOCK EXCHANGE AND OVER-THE-COUNTER BULLETIN BOARD STOCK
                                TRADING ACTIVITY

As of July 6, 2005, the Company's  shares started to trade on the American Stock
Exchange  ("AMEX").  Prior to that the Company's  shares were trading on the OTC
Bulletin Board operated by the National Association of Securities Dealers in the
United  States from October 8, 2002.  The Company  currently  trades on the AMEX
under the symbol "IMR".  The following  tables set forth the market price ranges
and the  aggregate  volume of trading of the common shares of the Company on the
AMEX or the OTC Bulletin Board system for the periods indicated:

                                                         SALES PRICE (US$)
                                                   ----------------------------
YEAR ENDED                       VOLUME                HIGH             LOW

December 31, 2006            26,580,100                $3.48           $0.43
December 31, 2005            13,245,000                $3.68           $2.00
December 31, 2004            20,134,200                $4.05           $1.31
December 31, 2003             6,974,500                $1.89           $0.36
December 31, 2002                97,497                $0.36           $0.22


                                                         SALES PRICE (US$)
                                                   ----------------------------
QUARTER ENDED                    VOLUME                HIGH             LOW

December 31, 2006             4,592,600                $0.59           $0.43
September 30, 2006            9,104,900                $3.10           $0.44
June 30, 2006                 5,606,700                $3.44           $2.57
March 31, 2006                7,275,900                $3.48           $2.43
December 31, 2005             4,024,400                $3.39           $2.16
September 30, 2005            3,003,500                $3.48           $2.00
June 30, 2005                 2,150,800                $3.23           $2.05
March 31, 2005                4,066,300                $3.68           $2.72


                                                         SALES PRICE (US$)
                                                   ----------------------------
MONTH ENDED                      VOLUME                HIGH             LOW

February 28, 2007             1,158,000                $0.83           $0.58
January 31, 2007              1,424,600                $0.63           $0.48
December 31, 2006             1,591,300                $0.59           $0.49
November 30, 2006             1,959,200                $0.55           $0.43
October 31, 2006              1,042,100                $0.58           $0.44
September 30, 2006            1,330,900                $0.63           $0.55


                                     - 47 -
<PAGE>


ITEM 10.  ADDITIONAL INFORMATION.
---------------------------------

MEMORANDUM AND ARTICLES OF ASSOCIATION

The  Company  was  incorporated  under the COMPANY  ACT  (British  Columbia)  on
September 17, 1979,  as Gold Star  Resources  Ltd. The  Company's  Incorporation
Number is 197061.  On May 1, 1990,  the Company  filed an Altered  Memorandum to
reflect its name change to EEC Marketing  Corp. On January 13, 1992, the Company
filed an Altered Memorandum to reflect its name change to Amera Industries Corp.
On February 9, 1995, the Company filed an Altered Memorandum to reflect its name
change to International Amera Industries Corp. On February 20, 1996, the Company
filed  an  Altered  Memorandum  to  reflect  its  name  change  to IMA  Resource
Corporation.  Effective July 7, 1998, the Company  underwent a statutory plan of
arrangement (the "Arrangement") with Viceroy Resource  Corporation  ("Viceroy"),
changed its name to IMA Exploration Inc.,  consolidated its share capital on the
basis of four old shares for one new share and filed an  Altered  Memorandum  to
give effect to the foregoing. See "Item 4. Information on the Company".

The  Company's  objects and purposes are not set forth in or  prescribed  by its
Articles  or  Memorandum.  The Company is in the  business  of the  acquisition,
exploration and development of mineral properties, mainly in Argentina.

AMENDMENT OF NOTICE OF ARTICLES

On March 29, 2004, the new British Columbia Business  Corporations Act came into
force in British  Columbia  (the  "BCBCA The Board of  Directors  of the Company
approved  the  Transition  of the  Company and the  Company  filed a  transition
application  with the Registrar of Companies  British Columbia and completed the
Transition on May 4, 2004.

In order to bring the  Company's  Articles  in line with the BCBCA,  the Company
deleted  and  replaced  its  Articles  in  their  entirety.   Accordingly,   the
shareholders  passed  a  special  resolution  removing  the  application  of the
Pre-Existing Company Provisions at a meeting held on June 24, 2004.

BORROWING POWERS

Under the BCBCA, companies are now permitted,  without restriction, to guarantee
repayment of money by any other person or the  performance  of any obligation of
any  other  person.   This  change  reflects  the   modernization  of  corporate
legislation   to  effectively   respond  to   increasingly   complex   financial
transactions that companies may enter into in the course of their business. As a
result,  the New  Articles  state  that the  Company  is able to  guarantee  the
repayment of money by any other person or the  performance  of any obligation of
any other person.  Management  believes that it is in the best  interests of the
Company  to allow  for such a  guarantee  to  permit  the  Company  the  maximum
flexibility in possible future  financial  transactions,  recognizing the duties
directors  have to ensure that the guarantee must always be in the best interest
of the Company and its shareholders.

DIRECTORS AUTHORITY TO SET AUDITOR'S REMUNERATION

Under the BCBCA,  the  Company  has,  subject  to  shareholder  approval,  given
authorization  for the directors to set the remuneration paid to the auditors of
the Company.  Historically,  shareholders of the Company have always  authorized
the directors to appoint the auditors and to set the auditor's  remuneration and
the Articles mere codify existing  practice.  More  importantly,  however,  this
change also codifies new corporate  governance rules and regulations relating to
audit committees and the appointment and remuneration of auditors.

SPECIAL MAJORITY FOR RESOLUTIONS

Under the  BCBCA,  the  Company is  authorized  to  determine  whether a special
resolution  requires  two-thirds  or  three-quarters  of  the  votes  cast  on a
resolution.  The Company  Articles propose that a special  resolution  require a
majority of  two-thirds  of the votes cast on a  resolution.  This  threshold is
consistent with the threshold in most other Canadian corporate law statutes such
as the Canada Business Corporations Act.



                                     - 48 -
<PAGE>


SHARE ISSUANCES

Under the BCBCA the Company is,  subject to shareholder  approval,  permitted to
avoid setting a numerical  maximum for a discount or  commission  payable on the
issuance of a share but rather  limit any  discount or  commission  by a test of
reasonableness.  The  Articles  provide  that the Company be permitted to pay or
offer the  commission  or discount as permitted in the BCBCA.  Management of the
Company  believes  that the 25% maximum  limit  should not be set out in the New
Articles as such a limit does not  consider  factual  circumstances  nor apply a
test of  reasonableness.  By limiting the discount or commission amounts payable
by the test of reasonableness,  exercised by directors with a duty to act in the
best interest of the Company,  the Company is provided  greater  flexibility  in
possible  future  transactions.  In  addition,  since  the  Company  is a public
company,  it is subject to the  requirements of the TSX-V on share issuances and
discounts and commissions,  which  requirements are generally far more stringent
than the Former Act provisions.

The following are changes to the provisions contained in the BCBCA which have an
effect on provisions contained in the Existing Articles:

OFFICERS

The BCBCA no longer  requires  that the  President  and  Secretary  be  separate
individuals  and  as  a  result,   the  Company   Articles  do  not  have  these
requirements.  Management and the board of directors believe that the Company is
better able to meet its corporate governance obligations as to membership of the
board of directors.

PUBLICATION OF ADVANCE NOTICE OF
MEETING

Under the BCBCA,  the Company is no longer required to publish notice of general
meetings,  and recent changes to securities  legislation in Canada requires that
all public  companies,  including the Company,  post advance notice of a general
meeting on WWW.SEDAR.COM in advance of the record date for the meeting.

SHARE CERTIFICATES

Under the BCBCA, a shareholder is entitled to a share  certificate  representing
the number of shares of the Company he or she holds or a written acknowledgement
of the shareholder's  right to obtain such a share certificate The Articles have
been amended to provide for this additional right.

DISCLOSURE OF INTEREST OF
DIRECTORS

Under the BCBCA,  the  provisions  relating to the  disclosure  of  interests by
directors have been revised and updated and the Articles have deleted  reference
to the old  disclosure  of  interest  provisions  and  refer  to the  provisions
contained in the BCBCA.

INDEMNITY PROVISION

Under the BCBCA,  the Company is now  permitted  to  indemnify a past or present
director or officer of the Company  without  obtaining  prior court  approval in
respect of an "eligible proceeding". An "eligible proceeding" includes any legal
proceeding relating to the activities of the individual as a director or officer
of the Company.  However,  under the BCBCA,  the Company will be prohibited from
paying an indemnity if:

         (a)      the party did not act  honestly  and in good faith with a view
                  to the best interests of the Company;

         (b)      the  proceeding  was not a civil  proceeding and the party did
                  not have  reasonable  grounds  for  believing  that his or her
                  conduct was lawful; and

         (c)      the proceeding is brought  against the party by the Company or
                  an associated corporation.

As a result,  the Company  Articles  allow the Company to  indemnify  directors,
officers,  employees and agents,  subject to the limits imposed under the BCBCA.
Management believes that it is in the best interests of the Company to allow the
indemnification  of directors,  officers,  employees and agents,  subject to the
limits and conditions of the BCBCA.



                                     - 49 -
<PAGE>

The  directors,  officers,  employees  and agents have  entered  into  Indemnity
Agreements, as allowed under the Articles of the Company.

AUTHORIZED SHARE CAPITAL

Under the  BCBCA  there  are no  maximum  number  restrictions  and,  due to the
elimination of the memorandum  under the BCBCA,  such  authorized  share capital
must be  contained in a company's  Notice of  Articles.  In order to provide the
Company with greater  flexibility to proceed with equity financings,  management
altered its  authorized  share  capital  from  200,000,000  shares  divided into
100,000,000  common  shares and  100,000,000  preferred  shares to an  unlimited
number of common shares and 100,000,000 preferred shares.

HOLDING OF ANNUAL MEETINGS

The BCBCA allows for annual  meetings to be held once in each  calendar year and
not more than 15 months  after the last  annual  meeting  and  accordingly,  the
Company's Articles reflect this provision.


QUORUM FOR SHAREHOLDER MEETING

The  current  Articles  allow  for  quorum  to be two  persons  who are,  or who
represent  by proxy,  shareholders  who,  in the  aggregate,  hold at least five
percent (5%) of the issued shares entitled to be voted at the meeting.

ALTERATIONS TO CONSTATING
DOCUMENT

In accordance with the BCBCA, the Articles list the type of alterations that can
be  made  to the  Company's  constating  documents,  and  disclose  the  type of
resolution that is required to make such amendments.

SUMMARY OF MATERIAL PROVISIONS

The  following  is a summary of certain  material  provisions  of the  Company's
Articles of Association and Memorandum:

A.       DIRECTOR'S  POWER TO VOTE ON A  PROPOSAL,  ARRANGEMENT  OR  CONTRACT IN
         WHICH THE DIRECTOR IS MATERIALLY INTERESTED.

         Under the BCBCA,  subject to certain  exceptions,  a director or senior
         officer of the Company  must  disclose any  material  interest  that he
         personally  has, or that he as a director or senior  officer of another
         corporation  has in a contract or  transaction  that is material to the
         Company and which the  Company  has  entered  into or proposes to enter
         into.

         A director or senior officer of the Company does not hold a disclosable
         interest in a contract or transaction if:

         1.       the situation  that would  otherwise  constitute a disclosable
                  interest  arose before the coming into force of the BCBCA,  or
                  the interest was  disclosed  and  approved  under,  or was not
                  required to be disclosed under legislation that applied to the
                  Company before the coming into effect of the BCBCA;
         2.       both  the  Company  and the  other  party to the  contract  or
                  transaction   are  wholly  owned   subsidiaries  of  the  same
                  corporation;
         3.       the Company is a wholly owned subsidiary of the other party to
                  the contract or transaction;
         4.       the other  party to the  contract or  transaction  is a wholly
                  owned subsidiary of the Company ; or
         5.       the director or senior officer is the sole  shareholder of the
                  Company or of a  corporation  of which the Company is a wholly
                  owned subsidiary.


                                     - 50 -
<PAGE>


         A director or senior officer of the Company does not hold a disclosable
         interest in a contract or transaction merely because:

         1.       the  contract or  transaction  is an  arrangement  by way of a
                  security  granted  by the  Company  for  money  loaned  to, or
                  obligations  undertaken by, the director or senior officer, or
                  a person in whom the director or senior officer has a material
                  interest,  for the benefit of the Company or an  affiliate  of
                  the Company;
         2.       the  contract  or  transaction  relates  to  an  indemnity  or
                  insurance under the BCBCA;
         3.       the contract or transaction relates to the remuneration of the
                  director or senior  officer,  or a person in whom the director
                  or senior  officer,  employee or agent of the Company or of an
                  affiliate of the Company;
         4.       the contract or transaction  relates to a loan to the Company,
                  and the director or senior  officer,  or a person win whom the
                  director or senior officer has a material  interest,  is or is
                  to be a guarantor of some or all of the loan; or
         5.       the contract or  transaction  has been or will be made with or
                  for the benefit of a corporation  that is affiliated  with the
                  Company and the director or senior  officer is also a director
                  or senior officer of that  corporation or an affiliate of that
                  corporation.

         A director or senior  officer who holds such a material  interest  must
         disclose such interest in writing.  The disclosure must be evidenced in
         writing in a consent resolution,  the minutes of a meeting or any other
         record deposited with the Company's record office. A director who has a
         disclosable  interest in a contract or  transaction  is not entitled to
         vote  of  any  directors'   resolution  to  approve  that  contract  or
         transaction, but may be counted in the quorum at the directors' meeting
         at which such vote is taken.

B.       DIRECTOR'S  POWER,  IN THE ABSENCE OF AN  INDEPENDENT  QUORUM,  TO VOTE
         COMPENSATION TO THEMSELVES OR ANY MEMBERS OF THEIR BODY.

         The  compensation  of the directors is decided by the directors  unless
         the Board of Directors  requests  approval of the compensation from the
         shareholders.  If the  issuance of  compensation  to the  directors  is
         decided by the directors,  a quorum is the majority of the directors in
         office.

C.       BORROWING  POWERS  EXERCISABLE  BY THE DIRECTORS AND HOW SUCH BORROWING
         POWERS MAY BE VARIED.

         The Company, if authorized by the directors, may:

         1.       borrow money in the manner and amount,  on the security,  from
                  the sources and on the terms and conditions that they consider
                  appropriate;
         2.       issue  bonds,  debentures  and other debt  obligations  either
                  outright or as security for any liability or obligation of the
                  Company or any other person and at such  discounts or premiums
                  and on such other terms as they consider appropriate;
         3.       guarantee  the  repayment  of money by any other person or the
                  performance of any obligation of any other person; and
         4.       mortgage,  charge,  whether  by way of  specific  or  floating
                  charge,  grant a security  interest in, or give other security
                  on, the whole or any part of the present and future assets and
                  undertaking of the Company.

         The borrowing  powers may be varied by amendment to the Articles of the
         Company which requires  approval of the  shareholders of the Company by
         special resolution.

D.       RETIREMENT  AND   NON-RETIREMENT   OF  DIRECTORS  UNDER  AN  AGE  LIMIT
         REQUIREMENT.

         There are no such provisions applicable to the Company under the Notice
         of Articles, Articles (as existing or the new proposed Articles) or the
         BCBCA.



                                     - 51 -
<PAGE>


E.       NUMBER OF SHARES REQUIRED FOR A DIRECTOR'S QUALIFICATION.

         A  director  of the  Company  is not  required  to hold a share  in the
         capital of the Company as qualification for his office.

DESCRIPTION OF SHARE CAPITAL

The authorized  capital of the Company consists of an unlimited number of common
shares without par value and 100,000,000  Preferred shares without par value, of
which 18,283,053 have been designated as Preferred Shares, Series I.

