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

                                    FORM 20-F

[ ]      Registration  Statement  Pursuant  to  Section  12(b)  or  (g)  of  the
         Securities Exchange Act of 1934
                                       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, 2007
                                       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.
                52,132,064 COMMON SHARES AS OF DECEMBER 31, 2007

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.

CAUTIONARY  NOTE TO UNITED  STATES  READERS  CONCERNING  ESTIMATES  OF MEASURED,
INDICATED AND INFERRED RESOURCES

This  form  uses  the  terms  "Measured,"  "Indicated"  and  "Inferred"  Mineral
Resources.  United  States  investors  are  advised  that  while  such terms are
recognized and required by Canadian  regulations,  the United States  Securities
and Exchange  Commission (the "SEC") does not recognize them.  "Inferred Mineral
Resources" have a great amount of uncertainty as to their  existence,  and great
uncertainty  as to their  economic and legal  feasibility.  It cannot be assumed
that all or any part of an Inferred  Mineral Resource will ever be upgraded to a
higher category.  Under Canadian rules,  estimates of Inferred Mineral Resources
may not form the basis of feasibility or other economic  studies.  United States
investors  are  cautioned  not to  assume  that all or any part of  Measured  or
Indicated Mineral Resources will ever be converted into reserves.  United States
investors  are also  cautioned not to assume that all or any part of an Inferred
Mineral Resource exists, or is economically or legally mineable.


                                     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, 2007, 2006 and
2005 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, 2004 and 2003 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 11 of the 2007  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 its  commitments.
The funds on hand and  received  in  January  and  February  2008 will allow the
company to acquire viable advance stage exploration




                                     - 3 -
<PAGE>

assets.  The Company 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".


CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
--------------------------------------------------
<TABLE>
<CAPTION>

                                                                    (CDN$ IN 000, EXCEPT PER SHARE DATA)
------------------------------------------------------------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------
<S>                                              <C>              <C>         <C>          <C>          <C>

Revenue                                                      -            -            -            -            -
General Corporate Expenditures                          (2,093)      (3,452)      (6,092)      (4,084)      (2,276)
General Exploration Expenditures                          (209)(a)     (499)(a)      (56)        (229)        (227)
Foreign Exchange Gain (Loss)                                (8)          (3)         233         (195)         (13)
Interest and Miscellaneous Income                        1,225          373          150          102           67
Provision for Marketable Securities                          -            -            -         (100)           -
Loss Allocated to Spin off Assets                            -            -            -         (131)        (969)
                                                  ----------------------------------------------------------------
Net Loss for the Year                                   (1,085)      (3,581)      (5,765)      (4,655)      (3,418)
                                                  ================================================================

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

Loss per Share -Basic and Diluted                        (0.02)       (0.07)       (0.12)       (0.11)       (0.11)
                                                  ================================================================
Weighted Average Number of Shares Outstanding           52,100       51,264       46,197       40,939       32,252
                                                  ================================================================

Working Capital                                         26,019        9,060        7,489        5,053        4,747
Capital Assets                                               -            -            -           94           36
Mineral Properties                                           -            -       15,032        6,551        1,469
Navidad Interest                                             -       17,950            -            -            -
Spin-Off Assets                                              -            -            -            -        6,749
Long-Term Debt                                               -            -            -            -            -
Total Assets                                            26,124       27,246       23,498       12,222       13,419
Net Assets - Shareholder's Equity                       26,019       27,010       20,761       10,813       11,671
</TABLE>


(a)  The 2007 and 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  Aquiline  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)
------------------------------------------------------------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------
<S>                                              <C>              <C>         <C>          <C>          <C>

CONSOLIDATED STATEMENT OF OPERATIONS

Loss for the year under Canadian GAAP                  $(1,085)     $(3,581)     $(5,765)     $(4,655)     $(3,418)

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)

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)

Realization of Navidad interest                         17,683            -            -            -            -
                                                  ----------------------------------------------------------------
Income (loss) for the year under US GAAP               $16,598      $(8,073)    $(13,370)     $(9,134)     $(4,598)