COMMON SHARES

A total of 52,013,064  common shares were issued and  outstanding as of February
28, 2007.  All of the common shares are fully paid and not subject to any future
call or  assessment.  All of the common shares of the Company rank equally as to
voting rights, participation in a distribution of the assets of the Company on a
liquidation,  dissolution  or winding-up of the Company and the  entitlement  to
dividends.  The holders of the common  shares are entitled to receive  notice of
all  shareholder  meetings and to attend and vote at such meetings.  Each common
share  carries  with it the right to one  vote.  The  common  shares do not have
preemptive  or  conversion  rights.  In  addition,  there are no sinking fund or
redemption  provisions  applicable  to  the  common  shares  or  any  provisions
discriminating against any existing or prospective holders of such securities as
a result of a shareholder owning a substantial number of shares.

PREFERRED SHARES

The Company is authorized to issue up to 100,000,000  preferred shares in one or
more series of which 18,283,053 have been designated as Preferred Shares, Series
I. The  preferred  shares are entitled to priority  over the common  shares with
respect  to the  payment  of  dividends  and  distribution  in the  event of the
dissolution,  liquidation or winding-up of the Company. The holders of preferred
shares as a class shall not be entitled as such to receive  notice of, to attend
or to vote at any meeting of the  shareholders  of the Company,  other than at a
meeting  of  holders of  Preferred  Shares.  As of March 31 , 2007 there were no
issued or outstanding preferred shares.

CHANGES TO RIGHTS AND RESTRICTIONS OF SHARES

If the Company wishes to change the rights and restrictions of the common shares
or the  preferred  shares,  the Company  must  obtain the  approval of a special
resolution by 2/3 of the holders of the common shares,  or 2/3 of the holders of
the preferred shares.

DIVIDEND RECORD

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

OWNERSHIP OF SECURITIES AND CHANGE OF CONTROL

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

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



                                     - 52 -
<PAGE>


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

MEETINGS OF THE SHAREHOLDERS

ANNUAL AND GENERAL MEETINGS

Under BCBCA and the Company's Articles,  the Company's annual general meeting is
to be held once in each  calendar  year and not more  than 15  months  after the
previous  meeting.  No advance  notice  will be required  to be  published  at a
meeting where  directors are to be elected.  The Company must give  shareholders
not less than 21 days notice of any general meeting of the shareholders.

The  Directors  may fix in advance a date,  which is no fewer than 35 days or no
more than 60 days prior to the date of the  meeting.  All the  holders of common
shares as at that date are entitled to attend and vote at a general meeting.

DIFFERENCES FROM REQUIREMENTS IN THE UNITED STATES

Except for the Company's quorum  requirements,  certain  requirements related to
related  party  transactions  and the  requirement  for  notice  of  shareholder
meetings,  discussed  above,  there are no  significant  differences  in the law
applicable to the Company,  in the areas  outlined  above,  in Canada versus the
United States.  In most states in the United States,  a quorum must consist of a
majority of the shares  entitled to vote.  Some states  allow for a reduction of
the quorum  requirements to less than a majority of the shares entitled to vote.
Having a lower quorum threshold may allow a minority of the shareholders to make
decisions about the Company,  its management and operations.  In addition,  most
states  in the  United  States  require  that a notice of  meeting  be mailed to
shareholders  prior to the meeting date.  Additionally,  in the United States, a
director may not be able to vote on the approval of any transaction in which the
director has a interest.

MATERIAL CONTRACTS

The following are material contracts to which the Company is a party:

1.       Effective  January 1, 2005, the Company engaged Grosso Group to provide
         services  and   facilities   to  the  Company.   On  May  6,  2005,  an
         Administrative  Services  Agreement  was  finalized and executed by the
         Company and the Grosso  Group.  The Grosso  Group is a private  company
         which is owned by the  Company,  Golden  Arrow,  Amera,  Astral  Mining
         Corporation  and Gold Point Energy Corp.,  each of which own one share.
         The Grosso Group provides its  shareholder  companies with  geological,
         corporate  development,  administrative  and management  services.  The
         Grosso Group staff is available to the shareholder  companies on a cost
         recovery  basis  without  the  expense  of  full  time  personnel.  The
         shareholder  companies pay monthly fees to the Grosso Group. The fee is
         based  upon  a  reasonable  pro-rating  of  the  Grosso  Group's  costs
         including its staff and overhead costs among each  shareholder  company
         with regard to the  mutually  agreed  average  annual level of services
         provided to each shareholder  company.  During fiscal 2006, the Company
         incurred  fees of $724,902  (2005 - $730,802) to the Grosso  Group.  In
         addition, included in the Accounts receivable, prepaids and deposits is
         a $205,000 (2005 - $205,000)  deposit to the Grosso Group. The deposits
         from the member  companies  were used for the purchase of equipment and
         leasehold improvements and for operating working capital.

         The   Administration   Services   Agreement  may  be  terminated  by  a
         shareholder  company after January 1, 2007, upon 30 days written notice
         to the Grosso Group.

2.       The Company  leased a portion of its office  space from  Beauregard,  a
         private  company owned by Mr.  Grosso's wife,  Mrs.  Evelina Grosso and
         subleased these premises to the Grosso Group in 2005 for the balance of
         the  existing  lease term.  Effective  January 1, 2007  Beauregard  and
         Grosso  Group  executed  a lease for the  office  premises.  During the
         fiscal  year  ended  December  31,  2006,  the  Company  paid  rent  to
         Beauregard in the amount of $141,203 (2005 - $128,722, 2004 - $74,870).
         The Company  subleases  the premises to the Grosso Group and  recovered
         the 2006 and 2005 rent it had paid. - See "Item 4.  Information  on the
         Company - Properties, Plants and Equipment - Principal Office".



                                     - 53 -
<PAGE>

3.       The Company  executed an  agreement  with Oxbow,  pursuant to which Mr.
         Grosso,  an officer and director of the Company,  provides  services to
         the Company. See "Item 6. Directors,  Senior Management and Employees -
         Compensation  -  Management  Contracts".  During the fiscal  year ended
         December 31, 2006,  Oxbow was paid  $350,667  (2005 - $102,000,  2004 -
         $102,000).

4.       By  agreement  dated  April  1,  2004,  between  the  Company  and  KGE
         Management  Ltd.  ("KGE"),  a  private  company  owned by Mr.  Carlson,
         Chairman of the board of directors of the Company,  this new agreement,
         which replaced a prior  agreement,  provided for a monthly  retainer of
         $2,000  per  month  plus a fee of $600 per day for  additional  days in
         excess of 3 days per month.  This agreement  expired March 31, 2005 and
         was renewed for six months  with the same terms.  Effective  January 1,
         2006 the  Company  agreed to pay KGE a fee of $600 per day if  services
         were  required and the former  agreement  was not  renewed.  During the
         fiscal year ended  December  31,  2006,  the Company paid $3,300 to KGE
         (2005 - $24,000 2004 - $34,749).

5.       On December 16, 2003 and November 16, 2004, the Company entered into an
         agreement with Endeavour Financial Ltd. a company of which Mr. Angus, a
         director of the Company,  was a shareholder.  A monthly fee of US$5,000
         for services was payable under this  agreement for a minimum  period of
         one year.  On July 4, 2005,  the  agreement was amended to increase the
         monthly  fee to  US$10,000  per  month  effective  June  1,  2005.  The
         agreement  includes a  provision  for a nominee  from  Endeavour  to be
         nominated  to the  board  and for  fees to be  paid  to  Endeavour,  in
         addition  to  the  monthly  fee,  in the  event  of  certain  specified
         transactions.  Effective  December  31,  2005 Mr.  Angus  retired  from
         Endeavour  and the monthly fee was reduced to US$5,000  per month.  The
         agreement was terminated by mutual consent effective February 28, 2006.
         During the fiscal year ended  December  31,  2006,  Endeavour  was paid
         $11,600 (2005 - $115,088, 2004 - $78,637).

6.       On February  14, 2006 and  effective  January 1, 2006,  the Company has
         entered into an agreement with RSA Holdings Ltd., pursuant to which Mr.
         Angus, a director of the Company,  provides advisory services including
         participation  on various  committees of the Company.  A monthly fee of
         US$5,000 for  services is payable  under this  agreement  for a minimum
         period of six months. The Company paid RSA $68,350 in 2006.

7.       Mr.  Terry had a  consulting  agreement  with Amera dated  February 16,
         2004,  amended  June 1, 2004,  which  called for  monthly  payments  of
         $10,000.  The  Company had agreed to  reimburse  Amera for 50% of these
         fees.  In the fiscal year ended  December  31,  2004 the  Company  paid
         $43,000 as a result of this arrangement. On January 1, 2005 Mr. Terry's
         agreement  with  Amera was  replaced  by a similar  agreement  with the
         Grosso  Group.  During the year ended  December 31, 2005,  Mr.  Terry's
         total compensation from the Grosso Group was $120,000, of which $63,600
         was  allocated  to the Company as part of the Grosso  Group fees during
         the year. On April 12, 2006 the Board accepted the recommendation  from
         the  Compensation  Committee  to increase  Mr.  Terry's  monthly fee to
         $12,500 ($150,000 annually) effective May 1, 2006 and to pay a bonus of
         $50,000.  During the year ended  December  31, 2006 Mr.  Terry's  total
         compensation  from the Grosso Group was $140,000,  of which $57,400 was
         allocated to the Company. See "Item 6. Directors, Senior Management and
         Employees - Compensation - Management Contracts."

8.       The Company has entered  into an agreement  dated April 23, 2004,  with
         Mr.  Lang,  Chief  Financial  Officer  and a director  of the  Company,
         pursuant  to which  Mr.  Lang  provides  services  to the  Company.  By
         agreement  dated  April 23,  2004,  Arthur  Lang,  the Chief  Financial
         Officer and a director of the Company,  is paid a salary of $80,000 per
         year for professional  services  rendered.  Mr. Lang is also reimbursed
         for certain  monthly club dues.  During the fiscal year ended  December
         31, 2004, Mr. Lang was paid $58,671. Mr. Lang became an employee of the
         Grosso Group in January  2005.  Effective May 1, 2005 Mr. Lang's annual
         salary was  increased to $102,000.  During the year ended  December 31,
         2005, Mr. Lang's total  compensation from the Grosso Group was $94,667,
         of which  $68,927  was  allocated  to the Company as part of the Grosso
         Group  fees for the year.  On April 12,  2006 the  Board  accepted  the
         recommendation  from the Compensation  Committee to increase Mr. Lang's
         annual  salary to $150,000  effective May 1, 2006 and to pay a bonus of
         $50,000.  During the year  ended  December  31,2006  Mr.  Lang's  total
         compensation  from the Grosso Group was  $134,000 of which  $54,940 was
         allocated to the Company. See "Item 6. Directors, Senior Management and
         Employees - Compensation - Management Contracts."



                                     - 54 -
<PAGE>


9.       The Company  entered into an  Arrangement  Agreement  with Golden Arrow
         pursuant  to which the  Company  transferred  certain  assets to Golden
         Arrow as part of a reorganization of the Company completed in 2004. See
         "Item 4.  Information  on the Company - History and  Development of the
         Company."  The Company  entered  into an indemnity  agreement,  for any
         costs or losses incurred by Golden Arrow in respect of the legal action
         commenced by a Minera Aquiline Argentina S.A. against the Company.  See
         "Item 8. Financial Information - Legal Proceedings."

10.      The Company  entered into a Management  Services  Agreement dated March
         22, 2005 with IMA Latin  America Inc.,  the Company's  wholly owned BVI
         subsidiary  and Gestora de Negocios E Inversiones  S.A.  ("Gestora") to
         retain Gestora to provide certain  management,  consulting and advisory
         services of Mr.  Augusto Baertl  ("Baertl") for the  development of the
         Navidad project.  A Confidentiality  Agreement between the Grosso Group
         Management  Ltd. and Gestora was also entered into. A  Director/Officer
         Agreement  between IMA Latin  America  Inc. and Baertl was also entered
         into as well as an Indemnity  Agreement between the Company and Baertl.
         Baertl  and  Gestora  gave  notice  of  termination  of the  Management
         Services  Agreement  and  the   Director/Officer   Agreement  effective
         September 30, 2006.

11.      On October 18,  2006,  the Company and  Aquiline  reached a  definitive
         agreement  (the  Interim  Agreement)  for the  orderly  conduct  of the
         Navidad Project pending the  determination of the appeal by the Company
         against the judgment of the trial court. The  transactions  outlined in
         the agreement  will  constitute due compliance by both parties with the
         July 14, 2006 Supreme Court of British Columbia  judgment in respect of
         the Navidad project.  The principal terms and conditions of the Interim
         Agreement are as follows:

         (a)      control of the Navidad project will be transferred to Aquiline
                  in trust for the ultimately successful party in the appeal;

         (b)      the  Company  and  Aquiline  have agreed to the costs spent to
                  date   developing  the  Navidad   Project  in  the  amount  of
                  $18,500,000.  Upon transfer of control of the Navidad project,
                  Aquiline  paid  $7,500,000  of the  costs  into  trust and the
                  balance will be expended by Aquiline in developing the Navidad
                  Project  during the period of the appeal and secured under the
                  terms of the trust conditions;

         (c)      in the event that the Company is unsuccessful  on appeal,  the
                  Company will be paid such $18,500,000 amount, less legal costs
                  Aquiline would be entitled to in relation to the trial and the
                  appeal.

         (d)      in the event that the Company's appeal is successful,  it will
                  pay  Aquiline's  qualifying  costs  expended on developing the
                  Navidad  Project  during the period of the appeal,  less legal
                  costs the  Company  would be  entitled  to in  relation to the
                  trial and the appeal,  and control of the Navidad Project will
                  then revert to the Company; and

         (e)      pending the finalization of the appeal process,  neither party
                  will attempt a hostile takeover of the other.

EXCHANGE CONTROLS

There are no governmental  laws,  decrees,  or regulations in Canada relating to
restrictions on the export or import of capital,  or affecting the remittance of
interest,  dividends, or other payments to non-resident holders of the Company's
Common  Stock.  Any  remittances  of dividends to United States  residents  are,
however,  subject  to a  15%  withholding  tax  (10%  if  the  shareholder  is a
corporation  owning at least 10% of the outstanding Common Stock of the Company)
pursuant to Article X of the reciprocal tax treaty between Canada and the United
States. See "Item 10. Additional Information - Taxation".

Except as  provided  in the  Investment  Canada  Act (the  "Act"),  there are no
limitations  specific to the rights of  non-Canadians to hold or vote the Common
Stock of the  Company  under  the laws of  Canada  or the  Province  of  British
Columbia or in the charter documents of the Company.



                                     - 55 -
<PAGE>



Management  of the  Company  considers  that the  following  general  summary is
materially  complete and fairly  describes those provisions of the Act pertinent
to an investment by an American investor in the Company.

The Act requires a non-Canadian  making an investment  which would result in the
acquisition of control of a Canadian business,  the gross value of the assets of
which  exceed  certain  threshold  levels or the  business  activity of which is
related to Canada's cultural heritage or national identity, to either notify, or
file an  application  for review with,  Investment  Canada,  the federal  agency
created by the Investment Canada Act.

The notification  procedure  involves a brief statement of information about the
investment  of a prescribed  form which is required to be filed with  Investment
Canada by the investor at any time up to 30 days following implementation of the
investment.  It is intended that investments  requiring only  notification  will
proceed without government  intervention  unless the investment is in a specific
type of business  activity  related to Canada's  cultural  heritage and national
identity.

If an investment is reviewable  under the Act, an application  for review in the
form prescribed is normally required to be filed with Investment Canada prior to
the investment  taking place and the investment may not be implemented until the
review has been completed and the Minister  responsible for Investment Canada is
satisfied that the  investment is likely to be of net benefit to Canada.  If the
Minister is not satisfied  that the investment is likely to be of net benefit to
Canada, the non-Canadian must not implement the investment or, if the investment
has been  implemented,  may be  required  to divest  himself  of  control of the
business that is the subject of the investment.

The following investments by non-Canadians are subject to notification under the
Act:

(a)      an investment to establish a new Canadian business; and

(b)      an  investment  to acquire  control of a Canadian  business that is not
         reviewable pursuant to the Act.

An  investment  is  reviewable  under  the Act if there is an  acquisition  by a
non-Canadian of a Canadian business and the asset value of the Canadian business
being acquired equals or exceeds the following thresholds:

(a)      for  non-WTO  Investors,  the  threshold  is  $5,000,000  for a  direct
         acquisition  and over  $50,000,000  for an  indirect  acquisition.  The
         $5,000,000  threshold will apply however for an indirect acquisition of
         the asset value of the Canadian  business being acquired exceeds 50% of
         the asset value of the global transaction;

(b)      except as specified in paragraph  (c) below,  a threshold is calculated
         for  reviewable  direct  acquisitions  by or from  WTO  Investors.  The
         threshold for 2005 is $250,000,000.  Pursuant to Canada's international
         commitments,  indirect  acquisitions  by or from WTO  Investors are not
         reviewable; and

(c)      the  limits  set  out in  paragraph  (a)  apply  to all  investors  for
         acquisitions of a Canadian business that:

         (i)      engages in the production of uranium and owns an interest in a
                  producing uranium property in Canada;
         (ii)     provides any financial services;
         (iii)    provides any transportation service; or
         (iv)     is a cultural business.

WTO Investor as defined in the Act means:

(a)      an individual, other than a Canadian, who is a national of a WTO Member
         or who has the right of  permanent  residence  in  relation to that WTO
         Member;

(b)      a government of a WTO Member,  whether  federal,  state or local, or an
         agency thereof;

(c)      an entity that is not a  Canadian-controlled  entity, and that is a WTO
         investor-controlled entity, as determined in accordance with the Act;

(d)      a corporation or limited partnership:



                                     - 56 -
<PAGE>


         (i)      that  is  not  a  Canadian-controlled  entity,  as  determined
                  pursuant to the Act;
         (ii)     that is not a WTO investor within the meaning of the Act;
         (iii)    of which less than a  majority  of its  voting  interests  are
                  owned by WTO investors;
         (iv)     that is not  controlled  in fact through the  ownership of its
                  voting interests; and
         (v)      of which two thirds of the members of its board of  directors,
                  or of which two thirds of its  general  partners,  as the case
                  may be, are any combination of Canadians and WTO investors;

(e)      a trust:

         (i)      that  is  not  a  Canadian-controlled  entity,  as  determined
                  pursuant to the Act;
         (ii)     that is not a WTO investor within the meaning of the Act;
         (iii)    that is not  controlled  in fact through the  ownership of its
                  voting interests, and
         (iv)     of which two thirds of its  trustees  are any  combination  of
                  Canadians and WTO investors, or

(f)      any other form of business  organization  specified by the  regulations
         that is controlled by a WTO investor.

WTO Member as defined in the Act means a member of the World Trade Organization.

Generally  speaking,  an acquisition is direct if it involves the acquisition of
control of the Canadian business or of its Canadian parent or grandparent and an
acquisition  is  indirect  if  it  involves  the  acquisition  of  control  of a
non-Canadian  parent  or  grandparent  of an  entity  carrying  on the  Canadian
business.  Control may be acquired  through the acquisition of actual or de jure
voting  control  of  a  Canadian  corporation  or  through  the  acquisition  of
substantially  all of the assets of the Canadian  business.  No change of voting
control  will be deemed to have  occurred if less than  one-third  of the voting
control of a Canadian corporation is acquired by an investor.

The Act specifically  exempts certain  transactions from either  notification or
review. Included among the category of transactions is the acquisition of voting
shares or other voting  interests  by any person in the ordinary  course of that
person's business as a trader or dealer in securities.

TAXATION

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES

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

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

DIVIDENDS

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



                                     - 57 -
<PAGE>

CAPITAL GAINS

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

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

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

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

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

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

U.S. HOLDERS

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

DISTRIBUTIONS ON SHARES OF COMMON STOCK

U.S. Holders receiving dividend distributions (including constructive dividends)
with  respect to the  Company's  common  stock are  required to include in gross
income for United  States  federal  income tax purposes the gross amount of such
distributions to the extent that the Company has current or accumulated earnings
and profits,  without  reduction for any Canadian  income tax withheld from such
distributions.  Such  Canadian tax withheld may be credited,  subject to certain
limitations,  against  the  U.S.  Holder's  United  States  federal  income  tax
liability  or,  alternatively,  may be deducted in computing  the U.S.  Holder's
United States federal taxable income by those who


                                     - 58 -
<PAGE>

itemize  deductions.  (See more  detailed  discussion  at  "Foreign  Tax Credit"
below.) To the extent that distributions  exceed current or accumulated earnings
and profits of the Company, they will be treated first as a return of capital up
to the U.S.  Holder's  adjusted basis in the common stock and thereafter as gain
from the sale or exchange of such shares.  Preferential  tax rates for long-term
capital gains are applicable to a U.S. Holder which is an individual,  estate or
trust. There are currently no preferential tax rates for long-term capital gains
for a U.S. Holder which is a corporation. Dividends paid on the Company's common
stock will not  generally  be  eligible  for the  dividends  received  deduction
provided  to  corporations   receiving  dividends  from  certain  United  States
corporations.

FOREIGN TAX CREDIT

A U.S. Holder who pays (or has withheld from distributions)  Canadian income tax
with respect to the ownership of the Company's common stock may be entitled,  at
the option of the U.S.  Holder,  to either a deduction  or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit  because  a  credit  reduces  United  States  federal  income  taxes on a
dollar-for-dollar  basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and applies to all
foreign  taxes paid by (or  withheld  from) the U.S.  Holder  during  that year.
Subject to certain  limitations,  Canadian  taxes  withheld will be eligible for
credit against the U.S.  Holder's United States federal income taxes.  Under the
Code,  the  limitation  on  foreign  taxes  eligible  for  credit is  calculated
separately  with respect to specific  classes of income.  Dividends  paid by the
Company  generally  will be  either  "passive"  income or  "financial  services"
income,  depending on the particular U.S.  Holder's  circumstances.  Foreign tax
credits  allowable  with respect to each class of income  cannot exceed the U.S.
federal income tax otherwise  payable with respect to such class of income.  The
consequences of the separate  limitations  will depend on the nature and sources
of each U.S.  Holder's  income and the  deductions  appropriately  allocated  or
apportioned  thereto.  The  availability  of the  foreign  tax  credit  and  the
application  of the  limitations on the credit are fact specific and holders and
prospective  holders  of common  stock  should  consult  their own tax  advisors
regarding their individual circumstances.

DISPOSITION OF SHARES OF COMMON STOCK

A U.S.  Holder  will  recognize  gain or loss  upon the sale of shares of common
stock equal to the difference,  if any,  between (i) the amount of cash plus the
fair market value of any property received; and (ii) the shareholder's tax basis
in the  common  stock.  This  gain or loss will be  capital  gain or loss if the
shares  are a capital  asset in the hands of the U.S.  Holder,  and such gain or
loss will be  long-term  capital  gain or loss if the U.S.  Holder  has held the
common  stock for more than one year.  Gains and losses are netted and  combined
according to special rules in arriving at the overall capital gain or loss for a
particular  tax  year.   Deductions  for  net  capital  losses  are  subject  to
significant  limitations.  For U.S.  Holders  who are  individuals,  any  unused
portion of such net  capital  loss may be  carried  over to be used in later tax
years until such net capital loss is thereby  exhausted.  For U.S. Holders which
are corporations (other than corporations  subject to Subchapter S of the Code),
an unused net  capital  loss may be carried  back three years from the loss year
and carried  forward five years from the loss year to be offset against  capital
gains until such net capital loss is thereby exhausted.

OTHER CONSIDERATIONS

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

If more  than  50% of the  voting  power  or value  of the  Company  were  owned
(actually  or  constructively)  by U.S.  Holders  who each  owned  (actually  or
constructively)  10% or more of the voting power of the Company's  common shares
("10%  Shareholders"),  then  the  Company  would  become  a CFC  and  each  10%
Shareholder would be required to include in its taxable income as a constructive
dividend  an amount  equal to its share of certain  undistributed  income of the
Company.  If (1) more  than 50% of the  voting  power or value of the  Company's
common  shares  were  owned  (actually  or  constructively)  by  five  or  fewer
individuals  who are citizens or  residents of the United  States and (2) 60% or
more of the Company's  income consisted of certain  interest,  dividend or other
enumerated  types of income,  then the Company  would be a FPHC.  If the Company
were a FPHC,  then each U.S.  Holder  (regardless of the amount of the Company's
Common  Shares  owned by such U.S.  Holder)  would be required to include in its
taxable  income  as  a   constructive   dividend  its  share  of  the  Company's
undistributed income of specific types.



                                     - 59 -
<PAGE>


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

If the Company were to be a PFIC, then a U.S. Holder would be required to pay an
interest  charge  together  with tax  calculated at maximum tax rates on certain
"excess  distributions"  (defined to include  gain on the sale of stock)  unless
such U.S.  Holder made an  election  either to (1) include in his or her taxable
income  certain  undistributed  amounts of the  Company's  income or (2) mark to
market his or her Company  common  shares at the end of each taxable year as set
forth in Section 1296 of the  Internal  Revenue  Code of 1986,  as amended.  The
elections require certain  conditions be met such as filing on or before the due
date, as extended,  for filing the shareholder's income tax return for the first
taxable year to which the election will apply.

INFORMATION REPORTING AND BACKUP WITHHOLDING

U.S. information reporting requirements may apply with respect to the payment of
dividends to U.S. Holders of the Company's  shares.  Under Treasury  regulations
currently in effect,  non-corporate holders may be subject to backup withholding
at a 31% rate with respect to dividends when such holder (1) fails to furnish or
certify a correct  taxpayer  identification  number to the payor in the required
manner,  (2) is  notified  by the IRS that it has failed to report  payments  of
interest or dividends  properly or (3) fails,  under certain  circumstances,  to
certify  that it has been  notified  by the IRS  that it is  subject  to  backup
withholding for failure to report interest and dividend payments.

DOCUMENTS ON DISPLAY

Documents concerning the Company and referred to in this report may be inspected
at the COMPANY'S  principal office,  located at #709 - 837 West Hastings Street,
Vancouver, British Columbia, V6C 3N6.


ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------------------

As of the date of this report,  the Company  does not have any  material  market
risk sensitive financial instruments.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
--------------------------------------------------------------------------------

Not applicable.



                                     PART II


ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
--------------------------------------------------------------------------------

Not applicable.


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

Not applicable.


                                     - 60 -
<PAGE>


ITEM 15. CONTROLS AND PROCEDURES.
--------------------------------------------------------------------------------

An evaluation was performed under the supervision and with the  participation of
the Company's  management,  including Mr. Grosso,  the Company's Chief Executive
Officer,   and  Mr.  Lang,  the  Company's  Chief  Financial  Officer,   of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures  pursuant to Rules  13a-15(b)  and  15d-15(b) of the  Securities
Exchange Act of 1934 (the  "Exchange  Act") as of December 31, 2005.  Based upon
that  evaluation,   Messrs.  Grosso  and  Lang,  concluded  that  the  Company's
disclosure  controls and  procedures  are  effective to ensure that  information
required  to be  disclosed  by the  Company in reports  that it files or submits
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods  specified in  Securities  and  Exchange  Commission  rules and
forms.

During the fiscal year ended  December  31,  2006,  there were no changes in the
Company's  internal  control  over  financial  reporting  that  have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT.
--------------------------------------------------------------------------------

The Board of Directors  has  determined  that the Company has at least one audit
committee financial expert, Mr. David Horton, an independent director, serves on
the Company's audit committee.


ITEM 16B.  CODE OF BUSINESS CONDUCT AND ETHICS.
--------------------------------------------------------------------------------


                       CODE OF BUSINESS CONDUCT AND ETHICS

The Board of Directors of IMA  Exploration  Inc. (the  "Company")  has adopted a
Code of Business  Conduct and Ethics that outlines the Company's  values and its
commitment to ethical  business  practices in every business  transaction.  This
code applies to all  directors,  officers,  and employees of the Company and its
subsidiaries  and affiliates.  A copy of the Company's Code of Business  Conduct
and Ethics is available on the Company's website at
www.imaexploration.com/s/CorporateGovernance.asp.

HONEST AND ETHICAL CONDUCT

The  Company  expects a high  level of  personal  integrity  for each  employee,
officer  and  director  when  interacting  with  investors,  business  partners,
shareholders, suppliers, consultants and other employees.

CONFLICT OF INTEREST

When  possible,   conflicts  of  interest   between  personal  and  professional
relationships should be avoided, however,  unavoidable conflict of interest will
be handled in accordance with the Company's ethical standards.

A director, officer or employee may not represent the Company in any transaction
with a person or an entity in which the  director,  officer  or  employee  has a
direct or indirect interest or from which the director,  officer or employee may
derive personal benefit.

ACCURATE AND TIMELY DISCLOSURE

Full,  fair,  accurate,  timely  and  understandable  disclosure  in  reports or
documents  submitted  to  the  Securities  and  Exchange  Commission  and  other
securities  commissions  across  Canada  as well as all  public  communications.
Employees  and officers who prepare  financial  and other  reports will exercise
diligence in ensuring that there are no false or misleading statements.

COMPLIANCE WITH APPLICABLE GOVERNMENTAL LAWS, RULES AND REGULATIONS

The Company is committed to  compliance  with all laws,  rules and  regulations,
including laws and regulations  applicable to the Company's securities,  as well
as any rules  promulgated  by any  exchange  on which the  Company's  shares are
listed.


                                     - 61 -
<PAGE>


PROMPT INTERNAL REPORTING OF VIOLATIONS

Employees and officers are responsible for the prompt internal  reporting of any
violations of the Code to the Company's Compliance Officer.

PROTECTION AND PROPER USE OF COMPANY ASSETS AND OPPORTUNITIES

All employees  have an obligation to protect the Company's  assets and to ensure
that all opportunities  available to the Company are brought to the attention of
the relevant officer or employee.

CONFIDENTIALITY OF COMPANY INFORMATION

It is the Company's policy that business affairs of the Company are confidential
and should not be discussed  outside the Company except for information that has
already been made available to the public.

INSIDER TRADING

Management, employees, members of the Board of Directors and others who are in a
"special  relationship"  with the  Company  from  time to time  become  aware of
corporate  developments  or plans  which may affect  the value of the  Company's
shares (inside  information) before these developments or plans are made public.
Company  directors,  officers and  employees  are  prohibited  from using inside
information  themselves or disclosing this inside  information to others who may
use the information to trade Company stock.

FAIR DEALING

Each employee  should  endeavour to respect the rights of, and deal fairly with,
our  shareholders,  investors,  business  partners,  suppliers,  competitors and
employees.   No  employee  should  take  unfair   advantage  of  anyone  through
manipulation, concealment, abuse of privileged information, misrepresentation of
material facts, or any other unfair business practice.

REPORTING UNETHICAL AND ILLEGAL CONDUCT/ETHICS QUESTIONS

The Company is committed to taking prompt action against  violations of the Code
of Business  Conduct and Ethics and it is the  responsibility  of all directors,
officers  and  employees  to comply  with the Code and to report  violations  or
suspected  violations to the Company's  Compliance  Officer.  Employees may also
discuss their  concerns  with their  supervisor  who will then report  suspected
violations to the Compliance Officer.

The Compliance Officer is appointed by the Board of Directors and is responsible
for  investigating  and resolving all reported  complaints and  allegations  and
shall advise the President and CEO, the CFO and/or the Audit Committee.

The Compliance Officer can be reached via telephone at 1-866-921-6714 or via the
internet site located at http://www.whistleblowersecurity.com.

VIOLATIONS AND WAIVERS

The Compliance  Officer will report suspected fraud or securities law violations
for  review  by the  Audit  Committee.  The  Audit  Committee  will  report  all
violations reviewed by the Committee to the Board of Directors.

The  Compliance  Officer will report  regularly to the Board of Directors on the
results and resolution of complaints and  allegations  concerning  violations of
the Code.