Unrealized (loss) gains on
available-for-sale securities                                -           (3)           -         (387)         434
                                                  ----------------------------------------------------------------

Comprehensive Income (loss) for the year               $16,598      $(8,076)    $(13,370)     $(9,521)     $(4,164)
                                                  ================================================================

Income (loss) per share under US GAAP                    $0.32       $(0.16)      $(0.29)      $(0.22)      $(0.14)
                                                  ================================================================

Diluted Income (loss) per share under US GAAP            $0.32       $(0.16)      $(0.29)      $(0.22)      $(0.14)
                                                  ================================================================

------------------------------------------------------------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------
SHAREHOLDERS' EQUITY

Balance per Canadian GAAP                              $26,019      $27,010      $20,761      $10,813      $11,671

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

Accumulated other comprehensive income                       -           81           84           84          489
                                                  ----------------------------------------------------------------
Balance per US GAAP                                    $26,019       $9,327       $7,573       $5,231       $5,277
                                                  ================================================================

------------------------------------------------------------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------

MINERAL PROPERTIES/NAVIDAD INTEREST

Balance per Canadian GAAP                              $18,500      $17,950      $15,032       $6,552       $8,214

Mineral property and deferred exploration costs
expensed net of reversal of future income tax                -      (17,750)     (15,032)      (6,552)      (8,214)

Transfer of marketable securities                            -           81            -            -            -
                                                  ----------------------------------------------------------------
Balance per US GAAP                                    $18,500         $267           $-           $-           $-
                                                  ================================================================
</TABLE>



                                     - 5 -
<PAGE>

<TABLE>
<CAPTION>

                                                                    (CDN$ IN 000, EXCEPT PER SHARE DATA)
------------------------------------------------------------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------
<S>                                              <C>              <C>         <C>          <C>          <C>

CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES

Cash used per Canadian GAAP                            $(1,954)     $(3,785)     $(3,850)     $(2,962)     $(1,419)

Mineral properties and deferred costs                        -       (4,492)      (7,025)      (4,578)      (1,851)
                                                  ----------------------------------------------------------------
Cash used per US GAAP                                  $(1,954)     $(8,277)    $(10,875)     $(7,540)     $(3,270)
                                                  ================================================================

INVESTING ACTIVITIES

Cash used per Canadian GAAP                             $1,687      $(5,412)    $(10,259)     $(8,810)     $(1,873)

Mineral properties and deferred costs                        -        4,492        7,026        4,579        1,851
                                                  ----------------------------------------------------------------
Cash provided (used) per US GAAP                        $1,687        $(920)     $(3,233)     $(4,232)        $(22)
                                                  ================================================================

FINANCING ACTIVITIES

Cash provided per Canadian and US GAAP                    $ 60       $9,437      $13,478       $9,297       $6,278
                                                  ===============================================================
</TABLE>

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

EXCHANGE RATE HISTORY

The noon rate of exchange on February  29, 2008,  reported by the United  States
Federal  Reserve Bank of New York for the  conversion  of Canadian  dollars into
United States dollars was US$1.00 (US$1.00 =0.9999 CDN$).

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 29, 2008.

        MONTH                             HIGH                    LOW

        September 2007                   0.9721                  0.9783
        October 2007                     1.0218                  1.0283
        November 2007                    1.0292                  1.0398
        December 2007                    0.9924                  1.0010
        January 2008                     0.9852                  0.9940
        February 2008                    0.9964                  1.0047

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, 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
        January 1, 2007 - December 31, 2007                1.0740

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: The validity of mining claims, which will constitute a
significant portion of the Company's  contemplated  property holdings,  is often
uncertain  and may be  contested.  Although  the Company will attempt to acquire
satisfactory  title to  undeveloped  properties  it acquires,  the  Company,  in
accordance  with  mining  industry  practice,  does not  intend to obtain  title
opinions until a decision is made to develop a property, with the attendant risk
that some titles,  particularly titles to undeveloped properties, may be subject
to contest by other  parties.  Title to properties  may be subject to litigation
claims by others.  The Company has no mineral  properties as of the date of this
filing.