No waivers of any  provision of this Code of Business  Conduct and Ethics may be
made except by the Board of Directors. Any waiver or amendment shall be reported
as required by law or regulation.

Only the Audit Committee may amend this Code of Business Conduct and Ethics.


                                     - 62 -
<PAGE>


ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
--------------------------------------------------------------------------------

AUDIT FEES

For the fiscal year ended  December  31,  2006,  the  Company's  auditor  billed
approximately  $28,500,  and for the fiscal year ended  December 31,  2005,  the
Company's  auditor billed  approximately  $42,000 for the audit of the Company's
annual  financial  statements  or  services  that are  normally  provided by the
auditor in connection  with statutory and regulatory  filings or engagements for
those fiscal years.

AUDIT RELATED FEES

For the fiscal years ended  December 31, 2006 and 2005,  the Company's  auditors
billed  $58,303 and billed  $32,015,  respectively,  for  assurance  and related
services that were reasonably  related to the performance of the audit or review
of the Company's  financial  statements  outside of those fees  disclosed  above
under "Audit Fees"

TAX FEES

For the fiscal years ended  December 31, 2006 and 2005,  the  Company's  auditor
billed $10,232 and billed $17,703,  respectively, for tax compliance, tax advice
and tax planning services.

PRE-APPROVAL POLICIES AND PROCEDURES

Generally,  in the past,  prior to engaging the Company's  auditors to perform a
particular service,  the Company's audit committee has, when possible,  obtained
an estimate for the services to be performed.  The audit committee in accordance
with procedures for the Company approved all of the services described above.

Additionally,   the  auditors   have  been   engaged  to  perform   services  by
non-independent  directors of the Company pursuant to pre-approval  policies and
procedures  established  by the audit  committee  (which are  detailed as to the
particular  service)  and the  audit  committee  has been  informed  of any such
engagement and service.

Since January 1, 2005,  the  Company's  auditors have not billed the Company for
audit related services in connection with the reorganization.

Beginning July 1, 2004, the Company's  audit  committee  obtained  estimates for
services to be performed, prior to engaging the Company's auditor to perform any
audit or non-audit related services,  including those set forth above. The audit
committee  also  allowed the  engagement  of the auditor,  by a  non-independent
member of the board of directors,  to render  services  pursuant to pre-approval
policies and procedures  established by the audit committee  (which are detailed
as to the particular  service),  provided the audit committee is informed of any
such  engagement  and service.  The audit  committee  may delegate to one of its
members,  who is also an  independent  director of the  Company,  the ability to
approve  such  services on behalf of the audit  committee.  Any approval by such
director shall be ratified by the audit committee at its next scheduled meeting.


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

Not applicable.


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

Not applicable.



                                     - 63 -
<PAGE>



                                    PART III

ITEM 17.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

See pages F-1 though F-27.


ITEM 18.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 19.  EXHIBITS.
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

   EXHIBIT
    NUMBER       DESCRIPTION
   -------       -------------------------------------------------------------------------------------------------
   <S>         <C>

      1.1        Notice of Articles (8)

      1.2        Articles

      4.1        Share Purchase Agreement Between Shareholders and 389863 B.C. Ltd. (1)

      4.2        Arrangement Agreement Between Viceroy Resource Corporation and IMA Resource
                 Corporation (1)

      4.3        Consulting Services Agreement Between Oxbow International Marketing Corp. and IMA
                 Resource Corporation (1)

      4.4        Employment Agreement with William Lee (1)

      4.5        Consulting Services Agreement Between Nikolaos Cacos and IMA Resource Corporation (1)

      4.6        Consulting Agreement Between KGE Management Ltd. and IMA Exploration Inc. dated
                 April 1, 2004 (8)

      4.7        Consulting Agreement Between Lindsay R. Bottomer and IMA Exploration Inc. (1)

      4.8        Exploration and Option Agreement with Barrick Exploraciones Argentina S.A. (1)

      4.9        Option Agreement with Juan Demetrio Lirio Jr. and Juan Demetrio Lirio representing Lir-Fer
                 Construcciones S.R.L. (1)

     4.10        Option Agreement with Lirio and Lir-Fer Construcciones S.R.L. (1)

     4.11        Option Agreement with Oscar Garcia and others (1)

     4.12        Purchase Agreement with Modesto Enrique Arasena (1)

     4.13        Option Agreement with Hugo Arturo Bosque (1)

     4.14        Option Agreement with Guillermo Munoz, Lydia Gonzalez, Ricardo Sanchez and Antonio Monteleone (1)

     4.15        Option Agreement with Jorge Ernesto Rodriguez and Gerardo Javier Rodriguez (1)

     4.16        Option Agreement with Jorge Ernesto Rodriguez and Raul Alberto Garcia (1)

     4.17        Purchase Agreement with Victor Ronchietto (1)

     4.18        Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura and Sociedad
                 Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura (1)

     4.19        Amendment to Option Agreement with Hugo Arturo Bosque (2)

     4.20        Amendment to Purchase Agreement with Victor Ronchietto (2)

</TABLE>

                                     - 64 -
<PAGE>


<TABLE>
<CAPTION>

   EXHIBIT
    NUMBER       DESCRIPTION
   -------       -------------------------------------------------------------------------------------------------
   <S>         <C>

     4.21        Option Agreement with Dionisio Ramos (2)

     4.22        Amendment to Consulting Services Agreement Between Oxbow International Marketing Corp.
                 and IMA Resource Corporation (2)

     4.23        Amendment to consulting Agreement between IMA Exploration Inc. and Nikolaos Cacos (3)

     4.24        Agreement between the Company and Sean Hurd dated June 2, 2002 (3)

     4.25        Option Agreement between Nestor Arturo and IMA S.A. (3)

     4.26        Amendment to Option Agreement with Guillermo Munoz, Lydia Gonzalez, Ricardo Sanchez and Antonio
                 Monteleone (3)

     4.27        Amendment to Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura
                 and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura (3)

     4.28        Option Agreement with Rio Tinto Mining and Exploration Limited (4)

     4.29        Amendment to Exploration and Option Agreement with Barrick Exploraciones Argentina S.A. (4)

     4.30        Consulting Agreement between the Company and Lindsay Bottomer dated April 1, 2002 (4)

     4.31        Amendment to Option Agreement with Juan Demetrio Lirio Jr. and Juan Demetrio Lirio representing
                 Lir-Fer Construcciones S.R.L. (4)

     4.32        Amendment to Option Agreement with Juan Demetrio Lirio and Lir-Fer Construcciones S.R.L. (4)

     4.33        Amendment to Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura
                 and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura (4)

     4.34        Amendment to Option Agreement between Nestor Arturo and IMA S.A. (4)

     4.35        Consulting Agreement Between KGE Management Ltd. and IMA Exploration Inc. (4)

     4.36        Amendment to Option Agreement with Juan Demetrio Lirio Jr. and Juan Demetrio Lirio representing
                 Lir-Fer Construcciones S.R.L. (5)

     4.37        Amendment to Option Agreement with Juan Demetrio Lirio and Lir-Fer Construcciones S.R.L. (5)

     4.38        Amendment to Option Agreement between Nestor Arturo and IMA S.A. (5)

     4.39        Amendment to Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura
                 and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura (5)

     4.40        Short Form Offering Document (5)

     4.41        Amendment to Consulting Services Agreement Between Oxbow International Marketing Corp. and IMA
                 Resource Corporation (5)

     4.42        Amendment to Consulting Agreement Between KGE Management Ltd. And IMA Exploration Inc. (5)

     4.43        Amendment to Agreement between the Company and Sean Hurd (5)

     4.44        Amendment to Exploration and Option Agreement with Barrick Exploraciones Argentina S.A. dated
                 March 26, 2003. (6)

     4.45        Letter of Intent dated March 6, 2003 with Amera Resources Corporation (6)

     4.46        Letter Agreement with Amera Resources Corporation re: reimbursement of office expenses (6)

     4.47        Amendment to Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura
                 and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura dated December
                 23, 2002 (6)

     4.48        Amendment to Option Agreement with Juan Demetrio Lirio Jr. and Juan Demetrio Lirio representing
                 Lir-Fer Construcciones S.R.L. dated July 10, 2002 (6)

</TABLE>


                                     - 65 -
<PAGE>


<TABLE>
<CAPTION>

   EXHIBIT
    NUMBER       DESCRIPTION
   -------       -------------------------------------------------------------------------------------------------
   <S>         <C>


     4.49        Amendment to Option Agreement with Juan Demetrio Lirio Jr. and Juan Demetrio Lirio representing
                 Lir-Fer Construcciones S.R.L. dated December 27, 2002 (6)

     4.50        Amendment to Consulting Services Agreement Between Oxbow International Marketing Corp. and IMA
                 Resource Corporation dated July 15, 2002 (6)

     4.51        Amendment to Consulting Agreement Between KGE Management Ltd. And IMA Exploration Inc. dated June
                 14, 2002 (6)

     4.52        Amendment to Consulting Agreement Between KGE Management Ltd. And IMA Exploration Inc. dated
                 October 3, 2002 (6)

     4.53        Amendment to Agreement between the Company and Sean Hurd dated June 10, 2002 (6)

     4.54        Amendment to Consulting Services Agreement Between Oxbow International Marketing Corp. and IMA
                 Resource Corporation dated April 17, 2003 (6)

     4.55        Arrangement Agreement between IMA Exploration Inc., IMA Holdings Corp. and Golden Arrow Resources
                 Corporation dated May 14, 2004 (7)

     4.56        Amendment to consulting Agreement with Nikolaos Cacos dated January 5, 2004 (8)

     4.57        Amendment to Agreement with Sean Hurd dated January 5, 2004 (8)

     4.58        Financial Advisory Services Agreement with Endeavour Financial Ltd. (8)

     4.59        Agreement between the Company and Amera Resources Corporation dated March 6, 2003 relating to the
                 Lago Pico, Loma Alta and Nueva Ruta properties (8)

     4.60        Amendment to Letter of Intent with Amera Resources Corporation dated September 30, 2003 (8)

     4.61        Amendment to Letter of Intent with Amera Resources Corporation dated April 8, 2004 (8)

     4.62        Letter Agreement with Beauregard Holdings Corp. dated February 5, 2004 regarding office lease (8)

     4.63        Option Agreement dated September 22, 2003, between the Company and Cloudbreak Resources Ltd. (8)

     4.64        Option Agreement dated August 12, 2003 between the Company and Consolidated Pacific Bay Minerals
                 Ltd. (8)

     4.65        Option agreement dated June 11, 2003, between the Company and Ballad Gold & Silver Ltd. (formerly
                 Ballad Ventures Ltd.) (8)

     4.66        Amendment to Option Agreement with Sociedad Minera de Responsabilidad Limitado Nova JJ de Piura
                 and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura dated August
                 15, 2003 (8)

     4.67        Letter Agreement with Arthur Lang dated April 23, 2004 (8)

     4.68        Arrangement Agreement by and among the Company, Golden Arrow Resources Corporation and IMA
                 Holdings Corp. dated May 14, 2004 (9)

     4.69        Indemnity Agreement provided to Golden Arrow Resources Corporation dated July 7, 2004 (9)

     4.70        Administration Services Agreement with the Grosso Group Management Ltd. dated January 1, 2005 (9)

     4.71        Amendment to Consulting Agreement between KGE Management Ltd. and IMA Exploration Inc. dated
                 April 1, 2005 (9)

     4.72        Audit Committee Charter (9)

     4.73        Amendment to Consulting Agreement between KGE Management Ltd. and IMA Exploration Inc. dated
                 January 26, 2006 (10)

     4.74        Advisory Services Agreement between RSA Holdings Ltd. and IMA Exploration Inc. dated February 14,
                 2006 (10)
</TABLE>



                                     - 66 -
<PAGE>


<TABLE>
<CAPTION>

   EXHIBIT
    NUMBER       DESCRIPTION
   -------       -------------------------------------------------------------------------------------------------
   <S>         <C>

     4.75        Interim Project Development Agreement between IMA Exploration Inc. and Aquiline Resources Inc.
                 dated October 18, 2006.(11)

      8.1        List of Subsidiaries (8)

     12.1        Certification of Joseph Grosso Pursuant to Rule 13a-14(a)

     12.2        Certification of Arthur Lang Pursuant to Rule 13a-14(a)

     13.1        Certification of Joseph Grosso Pursuant to 18 U.S.C. Section 1350

     13.2        Certification of Arthur Lang Pursuant to 18 U.S.C. Section 1350
   -------       -------------------------------------------------------------------------------------------------
</TABLE>

     (1)  Previously filed as an exhibit to the Company's Registration Statement
          on Form 20-F,  filed  with the  Commission  on  January 6, 2000.  File
          number 00-30464.
     (2)  Previously filed as an exhibit to the Company's Registration Statement
          on Form  20-F/A  Amendment  No. 1 filed  July 14,  2000.  File  Number
          00-30464.
     (3)  Previously filed as an exhibit to the Company's Registration Statement
          on Form 20-F/A  Amendment No. 2 filed  September 15, 2000. File Number
          00-30464.
     (4)  Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed May 8, 2001. File Number 00-30464.
     (5)  Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed May 8, 2002. File Number 00-30464.
     (6)  Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed May 16, 2003. File Number 00-30464.
     (7)  Previously  filed as with the Company's  Report on Form 6-K filed June
          18, 2004. File Number 00-30464.
     (8)  Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed June 23, 2004. File Number 00-30464.
     (9)  Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed June 7, 2005. File Number 00-30464.
     (10) Previously  filed as an exhibit to the Company's Annual Report on Form
          20-F filed May 8, 2006. File Number 01-32558.
     (11) Previously  filed  as with the  Company's  Report  on Form  6-K  filed
          October 19, 2006. File Number 01-32558.



                                     - 67 -
<PAGE>




                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this annual report on its behalf.


                                             IMA EXPLORATION INC.


Dated:    MARCH 30, 2007                     /s/ Arthur Lang
      ----------------------                 -----------------------------------
                                             Arthur Lang,
                                             Chief Financial Officer
                                             and Director


                                     - 68 -

<PAGE>










                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


















                                      F-1
<PAGE>



















MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The  accompanying  consolidated  financial  statements  of the Company have been
prepared by  management  in  accordance  with  accounting  principles  generally
accepted in Canada and reconciled to accounting principles generally accepted in
the  United  States  as set  out in  Note  11 and  contain  estimates  based  on
management's  judgement.  Management maintains an appropriate system of internal
controls to provide  reasonable  assurance  that  transactions  are  authorized,
assets safeguarded, and proper records maintained.

The  Audit  Committee  of the  Board of  Directors  has met  with the  Company's
independent auditors to review the scope and results of the annual audit, and to
review the financial statements and related financial reporting matters prior to
submitting the financial statements to the Board for approval.

The Company's independent auditors, PricewaterhouseCoopers LLP, are appointed by
the  shareholders  to conduct an audit in  accordance  with  generally  accepted
auditing standards in Canada and the Public Company  Accounting  Oversight Board
(United States), and their report follows.



/s/ JOSEPH GROSSO                                        /s/ ART LANG

Joseph Grosso                                            Art Lang
President                                                Chief Financial Officer


March 29, 2007




                                      F-2
<PAGE>

PRICEWATERHOUSECOOPERS

                                                    PRICEWATERHOUSECOOPERS LLP
                                                    CHARTERED ACCOUNTANTS
                                                    PricewaterhouseCoopers Place
                                                    250 Howe Street, Suite 700
                                                    Vancouver, British Columbia
                                                    Canada V6C 3S7
                                                    Telephone +1 604 806 7000
                                                    Facsimile +1 604 806 7806






INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF IMA EXPLORATION INC.


We have audited the  consolidated  balance sheets of IMA EXPLORATION  INC. as at
December 31, 2006 and 2005 and the  consolidated  statements of  operations  and
deficit  and cash  flows for each of the years in the three  year  period  ended
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 Canadian  generally accepted auditing
standards and the standards of the Public  Company  Accounting  Oversight  Board
(United  States).  Those standards  require that we plan and perform an audit to
obtain  reasonable  assurance  whether  the  financial  statements  are  free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 2006
and 2005 and the  results of its  operations  and its cash flows for each of the
years in the three year  period  ended  December  31,  2006 in  accordance  with
Canadian generally accepted accounting principles.


(SIGNED) PRICEWATERHOUSECOOPERS LLP

CHARTERED ACCOUNTANTS

Vancouver, B.C., Canada
March 29, 2007




PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP
and the other member firms of PricewaterhouseCoopers International Limited, each
              of which is a separate and independent legal entity.

                                      F-3


<PAGE>


                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                        AS AT DECEMBER 31, 2006 AND 2005
                         (EXPRESSED IN CANADIAN DOLLARS)


                                                       2006            2005
                                                         $               $
                                     ASSETS

CURRENT ASSETS

Cash                                                    391,420         151,395
Short-term investments (Note 4)                       8,500,000       7,580,000
Other receivables, prepaids and deposits (Note 8)       405,205         548,492
Marketable securities (Note 5)                                -         186,000
                                                   ------------    ------------
                                                      9,296,625       8,465,887
MINERAL PROPERTIES AND DEFERRED
     COSTS (Notes 2 and 9)                                    -      15,032,107
NAVIDAD INTEREST (Note 2)                            17,949,521               -
                                                   ------------    ------------
                                                     27,246,146      23,497,994
                                                   ============    ============


                                   LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued liabilities                236,612         976,811

FUTURE INCOME TAX LIABILITIES (Note 9)                        -       1,760,110
                                                   ------------    ------------
                                                        236,612       2,736,921
                                                   ------------    ------------


                              SHAREHOLDERS' EQUITY

SHARE CAPITAL (Note 6)                               58,664,727      50,414,672

WARRANTS (Note 6)                                     1,281,946               -

CONTRIBUTED SURPLUS (Note 7)                          6,152,265       5,854,445

DEFICIT                                             (39,089,404)    (35,508,044)
                                                   ------------    ------------
                                                     27,009,534      20,761,073
                                                   ------------    ------------
                                                     27,246,146      23,497,994
                                                   ============    ============

NATURE OF OPERATIONS AND CONTINGENCY (Note 1)

MEASUREMENT UNCERTAINTY AND NAVIDAD INTEREST (Note 2)

COMMITMENTS (Note 8)


APPROVED BY THE BOARD

/s/ DAVID HORTON        , Director
------------------------

/s/ ROBERT STUART ANGUS , Director
------------------------


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

                                      F-4
<PAGE>



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


<TABLE>
<CAPTION>

                                                       2006            2005            2004
                                                         $               $               $
<S>                                               <C>             <C>             <C>

EXPENSES

Administrative and management services                  461,553         294,828         350,521
Corporate development and investor relations            328,779         496,538         286,187
General exploration                                     186,572          55,914         228,961
Office and sundry                                       181,913         148,015         107,678
Professional fees                                     1,124,144       2,212,190         816,143
Rent, parking and storage                                96,263          72,791          90,629
Salaries and employee benefits                          652,530         585,560         313,409
Stock based compensation (Note 6)                       393,120       1,800,000       1,972,860
Telephone and utilities                                  17,432          26,648          34,165
Transfer agent and regulatory fees                      103,457         199,715          57,743
Travel and accommodation                                 93,392         256,035         203,591
Cost recoveries (Note 8)                                      -               -        (149,271)
Navidad holding costs (Note 2)                          312,349               -               -
                                                   ------------    ------------    ------------
                                                      3,951,504       6,148,234       4,312,616
                                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS                              (3,951,504)     (6,148,234)     (4,312,616)
                                                   ------------    ------------    ------------
OTHER INCOME (EXPENSE)

Foreign exchange                                         (2,865)        232,954        (195,285)
Reorganization costs                                          -               -        (346,103)
Interest and other income                               373,009         150,406         101,589
Gain on options and disposition of mineral
     properties                                               -               -         328,346
Write-down of marketable securities                           -               -         (99,762)
                                                   ------------    ------------    ------------
                                                        370,144         383,360        (211,215)
                                                   ------------    ------------    ------------
LOSS FROM CONTINUING OPERATIONS                      (3,581,360)     (5,764,874)     (4,523,831)

Loss allocated to spin-off assets (Note 13)                   -               -         131,232
                                                   ------------    ------------    ------------
LOSS FOR THE YEAR                                    (3,581,360)     (5,764,874)     (4,655,063)

DEFICIT - BEGINNING OF YEAR                         (35,508,044)    (29,597,304)    (17,577,363)

DISTRIBUTION OF EQUITY ON SPIN-OFF OF ASSETS
     TO GOLDEN ARROW (Note 13)                                -        (145,866)     (7,364,878)
                                                   ------------    ------------    ------------
DEFICIT - END OF YEAR                               (39,089,404)    (35,508,044)    (29,597,304)
                                                   ============    ============    ============

BASIC AND DILUTED LOSS PER COMMON SHARE
     FROM CONTINUING OPERATIONS                          $(0.07)         $(0.12)         $(0.11)
                                                   ============    ============    ============

BASIC AND DILUTED LOSS PER COMMON SHARE                  $(0.07)         $(0.12)         $(0.11)
                                                   ============    ============    ============
WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING                       51,263,575      46,197,029      40,939,580
                                                   ============    ============    ============
</TABLE>



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

                                      F-5
<PAGE>



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


<TABLE>
<CAPTION>

                                                       2006            2005            2004
                                                         $               $               $
<S>                                               <C>             <C>             <C>

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Net loss for the year                                (3,581,360)     (5,764,874)     (4,655,063)
Net loss allocated to spin-off assets                         -               -         131,232
                                                   ------------    ------------    ------------
Net loss from continuing operations                  (3,581,360)     (5,764,874)     (4,523,831)
Items not affecting cash
     Depreciation                                             -               -          26,665
     Stock based compensation                           393,120       1,800,000       1,972,860
     Gain on options and disposition of
        mineral properties                                    -               -        (328,346)
     Write-down of marketable securities                      -               -          99,762
                                                   ------------    ------------    ------------
                                                     (3,188,240)     (3,964,874)     (2,752,890)
Change in non-cash working capital balances            (596,912)        115,256          74,785
                                                   ------------    ------------    ------------
                                                     (3,785,152)     (3,849,618)     (2,678,105)
Cash used in spin-off operations                              -               -        (283,629)
                                                   ------------    ------------    ------------
                                                     (3,785,152)     (3,849,618)     (2,961,734)
                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Expenditures on mineral properties
     and deferred costs                              (4,491,524)     (7,025,492)     (4,448,659)
Increase in short-term investments                     (920,000)     (3,280,000)     (4,300,000)
Net cash flow related to spin-off assets                      -               -          32,592
Proceeds from sale/(purchase) of equipment                    -          46,589         (93,650)
                                                   ------------    ------------    ------------
                                                     (5,411,524)    (10,258,903)     (8,809,717)
                                                   ------------    ------------    ------------
FINANCING ACTIVITIES

Issuance of common shares                            10,308,450      14,215,165       9,707,897
Share issuance costs                                   (871,749)       (736,737)       (411,237)
                                                   ------------    ------------    ------------

                                                      9,436,701      13,478,428       9,296,660
                                                   ------------    ------------    ------------
INCREASE (DECREASE) IN CASH                             240,025        (630,093)     (2,474,791)

CASH TRANSFERRED TO GOLDEN ARROW (Note 13)                    -        (145,866)     (1,020,189)
                                                   ------------    ------------    ------------
NET INCREASE IN CASH                                    240,025        (775,959)     (3,494,980)

CASH - BEGINNING OF YEAR                                151,395         927,354       4,422,334
                                                   ------------    ------------    ------------
CASH - END OF YEAR                                      391,420         151,395         927,354
                                                   ============    ============    ============
</TABLE>

SUPPLEMENTARY CASH FLOW INFORMATION (Note 12)

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

                                      F-6
<PAGE>



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                    CONSOLIDATED SCHEDULE OF NAVIDAD INTEREST
                      FOR THE YEAR ENDED DECEMBER 31, 2006
                         (EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>

                                                                      NAVIDAD
                                                      NAVIDAD          AREA           IVA TAX          TOTAL
                                                         $               $               $               $
<S>                                               <C>             <C>             <C>             <C>

Mineral property interests balance,
     beginning of year                               13,466,957         113,426       1,451,724      15,032,107
                                                   ------------    ------------    ------------    ------------

Expenditures during the year
     Acquisition costs                                  110,807               -               -         110,807
     Assays                                              63,985               -               -          63,985
     Communications                                      53,793               -               -          53,793
     Drilling                                         1,400,714               -               -       1,400,714
     Engineering                                         43,832               -               -          43,832
     Environmental and social                           305,989               -               -         305,989
     Metallurgy                                         325,457               -               -         325,457
     Office and other                                   201,408               -               -         201,408
     Salaries and Contractors                           599,049               -               -         599,049
     Supplies and Equipment                             162,645               -               -         162,645
     Transportation                                     243,360               -               -         243,360
     Project Development                                442,402               -               -         442,402
     IVA Tax                                                  -               -         538,083         538,083
                                                   ------------    ------------    ------------    ------------
                                                      3,953,441               -         538,083       4,491,524
                                                   ------------    ------------    ------------    ------------
Future income tax (Note 9)                              455,439               -               -         455,439
                                                   ------------    ------------    ------------    ------------
Mineral property interest balance                    17,875,837         113,426       1,989,807      19,979,070
                                                   ------------    ------------    ------------    ------------
Less: Future income tax (Notes 2 and 9)             (2,215,549)               -               -     (2,215,549)
Add: Marketable securities (Note 5)                           -         186,000               -         186,000
                                                   ------------    ------------    ------------    ------------
Navidad interest balance, end of year
     (Notes 1 and 2)                                 15,660,288         299,426       1,989,807      17,949,521
                                                   ============    ============    ============    ============
</TABLE>


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

                                      F-7
<PAGE>



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
               CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                         (EXPRESSED IN CANADIAN DOLLARS)


<TABLE>
<CAPTION>

                                                                      NAVIDAD
                                                      NAVIDAD          AREA           IVA TAX          TOTAL
                                                         $               $               $               $
<S>                                               <C>             <C>             <C>             <C>

Balance, beginning of year                            5,770,968         112,694         667,936       6,551,598
                                                   ------------    ------------    ------------    ------------

Expenditures during the year

     Assays                                             316,220               -               -         316,220
     Communications                                      28,100              51               -          28,151
     Drilling                                         2,188,346               -               -       2,188,346
     Engineering                                         53,340               -               -          53,340
     Environmental                                      391,816               -               -         391,816
     Geophysics                                         176,036               -               -         176,036
     Metallurgy                                         501,070               -               -         501,070
     Office and other                                    95,310             640               -          95,950
     Petrography                                         13,563               -               -          13,563
     Salaries and Contractors (Note 6 (d))            1,539,569               -               -       1,539,569
     Supplies and Equipment                             441,012              41               -         441,053
     Transportation                                     248,554               -               -         248,554
     Project Development                                828,036               -               -         828,036
     IVA Tax                                                  -               -         783,788         783,788
                                                   ------------    ------------    ------------    ------------
                                                      6,820,972             732         783,788       7,605,492
                                                   ------------    ------------    ------------    ------------
Future income tax (Note 9)                              875,017               -               -         875,017
                                                   ------------    ------------    ------------    ------------
Balance, end of year                                 13,466,957         113,426       1,451,724      15,032,107
                                                   ============    ============    ============    ============
</TABLE>







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

                                      F-8

<PAGE>



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



1.       NATURE OF OPERATIONS AND CONTINGENCY

         IMA  Exploration  Inc. (the  "Company") is a natural  resource  company
         engaged in the business of acquisition,  exploration and development of
         mineral properties in Argentina. The Company presently has no proven or
         probable  reserves and on the basis of  information to date, it has not
         yet   determined   whether  these   properties   contain   economically
         recoverable ore reserves.  Consequently the Company considers itself to
         be an exploration stage company. The amounts that were shown as mineral
         properties and deferred costs  represent  costs incurred to date,  less
         amounts amortized and/or written off, and do not necessarily  represent
         present or future  values.  As at December  31, 2006 the Company had no
         mineral property interests other than the Navidad Interest. The Company
         considers  that  it  has  adequate   resources  to  maintain  its  core
         operations for the next fiscal year.

         On March 5, 2004,  Aquiline  Resources Inc.  ("Aquiline"),  through its
         subsidiary,  Minera Aquiline Argentina SA, filed a claim in the Supreme
         Court of British  Columbia  against the Company  seeking a constructive
         trust over the Navidad  properties  and  damages.  On July 14, 2006 the
         court  released  its  judgment  on  the  claim.  The  Company  was  not
         successful in its defense and the court found in Aquiline's favour.

         The Order reads in part:

          "(a)    that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
                  Navidad  Claims  and any  assets  related  thereto  to  Minera
                  Aquiline or its nominee within 60 days of this order;
           (b)    that IMA take any and all steps  required  to cause  IMA SA to
                  comply with the terms of this order;
           (c)    that the transfer of the Navidad Claims and any assets related
                  thereto is subject to the payment to IMA SA of all  reasonable
                  amounts expended by IMA SA for the acquisition and development
                  of the Navidad Claims to date; and
           (d)    any accounting  necessary to determine the  reasonableness  of
                  the  expenditures  referred  to  in  (c)  above  shall  be  by
                  reference to the Registrar of this court."

         The  Company  has  filed  an  appeal  of  this  judgment.  The  Company
         recognizes  that this will  take a  substantial  period of time and the
         costs will be  significant,  with no guarantee of a successful  outcome
         for the  Company.  The Company has not  provided  for any future  legal
         costs and will expense the legal costs of the appeal as they occur (see
         Note 2).

         On October 18,  2006,  the Company and  Aquiline  reached a  definitive
         agreement for the orderly  conduct of the Navidad  Project  pending the
         determination  of the appeal by the Company against the judgment of the
         trial court. The parties have agreed that the transactions  outlined in
         the agreement are in satisfaction of the Order  referenced  above.  The
         principal terms and conditions of the agreement are as follows:

         (a)      control of the Navidad Project will be transferred to Aquiline
                  in trust for the ultimately successful party in the appeal;

         (b)      the  Company  and  Aquiline  have agreed to the costs spent to
                  date   developing  the  Navidad   Project  in  the  amount  of
                  $18,500,000.  Upon transfer of control of the Navidad Project,
                  Aquiline  paid  $7,500,000  of the  costs  into  trust and the
                  balance will be expended by Aquiline in developing the Navidad
                  Project  during the period of the appeal and secured under the
                  terms of the trust conditions;

         (c)      in the event that the Company is unsuccessful  on appeal,  the
                  Company will be paid such $18,500,000 amount, less legal costs
                  Aquiline would be entitled to in relation to the trial and the
                  appeal.



                                      F-9
<PAGE>
                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


1.       NATURE OF OPERATIONS AND CONTINGENCY (continued)

         (d)      in the event that the Company's appeal is successful,  it will
                  pay  Aquiline's  qualifying  costs  expended on developing the
                  Navidad  Project  during the period of the appeal,  less legal
                  costs the  Company  would be  entitled  to in  relation to the
                  trial and the appeal,  and control of the Navidad Project will
                  then revert to the Company; and

         (e)      pending finalization of the appeal process, neither party will
                  attempt a hostile takeover of the other.

         The effective date of the transfer of the Navidad  project was November
         16, 2006. A copy of the  agreement has been posted on the SEDAR website
         as one of the Company's public documents and is titled "Interim Project
         Development Agreement".


2.       MEASUREMENT UNCERTAINTY AND NAVIDAD INTEREST

         As  discussed  in Note 1 above,  under the  terms of the July 14,  2006
         court order the  Company's  ownership  of the Navidad  project has been
         transferred to Aquiline and the Company  accordingly  cautions  readers
         that until the British Columbia Court of Appeal rules on the matter the
         Company may only recover the costs  incurred in the  development of the
         Navidad project.