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 29, 2008
the  Company  had  working  capital  of  approximately  $25,485,000.  Management
believes the Company has adequate resources to maintain its ongoing  operations.
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 a
company's properties are in the exploration stage.

ADDITIONAL  FINANCING:  The Company presently has sufficient financial resources
to meet its  commitments.  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.  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.

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



                                     - 7 -
<PAGE>


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 prices of metals  greatly affect the value of the Company
and the potential value of its potential 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  in foreign  jurisdictions  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. Site restoration costs are a component of exploration expenses.

PROJECT DELAY RISK: The Company's  minerals business will be subject to the risk
of unanticipated delays in permitting its contemplated 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 $1.20 to a low of $0.36
during the 12-month period ending  December 31, 2007.  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 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 $450,000,  with a $2,500
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.



                                     - 8 -
<PAGE>


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 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.

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

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.
(the "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.

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 acquire  properties or projects of merit; (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



                                     - 9 -
<PAGE>


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:  Mineral  exploration and mining
activities  in foreign  jurisdictions  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  effect  of all of these  factors  cannot  be  accurately
predicted.

CURRENCY  FLUCTUATIONS:  The  Company's  operations  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.  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.

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



                                     - 10 -
<PAGE>


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.


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



                                     - 11 -
<PAGE>

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

     (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



                                     - 12 -
<PAGE>


    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 began
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.

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  Resources  Corporation
("Golden  Arrow"),  a 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.

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



                                     - 13 -
<PAGE>


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.

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

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

         The Order read 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."

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  parties  agreed  that  the  transactions  outlined  in the  Interim
Agreement were in  satisfaction  of the Order  referenced  above.  The principal
terms and conditions of the Interim Agreement were as follows:

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

         (ii)     the  Company  and  Aquiline  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 and

         (iii)    in the event that the Company was unsuccessful on appeal,  the
                  Company was to be paid such $18,500,000 amount.

The effective date of the transfer of the Navidad project was November 16, 2006.
A copy of the Interim  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's appeal of this judgment was heard by the British Columbia Court of
Appeal  between April 10 and April 12, 2007.  The Court of Appeal  dismissed the
Company's appeal and released their reasons for judgment on June 7, 2007.

The Company  filed an  application  for leave to appeal to the Supreme  Court of
Canada in October  2007. On December 20, 2007 the Supreme Court of Canada denied
the Company's appeal.  This brought the lawsuit to a close. The Navidad property
has been transferred to Aquiline.

The Company was paid $18,500,000 as consideration for these assets.  The Company
received the $7.5 million held in trust on January 8, 2008,  plus  interest that
had accrued in the amount of $341,380.  The $11 million  balance was received on
February 11, 2008.



                                     - 14 -
<PAGE>


On February 29, 2008 IMA Holdings Inc. was wound up into IMA Exploration Inc.

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 $Nil
and capital  assets of $Nil,  $2,731,414  and $Nil,  $8,480,509 and $Nil for the
fiscal  years  ended  December  31,  2007,  2006 and 2005,  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 $17,949,521 and marketable
securities of $186,000 which are subject to transfer to Aquiline under the terms
of the Interim  Agreement.  As at December  31, 2007,  the Navidad  interest was
increased to  $18,500,000  as a result of a recovery of overhead costs that were
previously  expensed.  The $18,500,000  was received  subsequent to December 31,
2007.

PLANNED EXPLORATION EXPENDITURES AND PROPERTY PAYMENTS

The Company has been  actively  reviewing  many projects and  opportunities  for
future  acquisitions.  The Company has $25 million of cash available and is well
funded to acquire  projects and  properties  and to then further  develop  their
potential for 2008 and beyond.  The  Company's  reviews have focused on projects
with a  defined  resource  combined  with  future  potential  or which  have had
previous positive exploration activities. In the fall of 2007 Dr. Greg Myers was
retained to assist the existing staff and management in this search.  Management
is very cognizant of the shareholders' expectations for the Company to return to
active  exploration and development.  However,  this is a process that cannot be
rushed.  Proper  due  diligence  takes  time and  resources,  then  followed  by
negotiations  with the property vendors and then whatever  regulatory  approvals
may also be required.