         Upon the  transfer of the  Navidad  property  interest to Aquiline  the
         Related Future Income Liabilities, which related to differences between
         the tax values of certain  mineral  properties  expenditures  and their
         accounting  values,  are no longer a liability  of the  Company.  As at
         December 31, 2006, the Company has recorded a Navidad  interest balance
         of $17,949,521, the components of which are as follows:

                                                                         $

               Mineral properties and deferred costs                 17,763,521
               Marketable securities (Note 5)                           186,000
                                                                   ------------
               Navidad interest                                      17,949,521
                                                                   ============

         As  discussed  in Note 1  above,  in the  event  that  the  Company  is
         unsuccessful  on  appeal,  the  Company  will  be paid  $18,500,000  as
         consideration  for these  assets,  less legal costs  Aquiline  would be
         entitled to in relation to the trial and the appeal.  In the event that
         the legal costs that Aquiline may become  entitled to are  significant,
         the  recoverability  of the costs reflected as Navidad  interest may be
         impaired.  Such  impairment  may be material.  However,  at the current
         time,  the Company is unable to determine  with any degree of certainty
         what the final outcome of the appeal process may be, and if the Company
         is  unsuccessful,  what legal  costs may be awarded to  Aquiline by the
         court.  Accordingly,  the Company has not made any  adjustments  to the
         carrying value of the Navidad interest balance at December 31, 2006.

         The carrying  value of the components of the Navidad  interest  balance
         will be reviewed in  subsequent  periods and adjusted if  circumstances
         suggest that the full amount may not be recoverable  and an appropriate
         amount  expensed for  impairment  when such  amounts can be  reasonably
         determined.

         The  Company  expensed  Navidad  holding  costs of $312,349 in the year
         ended  December 31, 2006.  These costs are  comprised  of:


         i)       costs  incurred  in  order to  maintain  basic  operations  in
                  Argentina subsequent to the transfer of control of the Navidad
                  project to Aquiline; and
         ii)      costs  incurred in the period between the date of the judgment
                  and the transfer of control of the Navidad  project to Aquline
                  that would  normally have been included in mineral  properties
                  and deferred costs.

         The  Company  expects  to incur  additional  costs  until the  Aquiline
         litigation is settled.


                                      F-10
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


3.       SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         These   consolidated   financial   statements  have  been  prepared  in
         accordance  with  Canadian  generally  accepted  accounting  principles
         ("Canadian  GAAP").  The significant  measurement  differences  between
         those  principles  and those that would be applied  under United States
         generally accepted accounting principles ("US GAAP") as they affect the
         Company are disclosed in Note 11.

         USE OF ESTIMATES

         The  preparation  of financial  statements in conformity  with Canadian
         GAAP requires  management to make estimates and assumptions that affect
         the  reported  amount of  assets  and  liabilities  and  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported  amount of revenues and expenses during the
         period.  Significant  areas  requiring the use of management  estimates
         include the  recoverability of the Navidad interest balance (see Note 2
         above),  the  determination  of  environmental  obligations,   and  the
         assumptions used in the  determination of the fair value of stock based
         compensation. Actual results may differ from these estimates.

         PRINCIPLES OF CONSOLIDATION

         These  consolidated  financial  statements  include the accounts of the
         Company  and its  subsidiaries,  all of which  are  wholly  owned.  All
         inter-company transactions and balances have been eliminated.

         SHORT-TERM INVESTMENTS

         Short-term   investments  include  money  market  investments  maturing
         between 3 and 12 months from the date of initial investment.

         MARKETABLE SECURITIES

         Marketable securities are carried at the lower of cost and market.

         MINERAL PROPERTIES AND DEFERRED COSTS

         Direct costs  related to the  acquisition  and  exploration  of mineral
         properties  held  or  controlled  by the  Company  are  deferred  on an
         individual  property  basis  until  the  viability  of  a  property  is
         determined.  Administration  costs and  general  exploration  costs are
         expensed  as  incurred.   When  a  property  is  placed  in  commercial
         production,    deferred    costs   will   be    depleted    using   the
         units-of-production  method.  Management  of the  Company  periodically
         reviews  the  recoverability  of the  capitalized  mineral  properties.
         Management takes into consideration various information including,  but
         not limited to,  results of exploration  activities  conducted to date,
         estimated  future  metal  prices,  and reports and  opinions of outside
         geologists, mine engineers and consultants.  When it is determined that
         a project or property will be abandoned then the costs are written-off,
         or if its carrying value has been impaired, then the mineral properties
         and deferred costs are written down to fair value.

         The  Company  accounts  for  foreign  value added taxes paid as part of
         mineral properties and deferred costs. The recovery of these taxes will
         commence on the  beginning  of foreign  commercial  operations.  Should
         these  amounts be  recovered  they would be treated as a  reduction  in
         carrying costs of mineral properties and deferred costs.



                                      F-11
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         Although  the  Company  has  taken  steps to  verify  title to  mineral
         properties  in  which  it  has an  interest,  these  procedures  do not
         guarantee the Company's title.  Such properties may be subject to prior
         agreements  or  transfers  and  title  may be  affected  by  undetected
         defects.

         From time to time,  the Company  acquires  or  disposes  of  properties
         pursuant to the terms of option  agreements.  Options  are  exercisable
         entirely  at the  discretion  of the  optionee  and,  accordingly,  are
         recorded as mineral  property costs or recoveries when the payments are
         made or  received.  After  costs  are  recovered,  the  balance  of the
         payments  received are recorded as a gain on option or  disposition  of
         mineral property.

         ASSET RETIREMENT OBLIGATIONS

         Asset   retirement   obligations   are  recognized   when  a  legal  or
         constructive  obligation  arises.  This  liability is recognized at the
         fair value of the asset  retirement  obligation.  When the liability is
         initially  recorded the Company  capitalizes the cost by increasing the
         carrying  amount  of the  related  long-lived  assets.  Over  time  the
         liability  is  accreted  to its  present  value  each  period,  and the
         capitalized  cost is amortized on the same basis as the related  asset.
         Upon settlement of the liability, the Company may incur a gain or loss.
         As at December 31, 2006 the Company does not have any asset  retirement
         obligations.

         IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived   assets  are  reviewed  for   impairment   when  events  or
         circumstances   suggest  their  carrying  value  has  become  impaired.
         Management  considers  assets  to be  impaired  if the  carrying  value
         exceeds  the  estimated  undiscounted  future  projected  cash flows to
         result  from the use of the  asset  and its  eventual  disposition.  If
         impairment is deemed to exist,  the assets will be written down to fair
         value. Fair value is generally  determined using a discounted cash flow
         analysis.

         TRANSLATION OF FOREIGN CURRENCIES

         The Company's  foreign  operations  are  integrated  and are translated
         using the temporal method.  Under this method,  the Company  translates
         monetary  assets and liabilities  denominated in foreign  currencies at
         period-end rates. Non-monetary assets and liabilities are translated at
         historical rates. Revenues and expenses are translated at average rates
         in effect during the period except for  depreciation  and  amortization
         which are translated at historical rates. The resulting gains or losses
         are reflected in operating results in the period of translation.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments  that  potentially  subject  the  Company  to  a
         significant  concentration  of credit risk  consist  primarily of cash,
         short-term  investments and other  receivables.  The Company limits its
         exposure to credit loss by placing its cash and short-term  investments
         with major financial institutions.

         FAIR VALUES OF FINANCIAL INSTRUMENTS

         The fair value of the  Company's  financial  instruments  consisting of
         cash,  short-term  investments,  other receivables and accounts payable
         and accrued  liabilities  approximate  their carrying values due to the
         short-term nature of those instruments.



                                      F-12
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         INCOME TAXES

         The Company uses the liability  method of accounting  for future income
         taxes.  Under  this  method  of  tax  allocation,   future  income  tax
         liabilities   and  assets  are   recognized   for  the   estimated  tax
         consequences  attributable to differences  between the amounts reported
         in the  consolidated  financial  statements  and their  respective  tax
         bases, using substantively enacted tax rates and laws that are expected
         to be in effect in the periods in which the future income tax assets or
         liabilities  are  expected to be settled or  realized.  The effect of a
         change in income tax rates on future income tax  liabilities and assets
         is recognized in income in the period that the change occurs. Potential
         future income tax assets are not recognized to the extent that they are
         not considered more likely than not to be realized.

         LOSS PER SHARE

         Loss per share is calculated  based on the weighted  average  number of
         common shares issued and outstanding during the year. In years in which
         a loss is incurred,  the effect of potential  issuances of shares under
         options and warrants  would be  anti-dilutive  and therefore  basic and
         diluted losses per share are the same. Information regarding securities
         that could potentially dilute basic earnings per share in the future is
         presented in Note 6.

         STOCK BASED COMPENSATION

         The Company has an employee stock option plan.  The Company  recognizes
         an  expense  or  addition  to   exploration   properties  and  deferred
         exploration  expenditures  arising from stock  options  granted to both
         employees and non-employees using the fair value method. The fair value
         of option  grants  is  established  at the date of grant  using a Black
         Scholes  option  pricing  model and the  expense or addition to mineral
         properties is recognized over the option vesting period.

         COMPARATIVE FIGURES

         Certain  of the  prior  year  comparatives  have been  reclassified  to
         conform with the current year's presentation.


4.       SHORT-TERM INVESTMENTS

         As  at  December  31,  2006  and  2005,  the  Company  held  short-term
         investments comprised of the following:
                                                   ----------------------------
                                                        DECEMBER 31, 2006
                                                   ----------------------------
                                                     MATURITY        PRINCIPAL
                                                                         $
         12 month term deposit                       March 20,
            - 3.7% annual interest rate                2007             500,000

         12 month term deposit                      November 5,
            - 4.2% annual interest rate                2007           8,000,000
                                                                   ------------
                                                                      8,500,000
                                                                   ============


                                      F-13
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)





4.       SHORT-TERM INVESTMENTS (continued)
                                                   ----------------------------
                                                        DECEMBER 31, 2005
                                                   ----------------------------
                                                     MATURITY        PRINCIPAL
                                                                         $
         12 month term deposit                     September 11,
            - 2.65% annual interest rate               2006           7,580,000
                                                                   ------------
                                                                      7,580,000
                                                                   ============

         All term  deposits  are  fully  redeemable  in full or  portion  at the
         Company's option without penalty.  Interest is paid on amounts redeemed
         subsequent to 30 days from the date of investment.


5.       MARKETABLE SECURITIES
<TABLE>
<CAPTION>

                                                   ----------------------------    ----------------------------
                                                               2006                            2005
                                                   ----------------------------    ----------------------------
                                                                      QUOTED                          QUOTED
                                                      RECORDED        MARKET          RECORDED        MARKET
                                                       VALUE           VALUE           VALUE           VALUE
                                                         $               $               $               $
        <S>                                       <C>             <C>             <C>             <C>

         Tinka Resources Limited
              - 300,000 common shares                         -               -          96,000         126,000
         Consolidated Pacific Bay Minerals Ltd.
              - 900,000 common shares                         -               -          90,000         144,000
                                                   ------------    ------------    ------------    ------------
                                                              -               -         186,000         270,000
                                                   ============    ============    ============    ============
</TABLE>

         The Company acquired the marketable  securities as a result of entering
         into option and sale  agreements  for certain of its  non-core  mineral
         property holdings relating to the Navidad Project for which the Company
         received  common  shares  of  publicly  traded   companies  as  partial
         consideration.  These marketable securities were subject to transfer to
         Aquiline  in  relation to the July 2006 court order (see Note 1 above).
         Accordingly,  at  December  31,  2006,  the  carrying  value  of  these
         marketable  securities  has been  reclassified  as a  component  of the
         Navidad interest balance (see Note 2 above).


                                      F-14
<PAGE>


                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


<PAGE>


6.       SHARE CAPITAL

         Authorized   - unlimited  common shares without par value - 100,000,000
                        preferred shares without par value
<TABLE>
<CAPTION>

                                                                                      NUMBER             $
         Issued - common shares
        <S>                                                                       <C>             <C>

         Balance, December 31, 2003                                                  36,381,452      27,707,597
         Private placement                                                            1,500,000       4,650,000
         Exercise of options                                                            441,650         597,910
         Exercise of agents' options                                                    121,820         184,838
         Contributed surplus reallocated on exercise of options                               -         226,630
         Exercise of warrants                                                         5,371,285       4,275,149
         Proceeds collected and paid on behalf of Golden Arrow shares                         -       (107,544)
         Less share issue costs                                                               -       (552,273)
                                                                                   ------------    ------------

         Balance, December 31, 2004                                                  43,816,207      36,982,307
         Private placement                                                            3,333,340      10,000,020
         Exercise of options                                                             10,000          31,000
         Exercise of agents' options                                                    168,000         546,000
         Contributed surplus reallocated on exercise of options                               -         131,270
         Exercise of warrants                                                         1,485,517       3,784,011
         Proceeds collected and paid on behalf of Golden Arrow shares                         -       (145,866)
         Less share issue costs                                                               -       (914,070)
                                                                                   ------------    ------------

         Balance, December 31, 2005                                                  48,813,064      50,414,672
         Private placement                                                            2,865,000      10,027,500
         Warrants valuation                                                                   -     (1,298,981)
         Exercise of options                                                            335,000         280,950
         Contributed surplus reallocated on exercise of options                               -          95,300
         Less share issue costs                                                               -       (854,714)
                                                                                   ------------    ------------
         Balance, December 31, 2006                                                  52,013,064      58,664,727
                                                                                   ============    ============
</TABLE>


         (a)      During  fiscal  2006,  the  Company   completed  a  syndicated
                  brokered  private  placement  financing of  2,865,000  special
                  warrants  at  $3.50  per   warrant   for  gross   proceeds  of
                  $10,027,500.  Each  special  warrant  entitled  the  holder to
                  acquire one unit  consisting  of one common share and one half
                  common  share  purchase  warrant.  All special  warrants  were
                  converted  into  common  shares  on May 25,  2006.  Each  full
                  warrant entitles the holder thereof to purchase one additional
                  common share in the capital of the Company at a price of $3.80
                  per  share  until  March  21,  2010.  In  addition  to a  cash
                  commission of 6% the underwriters were granted 171,900 agent's
                  warrants,  representing  6% of the number of special  warrants
                  issued. Each agent's warrant is exercisable for one share at a
                  price of $3.80,  for a period of twenty four months,  expiring
                  on March 21, 2008.

                  The fair  value  of  warrants  and  agent's  warrants  were as
                  follows:

                  i)       value assigned to 1,432,500  warrants was $1,186,053,
                           net of share issue costs of $112,928

                  ii)      value  assigned  to the 171,900  agent's  warrant was
                           $95,893, net of share issue costs of $14,271


                                      F-15
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

6.       SHARE CAPITAL (continued)

                  The Black-Scholes Pricing Model was used to value the warrants
                  and agent's warrants.  The warrants were valued at $0.91 based
                  on the following  assumptions:  dividend  yield 0%,  risk-free
                  rate 4.0%,  expected  volatility  55% and expected  life of 24
                  months. The agent's warrants were valued at $0.64 based on the
                  following assumptions: dividend yield 0%, risk-free rate 4.0%,
                  expected  volatility  61% and expected  life of 12 months.  At
                  December  31, 2006,  no warrants or agent's  warrants had been
                  exercised.

         (b)      During fiscal 2005, the Company  completed a brokered  private
                  placement for 3,333,340  units at $3.00 per unit, for proceeds
                  of $9,263,283 net of $600,001 agent's  commission and $136,736
                  of related  issue  costs.  Each unit  consisted  of one common
                  share and one half common share  purchase  warrant.  Each full
                  warrant entitles the holder thereof to purchase one additional
                  common share at a price of $3.45 per share until September 14,
                  2009. In addition to the cash commission the underwriters were
                  granted  as   commission   233,334   underwriter's   warrants,
                  representing   7%  of  the  number  of  units   issued.   Each
                  underwriter's  warrant is exercisable for one share at a price
                  of $3.25,  for a period of twenty  four  months,  expiring  on
                  September  12, 2007.  The  underwriter's  warrants were valued
                  using the Black-Sholes Pricing Model. The warrants were valued
                  at $0.76 per warrant  for a total  value of $177,333  and have
                  been  recorded  as  share  issue  costs  with a  corresponding
                  increase to  contributed  surplus.  At December 31,  2006,  no
                  underwriter's warrants had been exercised.

         (c)      During fiscal 2004, the Company  completed a brokered  private
                  placement of 1,500,000 units at $3.10 per unit for proceeds of
                  $4,238,763,  net of $339,000 agent's commission and $72,237 of
                  related issue costs.  Each unit  consisted of one common share
                  and one half  non-transferable  share purchase  warrant.  Each
                  whole  warrant  entitles the holder to purchase a common share
                  for  $3.70  per  share on or before  February  23,  2005.  The
                  Company also issued 200,000  compensation options to the agent
                  to  acquire  200,000  shares at $3.25  per  share and  100,000
                  warrants at $3.70 per share on or before  February  23,  2005.
                  The  compensation  options  granted  were valued at $0.705 per
                  option using the  Black-Scholes  Option Pricing  Model,  for a
                  total  value of  $141,036,  which has been  recorded  as share
                  issue  costs  with a  corresponding  increase  to  contributed
                  surplus.  At December 31, 2004, a total of 32,000 compensation
                  options   had  been   exercised.   The   balance   of  168,000
                  compensation options was exercised during 2005.

         (d)      Stock options and stock based compensation

                  The  Company  grants  stock  options  in  accordance  with the
                  policies  of the TSX  Venture  Exchange  ("TSXV").  The  stock
                  options  granted during 2006 were subject to a four month hold
                  period  and are  exercisable  for a period  of five  years.  A
                  summary of the Company's  outstanding  options at December 31,
                  2006,  2005 and 2004 and the changes  for the years  ending on
                  those dates is presented below:

<TABLE>

                                          ---------------------    ---------------------    ----------------------
                                                   2006                     2005                      2004
                                          ---------------------    ---------------------    ----------------------
                                            OPTIONS    WEIGHTED      OPTIONS    WEIGHTED      OPTIONS     WEIGHTED
                                          OUTSTANDING   AVERAGE    OUTSTANDING   AVERAGE    OUTSTANDING    AVERAGE
                                              AND      EXERCISE        AND      EXERCISE        AND       EXERCISE
                                          EXERCISABLE    PRICE     EXERCISABLE    PRICE     EXERCISABLE     PRICE
                                                           $                        $                         $
                 <S>                     <C>           <C>         <C>           <C>         <C>           <C>

                  Balance,
                     Beginning of year       4,881,000    2.54        3,568,500    2.10        2,528,150     1.32
                  Granted                      273,000    3.21        1,360,000    3.74        1,512,000     3.14
                  Exercised                   (335,000)   0.84          (10,000)   3.10         (441,650)    1.14
                  Cancelled                   (195,000)   2.78          (37,500)   3.92          (30,000)    3.10
                                          ------------             ------------             ------------
                  Balance, end of year       4,624,000    2.69        4,881,000    2.54        3,568,500     2.10
                                          ============             ============             ============
</TABLE>


                                      F-16
<PAGE>


                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



6.       SHARE CAPITAL (continued)

                  Stock options outstanding and exercisable at December 31, 2006
                  are as follows:

                       NUMBER         EXERCISE PRICE          EXPIRY DATE
                                            $

                       119,000             0.50               May 2, 2007
                       115,000             0.50               September 23, 2007
                        25,000             0.84               March 7, 2008
                       300,000             0.90               May 30, 2008
                     1,170,000             1.87               August 27, 2008
                     1,372,000             3.10               March 24, 2009
                       865,000             4.16               March 16, 2010
                       385,000             2.92               November 16, 2010
                       273,000             3.21               June 22, 2011
                  ------------
                     4,624,000
                  ============

                  During fiscal 2006, the Company  granted 273,000 stock options
                  (2005 - 1,360,000; 2004 - 1,512,000).  The fair value of stock
                  options  granted is estimated on the dates of grants using the
                  Black-Scholes   Option   Pricing   Model  with  the  following
                  assumptions used for the grants made during the year:
<TABLE>
<CAPTION>

                                                      2006                    2005                   2004
                                                      ----                    ----                   ----
                 <S>                              <C>                   <C>                       <C>

                  Risk-free interest rate             4.0%                3.3% - 3.7%                2.4%
                  Estimated volatility                70%                  70% - 77%                  77%
                  Expected life                    2.5 years               2.5 years               2.5 years
                  Expected dividend yield              0%                      0%                     0%
</TABLE>

                  For  2006,   stock  based   compensation  of  $393,120  (2005:
                  $2,380,000;  2004: $1,972,860) was recorded by the Company, of
                  which  $393,120  (2005:   $1,800,000;   2004:  $1,972,860)  is
                  included in expenses and Nil (2005:  $580,000;  2004:  Nil) is
                  included in capitalized mineral property expenditures,  with a
                  corresponding increase in contributed surplus.

                  The  weighted  average  fair value per share of stock  options
                  granted  during  the year was $1.44  per share  (2005 - $1.76;
                  2004 -  $1.28).  Option  pricing  models  require  the  use of
                  estimates and assumptions  including the expected  volatility.
                  Changes in the underlying  assumptions  can materially  affect
                  the fair value  estimates and,  therefore,  existing models do
                  not necessarily  provide reliable measure of the fair value of
                  the Company's stock options.

         (e)      Warrants

                  A continuity summary of warrant equity is presented below:
<TABLE>
<CAPTION>

                                                                                         $
                 <S>                                                              <C>

                  Balance, December 31, 2005                                                  -
                      Warrant valuation from private placement warrants granted       1,298,981
                      Warrant valuation from agent's warrants granted                   110,164
                      Warrant issue costs                                              (127,199)
                                                                                   ------------
                  Balance, December 31, 2006                                          1,281,946
                                                                                   ============
</TABLE>

                                      F-17
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)





6.       SHARE CAPITAL (continued)

                  A summary of the number of common shares reserved  pursuant to
                  the  Company's   outstanding   warrants  and  agents  warrants
                  outstanding  at  December  31,  2006,  2005  and  2004 and the
                  changes for the years ending on those dates is as follows:
<TABLE>
<CAPTION>

                                                       2006            2005            2004
                 <S>                              <C>             <C>             <C>

                  Balance, beginning of year          1,900,004       1,422,017       6,042,448
                  Issued                              1,604,400       1,984,004         810,909
                  Exercised                                   -     (1,485,517)      (5,371,285)
                  Cancelled                                   -               -         (38,955)
                  Expired                                     -        (20,500)         (21,100)
                                                   ------------    ------------    ------------
                  Balance, end of year                3,504,404       1,900,004       1,422,017
                                                   =============   =============   ============
</TABLE>

                  Common shares reserved pursuant to warrants and agent warrants
                  outstanding at December 31, 2006 are as follows:

                        NUMBER         EXERCISE PRICE         EXPIRY DATE
                                             $
                       233,334              3.25              September 13, 2007
                     1,666,670              3.45              September 14, 2009
                       171,900              3.80              March 21, 2008
                     1,432,500              3.80              March 21, 2010
                  ------------
                     3,504,404
                  ============


7.       CONTRIBUTED SURPLUS

         A continuity summary of contributed surplus is presented below:
<TABLE>
<CAPTION>

                                                                                         $
        <S>                                                                       <C>

         Balance, December 31, 2003                                                   1,541,116
             Contributed Surplus as a result of stock options granted                 1,972,860
             Contributed Surplus as a result of brokers' warrants granted               141,036
             Contributed Surplus reallocated on exercise of stock options              (226,630)
                                                                                   ------------
         Balance, December 31, 2004                                                   3,428,382
             Contributed Surplus as a result of stock options granted                 2,380,000
             Contributed Surplus as a result of brokers' warrants granted               177,333
             Contributed Surplus reallocated on exercise of stock options              (131,270)
                                                                                   ------------
         Balance, December 31, 2005                                                   5,854,445
             Contributed Surplus as a result of stock options granted                   393,120
             Contributed Surplus reallocated on exercise of stock options               (95,300)
                                                                                   ------------
         Balance, December 31, 2006                                                   6,152,265
                                                                                   ============
</TABLE>


                                      F-18
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


<PAGE>


8.       RELATED PARTY TRANSACTIONS

         (a)      Effective January 1, 2005 the Company engaged the Grosso Group
                  Management  Ltd.  ("Grosso  Group")  to provide  services  and
                  facilities  to the  Company.  The  Grosso  Group is a  private
                  company   owned  by  the  Company,   Golden  Arrow   Resources
                  Corporation  ("Golden  Arrow"),  Amera  Resources  Corporation
                  ("Amera"),   Gold  Point  Energy  Corp.   and  Astral   Mining
                  Corporation,  each of which owns one share.  The Grosso  Group
                  provides its shareholder companies with geological,  corporate
                  development,   administrative  and  management  services.  The
                  shareholder  companies  pay monthly fees to the Grosso  Group.
                  The fee is based upon a pro-rating of the Grosso Group's costs
                  including its staff and overhead costs among each  shareholder
                  company  with regard to the  mutually  agreed  average  annual
                  level of services provided to each shareholder company. During
                  fiscal 2006,  the Company  incurred  fees of $724,902  (2005 -
                  $730,802) to the Grosso Group:  $764,115 (2005 - $764,012) was
                  paid in twelve  monthly  payments and $39,213 (2005 - $33,210)
                  is included in other  receivables,  prepaids and deposits as a
                  result of a review of the allocation of the Grosso Group costs
                  to the member companies for the year. In addition, included in
                  other receivables,  prepaids and deposits is other receivables
                  of a $205,000  (2005 - $205,000)  deposit to the Grosso  Group
                  for the purchase of equipment and leasehold  improvements  and
                  for operating working capital.

         (b)      During  fiscal  2006,   the  Company  paid  $533,917  (2005  -
                  $241,088;  2004 -  $476,226)  to  directors  and  officers  or
                  companies controlled by directors and officers of the Company,
                  for accounting, management and consulting services provided.

         (c)      Prior to the signing of the Administration  Services Agreement
                  with the Grosso Group in 2005,  the Company  shared its office
                  facilities  with Amera and Golden  Arrow.  During fiscal 2005,
                  the Company received $nil (2004 - $66,390) from Amera and $nil
                  (2004 -  $57,000l)  from  Golden  Arrow  for  shared  rent and
                  administration costs.

         (d)      The Company has  agreements  with a company  controlled by the
                  wife of the  President of the Company for the rental of office
                  premises.  Effective January 1, 2005 the Company subleased the
                  office premises to the Grosso Group.

         (e)      The  President  of the  Company  provides  his  services  on a
                  full-time  basis  under  a  contract  with a  private  company
                  controlled  by the  President.  On April  12,  2006 the  Board
                  accepted the recommendation from the Compensation Committee to
                  increase the monthly fee,  effective  May 1, 2006,  to $20,833
                  (previously $8,500) and to pay a bonus of $150,000.  The total
                  compensation paid to the President in 2006 was $350,667.  This
                  amount is included in the total amount paid to  directors  and
                  officers discussed in Note 8(b) above.

                  In the event the contract is terminated by the Company or as a
                  result of a change of  control,  a payment  is  payable to the
                  President  consisting of (i) any monthly  compensation  due to
                  the date of  termination,  (ii) options as  determined  by the
                  board of directors  (iii) three years of monthly  compensation
                  (which may be adjusted  annually)  and (iv) bonus of $461,500.
                  If the  termination  had occurred on December  31,  2006,  the
                  amount payable under the contract would be $1,211,500.

                  In the event the  contract is  terminated  by the Company as a
                  result of the President's death or permanent  disability while
                  providing  services to the  Company,  a bonus in the amount of
                  $461,500 is payable.

         Other  related  party  transactions  are  disclosed  elsewhere in these
         consolidated   financial   statements.   All  of  the   related   party
         transactions and balances in these  consolidated  financial  statements
         arose in the  normal  course  of  operations  and are  measured  at the
         exchange amount,  which is the amount of consideration  established and
         agreed to by the related parties


                                      F-19
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


9.       INCOME TAXES

         The recovery of income taxes shown in the  consolidated  statements  of
         operations  and deficit  differs from the amounts  obtained by applying
         statutory  rates to the loss before  provision  for income taxes due to
         the following:
<TABLE>
<CAPTION>

                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Statutory tax rate                                              34.12%          34.12%          35.62%
                                                                   ============    ============    ============

         Loss for the year                                           (3,581,360)     (5,764,874)     (4,655,063)
                                                                   ============    ============    ============

         Provision for income taxes based on statutory               (1,221,960)     (1,966,975)     (1,658,133)
              Canadian combined federal and provincial
                   income tax rates
         Differences in foreign tax rates                                  (526)              -        (114,390)
         Non-deductible differences                                     149,332         625,988               -
         Losses for which an income tax benefit
              has not been recognized                                   956,653       1,340,987       1,722,523
         Other                                                          116,501               -               -
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>

         The  significant  components of the Company's  future tax assets are as
         follows:
                                                       2006            2005
                                                         $               $
         Future income tax assets
              Operating loss carryforward             4,950,897       4,709,496
              Share issue costs                         509,317         472,437
              Resource deductions                       306,710               -
              Other                                      45,442               -
                                                   ------------    ------------
                                                      5,812,366       5,181,933
         Valuation allowance for future tax assets   (5,812,366)     (5,181,933)
                                                   ------------    ------------
                                                              -               -
                                                   ============    ============

         FUTURE INCOME TAX LIABILITIES

         For  certain  acquisitions  and other  payments  for  mineral  property
         interests,  the Company  records a future  income tax  liability  and a
         corresponding  adjustment to the related asset carrying amount.  During
         the year  ended  December  31,  2006,  as a result  of the  uncertainty
         regarding  the status of the mineral  properties  balance  (included in
         Navidad  interest),  the  Company  eliminated  the  future  income  tax
         liability of $1,760,110 that existed as of December 31, 2005 and made a
         corresponding  adjustment to mineral properties.  During the year ended
         December 31,  2005,  the Company  recorded an $875,017  increase to the
         future income tax liability and a  corresponding  adjustment to mineral
         properties.
                                                       2006            2005
                                                         $               $

         Future income tax liabilities                        -       1,760,110
                                                   ============    ============


                                      F-20
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


9.       INCOME TAXES (continued)

         The Company has  Canadian  capital loss  carryforwards  of $161,172 and
         non-capital loss carryforwards of $15,895,279 that may be available for
         tax  purposes.  The Company's  capital  losses do not expire and may be
         carried forward indefinitely. The non-capital losses expire as follows:

                          EXPIRY DATE                    $

                              2007                    1,261,932
                              2008                      841,160
                              2009                    1,317,729
                              2010                    1,545,964
                              2014                    2,752,324
                              2015                    4,709,088
                              2016                    3,467,379
                                                   ------------
                                                     15,895,279
                                                   ============


10.      SEGMENTED INFORMATION

         The  Company  is  involved  in  mineral   exploration  and  development
         activities,  which are conducted principally in Argentina.  The Company
         is in the exploration stage and, accordingly, has no reportable segment
         revenues or operating results for each of fiscal 2006 and 2005.

         The Company's total assets are segmented geographically as follows:

                                   --------------------------------------------
                                                 DECEMBER 31, 2006
                                   --------------------------------------------
                                      CANADA         ARGENTINA         TOTAL
                                         $               $               $

         Current assets               9,217,352          79,273       9,296,625
         Navidad interest                     -      17,949,521      17,949,521
                                   ------------    ------------    ------------
                                      9,217,352      18,028,794      27,246,146
                                   ============    ============    ============

                                   --------------------------------------------
                                                 DECEMBER 31, 2005
                                   --------------------------------------------
                                      CANADA         ARGENTINA         TOTAL
                                         $               $               $

         Current assets               8,331,000         134,887       8,465,887
         Mineral properties
            and deferred costs               -       15,032,107      15,032,107
                                   ------------    ------------    ------------
                                      8,331,000      15,166,994      23,497,994
                                   ============    ============    ============



                                      F-21
<PAGE>


<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



11.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES

         The consolidated financial statements of the Company have been prepared
         in accordance  with  Canadian  GAAP,  which differ in certain  material
         respects from US GAAP.