The Company is well placed to apply strict  criteria to its  selection and given
current market conditions  expects to be presented with excellent  opportunities
for one or more acquisitions on which to act.

The  Company   considers  that  it  has  adequate   resources  to  maintain  its
contemplated  operations.  The Company  will  continue  to rely on  successfully
completing   additional   equity  financing  and/or   conducting  joint  venture
arrangements  to  identify  and  acquire  future  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 Company being unable
to identify and acquire future properties.  See "Item 4. History and Development
of the Company."

BUSINESS OVERVIEW

The  Company  is  a  natural   resource  company  engaged  in  the  business  of
acquisition,  exploration and development of mineral properties. 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."

ORGANIZATIONAL STRUCTURE

The Company has one 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.



                                     - 15 -
<PAGE>


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.

                       ----------------------------------
                              IMA Exploration Inc.
                                    (CANADA)
                       ----------------------------------
                                       |
                                       |
                                       |
                                       |
                       ----------------------------------
                            IMA Latin America Inc.
                                     (BVI)
                       ----------------------------------
                                       |
                                       |
                                       |
                                       |
                       ----------------------------------
                                Punto Dorado S.A.
                                   (ARGENTINA)
                       ----------------------------------


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,  the Company's has no mineral
properties and the Company's  operations are exploratory in nature. See "Item 4.
History and Development of the Company."

PRINCIPAL PROPERTIES

ARGENTINEAN PROPERTIES

As described in "Item 4. History and Development of the Company," the Company no
longer has an interest in its former Argentinean  Properties.  During the fiscal
years ending  December 31, 2007,  2006 and 2005 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, 2005      $15,032,107                $55,914              $ Nil
December 31, 2006      $17,763,521               $498,921              $ Nil
December 31, 2007      $         -               $209,255              $ Nil

(a)  In fiscal 2007, this amount includes  $109,666 (2006 - $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  Aquiline  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.  See "Item 7.
Major Shareholders and Related Party Transactions - Related Party Transactions."


                                     - 16 -
<PAGE>

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, 2007,  2006 and 2005,  respectively,  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,  2007  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, through its subsidiary, 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  Aquiline  claim.  The
Company was not  successful  in its  defense  and the court found in  Aquiline's
favour.

The Company's appeal of this judgment was heard by the British Columbia Court of
Appeal  between April 10 and April 12, 2007.  The Court of Appeal  dismissed the
Company's appeal and released their reasons for judgment on June 7, 2007.

The Company  filed an  application  for leave to appeal to the Supreme  Court of
Canada in October  2007. On December 20, 2007 the Supreme Court of Canada denied
the  Company's  appeal.  This brought the lawsuit to a close.  As a result,  the
Navidad  property has been  transferred  to  Aquiline.  See "Item 4. History and
Development of the Company."

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 to fair value.

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."


                                     - 17 -
<PAGE>


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 11 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,  as the
Company has had no income or net sales revenue during such period.

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.  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  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.  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 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,  2007  the  Company  recorded
$18,500,000 as Navidad Interest receivable;  this amount was received in January
and February 2008. At December 31, 2006, the Company had capitalized $17,763,521
(2005 - $15,032,107) on its Argentine properties.  In 2006 the Company's mineral
properties  and  deferred  costs  balance was  classified  as a component of the
Navidad interest balance.

During the year ended  December  31, 2007,  the Company  issued  119,000  common
shares on the exercise of options,  warrants and agents warrants for $59,500. As
of December 31, 2007, the Company had reserved  3,271,070  common shares (2006 -
3,504,404,  2005 -  1,900,004)  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.

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



                                     - 18 -
<PAGE>


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.

Cash on hand and short-term  investments at February 29, 2008 were approximately
$25,560,000.