         The effects of significant  measurement  differences  between  Canadian
         GAAP and US GAAP for certain items on the consolidated  balance sheets,
         statements of operations  and deficit and  statements of cash flows are
         as follows:
<TABLE>
<CAPTION>

                                                                       2006            2005            2004
                                                                         $               $               $
         CONSOLIDATED STATEMENTS OF OPERATIONS
        <S>                                                       <C>             <C>             <C>

         Loss for the year under Canadian GAAP                       (3,581,360)     (5,764,874)     (4,655,063)
         Mineral properties and deferred costs for the year (i)      (4,491,524)     (8,480,509)     (5,212,625)
         Reversal of Future income tax liability (i)                          -         875,017         633,913
         Write down of marketable securities                                  -               -          99,762
                                                                   ------------    ------------    ------------
         Loss for the year under US GAAP                             (8,072,884)    (13,370,366)     (9,134,013)
         Unrealized losses
              on available-for-sale securities (ii)                      (3,000)              -        (387,160)
                                                                   ------------    ------------    ------------
         Comprehensive loss (iii)                                    (8,075,884)    (13,370,366)     (9,521,173)
                                                                   ============    ============    ============

         Basic and diluted loss per share under US GAAP                   (0.16)          (0.29)          (0.22)
                                                                   ============    ============    ============

         Weighted average number of common shares outstanding        51,263,575      46,197,029      40,939,580
                                                                   ============    ============    ============
</TABLE>
<TABLE>
<CAPTION>

                                                                       2006            2005
                                                                         $               $
        <S>                                                       <C>             <C>

         SHAREHOLDERS' EQUITY

         Balance per Canadian GAAP                                   27,009,534      20,761,073
         Mineral properties and deferred costs expensed (i)
              (In 2006, classified as a component of Navidad
              interest - Note 2)                                    (17,763,521)    (15,032,107)
         Reversal of Future income tax liability (i)                          -       1,760,110
         Accumulated other comprehensive income (ii)                     81,000          84,000
                                                                   ------------    ------------
         Balance per US GAAP                                          9,327,013       7,573,076
                                                                   ============    ============

                                                                       2006            2005
                                                                         $               $
         MINERAL PROPERTIES / NAVIDAD INTEREST

         Balance per Canadian GAAP                                   17,949,521      15,032,107
         Transfer of marketable securities (ii)                          81,000               -
         Mineral properties and deferred costs
              expensed under US GAAP (i)                            (17,763,521)    (15,032,107)
                                                                   ------------    ------------
         Balance per US GAAP                                            267,000               -
                                                                   ============    ============
</TABLE>



                                      F-22
<PAGE>


                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)
<TABLE>
<CAPTION>

                                                                       2006            2005
                                                                         $               $
        <S>                                                       <C>             <C>

         FUTURE INCOME TAX LIABILITY

         Balance per Canadian GAAP                                            -       1,760,110
         Reversal of Future income tax liability (i)                          -      (1,760,110)
                                                                   ------------    ------------
         Balance per US GAAP                                                  -               -
                                                                   ============    ============
</TABLE>
<TABLE>
<CAPTION>

                                                                       2006            2005            2004
                                                                         $               $               $
         CONSOLIDATED STATEMENTS OF CASH FLOWS
        <S>                                                       <C>             <C>             <C>

         OPERATING ACTIVITIES

         Cash used per Canadian GAAP                                 (3,785,152)     (3,849,618)     (2,961,734)
         Mineral properties and deferred costs (i)
              (In 2006, classified as a component of Navidad
              interest - Note 2)                                     (4,491,524)     (7,025,492)     (4,578,712)
                                                                   ------------    ------------    ------------
         Cash used per US GAAP                                       (8,276,676)    (10,875,110)     (7,540,446)
                                                                   ============    ============    ============

                                                                       2006            2005            2004
                                                                         $               $               $
         INVESTING ACTIVITIES

         Cash used per Canadian GAAP                                 (5,411,524)    (10,258,903)     (8,809,717)
         Mineral properties and deferred costs (i)
              (In 2006, classified as a component of Navidad
              interest - Note 2)                                      4,491,524       7,025,492       4,578,712
                                                                   ------------    ------------    ------------
         Cash provided by (used) per US GAAP                           (920,000)     (3,233,411)     (4,231,005)
                                                                   ============    ============    ============
</TABLE>

         i)       Mineral Properties and Deferred Costs

                  Mineral  properties  and deferred  costs are  accounted for in
                  accordance  with  Canadian GAAP as disclosed in Note 3. For US
                  GAAP purposes, the Company expenses exploration costs relating
                  to unproven mineral  properties as incurred,  and reverses any
                  associated  future  income tax  liabilities.  When  proven and
                  probable  reserves are determined  for a property,  subsequent
                  exploration  and   development   costs  of  the  property  are
                  capitalized.

         ii)      Investments

                  For the 2005 fiscal year, the Company's marketable  securities
                  were  classified as  available-for-sale  investments  under US
                  GAAP and  carried  at the lower of cost and  market  value for
                  Canadian  GAAP  purposes.   Such   investments  are  not  held
                  principally  for the  purpose of selling in the near term and,
                  for US GAAP  purposes,  must have  holding  gains  and  losses
                  reported as a separate component of shareholders' equity until
                  realized or until an other than temporary  impairment in value
                  occurs.  For the 2006 fiscal year,  the  Company's  marketable
                  securities were  classified as available for sale  investments
                  under US GAAP until  July 14,  2006,  the date of the  Navidad
                  judgment  (see Note 1  above).  Subsequently,  the  marketable
                  securities were  transferred to the Navidad  interest  balance
                  (see Note 2 above).



                                      F-23
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

         iii)     Comprehensive Income

                  US GAAP  requires  disclosure of  comprehensive  income (loss)
                  which is  intended  to  reflect  all other  changes  in equity
                  except those resulting from  contributions  by and payments to
                  owners.

         iv)      Spin-Off of Assets to Golden Arrow

                  Under Canadian GAAP, a spin-off of assets is accounted for and
                  disclosed  in  accordance  with  CICA  Handbook  Section  3475
                  "Disposal of Long-Lived  Assets and Discontinued  Operations".
                  Under US GAAP,  such a  spin-off  would be  accounted  for and
                  disclosed as a dividend in kind and would not require separate
                  carve-out of results in the  statements of operations and cash
                  flows nor separate balance sheet classification.

         v)       Recent Accounting Pronouncements

                  FINANCIAL INSTRUMENTS

                  On January  27,  2005,  the CICA  issued  Section  3855 of the
                  Handbook  titled  "Financial  Instruments  -  Recognition  and
                  Measurement".  It expands  Handbook  section 3860,  "Financial
                  Instruments - Disclosure and Presentation" by prescribing when
                  a  financial  instrument  is to be  recognized  on the balance
                  sheet and at what  amount.  It also  specifies  how  financial
                  instrument gains and losses are to be presented. All financial
                  instruments  will be required to be  classified  into  various
                  categories.   Held  to   maturity   investments,   loans   and
                  receivables  are measured at amortized cost with  amortization
                  of premium or discounts and losses and impairment  included in
                  current period  interest  income or expense.  Held for trading
                  financial  assets and  liabilities are measured at fair market
                  value with all gains and losses  included in net income in the
                  period in which they arise.  All available for sale  financial
                  assets are  measured  at fair  market  value with  revaluation
                  gains and losses included in other comprehensive  income until
                  the asset is removed from the balance  sheet except that other
                  than  temporary  losses due to impairment  are included in net
                  income.  All other financial  liabilities are to be carried at
                  amortized cost. This new Handbook  section will bring Canadian
                  GAAP more in line with U.S. GAAP. The mandatory effective date
                  is for fiscal years  beginning on or after October 1, 2006. At
                  present, the Company's most significant  financial instruments
                  are  cash,  short-term  investments,   other  receivables  and
                  accounts payable. The Company will adopt this Handbook section
                  in its fiscal 2007 year.  The Company is  currently  reviewing
                  the section to determine the potential  impact, if any, on its
                  consolidated financial statements.

                  HEDGE ACCOUNTING

                  Handbook   Section   3865,   "Hedges"   provides   alternative
                  treatments to Handbook  Section 3855 for entities which choose
                  to designate qualifying  transactions as hedges for accounting
                  purposes.  The  effective  date of this  section is for fiscal
                  years beginning on or after October 1, 2006.

                  The Company does not currently have any hedging relationships.

                  COMPREHENSIVE INCOME

                  New Handbook Section 1530, "Comprehensive Income",  introduces
                  a new  requirement  to temporarily  present  certain gains and
                  losses outside of income.  Section 1530 defines  comprehensive
                  income as a change in value of net  assets  that is not due to
                  owner activities.  Assets that are classified as available for
                  sale will have revaluation  gains and losses included in other
                  comprehensive  income  until  the  asset is  removed  from the
                  balance sheet.



                                      F-24
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)


11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)


                  At present,  the Company  has  investments  in shares of arm's
                  length  corporations  that may be  classified as available for
                  sale  investments.  The Company would be required to recognize
                  unrealized  gains and losses on these  securities  and include
                  these amounts in comprehensive  income.  The effective date of
                  this section is for fiscal years beginning on or after October
                  1, 2006.  Implementation  of this  section  will more  closely
                  align Canadian GAAP with U.S. GAAP.

                  ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

                  In July 2006, the Financial  Accounting Standards Board (FASB)
                  issued FIN 48,  Accounting for Uncertainty in Income Taxes, an
                  Interpretation  of FASB  Statement  109.  This  Interpretation
                  applies to all tax  positions  related to income taxes subject
                  to  SFAS  109,  Accounting  for  Income  Taxes.  FIN 48 uses a
                  two-step  approach for  evaluating  tax  positions.  The first
                  step, recognition,  occurs when an enterprise concludes that a
                  tax position,  based solely on its technical  merits,  is more
                  likely than not to be sustained upon  examination.  The second
                  step,  measurement,  is  only  addressed  if  the  recognition
                  threshold is met; under this step, the tax benefit is measured
                  as  the  largest  amount  of  the  benefit,  determined  on  a
                  cumulative  probability basis, that is more likely than not to
                  be realized  upon  settlement.  FIN 48's use of the term "more
                  likely  than  not"   represents  a  greater  than  50  percent
                  likelihood of occurrence.

                  The  cumulative  effect of  applying  the  provisions  of this
                  Interpretation  shall  be  reported  as an  adjustment  to the
                  opening balance of retained  earnings for fiscal year in which
                  the enterprise adopts the Interpretation.  FIN 48 is effective
                  for fiscal years  beginning  after December 15, 2006.  Earlier
                  application  is permitted if the reporting  enterprise has not
                  publicly  issued  financial   statements,   including  interim
                  financial statements,  for that fiscal year. Accordingly,  the
                  Company will adopt the  provisions of this  Interpretation  in
                  its fiscal 2007 year.  The Company is currently  reviewing the
                  provisions to determine the potential  impact,  if any, on its
                  consolidated financial statements

                  FAIR VALUE MEASUREMENTS

                  In  September  2006,  FASB issued  SFAS No.  157,  "Fair Value
                  Measurements",  which  establishes  a framework  for measuring
                  fair  value.  It also  expands  disclosures  about  fair value
                  measurements  and is effective  for the first quarter of 2008.
                  The Company is currently  reviewing  the guidance to determine
                  the potential  impact,  if any, on its consolidated  financial
                  statements.


12.      SUPPLEMENTARY CASH FLOW INFORMATION

         Non-cash  investing  and  financing  activities  were  conducted by the
         Company as follows:
<TABLE>
<CAPTION>

                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Investing activities
              Proceeds on disposition of mineral properties                   -               -        (252,000)
              Acquisition of marketable securities                            -               -         252,000
              Expenditures on mineral properties and deferred costs           -        (580,000)              -
              Stock based compensation capitalized                            -         580,000               -
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>

                                      F-25
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

<PAGE>


12.      SUPPLEMENTARY CASH FLOW INFORMATION (continued)
<TABLE>
<CAPTION>

                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Financing activities
              Shares issue costs                                        (95,893)       (177,333)              -
              Warrant issue costs                                       (14,271)
              Warrants                                                  110,164
              Shares issued on exercise of options                       74,800               -         204,070
              Contributed surplus                                       (74,800)        177,333        (204,070)
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>


13.      SPIN-OFF OF ASSETS

         On July 7, 2004, the Company completed a corporate  restructuring  plan
         (the "Reorganization")  which resulted in dividing the Company's assets
         and   liabilities   into  two   separate   companies.   Following   the
         Reorganization   the  Company   continued  to  hold  the  Navidad  Area
         properties,   while  all  other  mineral  property  interests,  certain
         marketable  securities  and cash were spun-off to Golden Arrow, a newly
         created company. The Navidad project, located in the province of Chubut
         Argentina,  was staked by the Company in late 2002 and  continues to be
         the  focus  of the  Company's  activities.  The  Reorganization  of the
         Company was accomplished by way of a statutory plan of arrangement. The
         shareholders  of the Company were issued  shares in Golden Arrow on the
         basis of one  Golden  Arrow  share for ten  shares of the  Company.  On
         completion of the  Reorganization,  the Company  transferred  to Golden
         Arrow:

         i)       all of the  Company's  investment  in its mineral  properties,
                  excluding the Navidad  project and Navidad Area properties and
                  related future income tax liabilities;
         ii)      the assets and  liabilities  of IMPSA  Resources  (BVI)  Inc.,
                  Inversiones  Mineras  Argentinas  Holdings  (BVI)  Inc.,  both
                  wholly-owned  subsidiaries of the Company, and IMPSA Resources
                  Corporation, an 80.69% owned subsidiary of the Company;
         iii)     certain marketable securities at their recorded values; and
         iv)      cash

                  The aggregate  carrying  amount of the net assets  transferred
                  from the Company to Golden Arrow during 2004 is as follows:
<TABLE>
<CAPTION>

                                                                                       2004
                                                                                         $
                 <S>                                                              <C>

                  Cash                                                                1,020,189
                  Marketable securities and other current assets and liabilities        548,841
                  Mineral properties and deferred cost and equipment                  6,874,960
                  Future income tax liabilities                                      (1,079,112)
                                                                                   ------------
                                                                                      7,364,878
                                                                                   ============
</TABLE>

         During 2005 the Company paid $145,866 to Golden Arrow from the exercise
         of warrants of the Company  that  resulted in the issue of Golden Arrow
         shares as required by the terms of the Reorganization.  As all warrants
         that were  outstanding as of the effective  date of the  reorganization
         have been  exercised  the  Company  has no  further  obligation  to pay
         amounts to Golden  Arrow for the issue of its shares on the exercise of
         the Company's warrants.




                                      F-26
<PAGE>

                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)

13.      SPIN-OFF OF ASSETS (continued)

         The Company's  comparative  amounts in the Statement of Operations  and
         Deficit include an allocation of general and administrative expenses as
         Loss allocated to spin-off assets. The allocation was calculated on the
         basis  of the  ratio  of the  specific  assets  transferred  to  assets
         retained.  Certain "Other Income and Expense" items have been allocated
         to spin-off assets on a cost specific basis.

         As a condition  of the  Reorganization,  Golden Arrow became a party to
         the Aquiline litigation (see Notes 1 and 2 above). The Company provided
         Golden  Arrow  with an  indemnification  that will  compensate  for any
         payment or cost Golden Arrow might have to pay in the event of an award
         against  the  Company  and/or  Golden  Arrow.  Accordingly,  no amounts
         related to this action have been accrued in these financial  statements
         at December 31, 2006.





                                      F-27
<PAGE>