RESULTS OF OPERATIONS

The  following  discussion  of the results of  operations of the Company for the
fiscal  years  ended  December  31,  2007,  2006  and  2005  should  be  read in
conjunction with the consolidated  financial  statements of the Company attached
hereto and related notes included therein.

YEAR ENDED DECEMBER 31, 2007 COMPARED TO YEAR ENDED DECEMBER 31, 2006

For the year ended December 31, 2007, the Company  reported a consolidated  loss
of  $1,084,689  ($0.02 per  share),  a decrease of  $2,496,671  from the loss of
$3,581,360  ($0.07 per share) for the year ended December 31, 2006. The decrease
in the loss in 2007, compared to the 2006 amount, can primarily be attributed to
a $1,649,504  decrease in operating  expenses and an increase of income $847,167
from other income items.

The  Company's  operating  expenses  for the year ended  December  31, 2007 were
$2,302,000, a decrease of $1,649,504 from $3,951,504 in 2006.

Professional  fees  decreased  $101,823 to  $1,022,321  in 2007,  as the Company
incurred  significant legal costs incurred in connection with the Aquiline legal
action.  The Company's 2007 legal fees primarily consist of costs related to the
appeal to the British  Columbia Court of Appeal in and the  application of leave
to appeal to the Supreme Court of Canada.  In 2007 the Company recorded non-cash
stock-based  compensation  of $34,421  compared to  $393,120 in 2006,  for stock
options granted to its employees, consultants and directors.

Other notable changes in the operating expenses are:

(i)      Administrative and management  services decreased by $252,352 primarily
         as a result of decreased fees paid for the services of the president of
         the Company which  included a bonus of $150,000 paid in 2006. See "Item
         7. Major  Shareholders  and Related Party  Transactions - Related Party
         Transactions

(ii)     Corporate  development  and  investor  relations  decreased by $160,962
         primarily as a result of the Company's  termination of its  third-party
         investor  relation  contracts  in 2006 as  well as  decreased  investor
         relations activity during the year.

(iii)    General exploration decreased by $86,983, as the 2006 expenses included
         payments made to review properties.

(iv)     Office  and  sundry  increased  by  $56,307  as a result  of  increased
         insurance purchased during the year.

(v)      Salaries  decreased  $408,193  to $244,337 in 2007 due to a decrease in
         activity levels and bonuses paid in 2006 totalling $100,000.

(vi)     Travel and accommodation  decreased  $58,162 due to decreased  activity
         during the year.

(vii)    Navidad holding costs decreased  $202,683 to $109,666.  These are costs
         incurred in order to maintain basic operations in Argentina  subsequent
         to the  transfer of control of the  Navidad  project to  Aquiline.  The
         Company  expensed all Navidad  related costs that would otherwise being
         capitalized  from  September 30, 2006. In 2006 the Company funded costs
         during the transfer of the Navidad project in October and November.  As
         the full  amount  of the costs  agreed  to,  between  the  Company  and
         Aquiline,  were received


                                     - 19 -
<PAGE>


         ($18,500,000)  a recovery of  overhead  costs in the amount of $550,479
         was recorded in 2007  representing the excess over the Navidad carrying
         costs.

In 2007 the Company recorded interest income of $675,156 compared to $373,009 in
2006.  As a result of the transfer of $7.5  million  amount of funds in trust on
January 8, 2008  interest of $341,380 was recorded in 2007. A loss of $8,324 for
foreign exchange was recorded in 2007 compared to loss of $2,865 in 2006.

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 a 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   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).

(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:
         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 Aquiline
                  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.



                                     - 20 -
<PAGE>


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 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.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  cash  position at December 31, 2007 was  $183,628,  a decrease of
$207,792 from December 31, 2006. Short-term  investments decreased $1,686,538 to
$6,813,462  at December 31, 2007 from  $8,500,000  at December  31, 2006.  Total
assets  decreased  to  $26,124,490  at  December  31, 2007 from  $27,246,146  at
December  31,  2006.  This  increase  is mainly due to the  increase  in Navidad
carrying value and in cash balance.


                                     - 21 -
<PAGE>


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, 2007,  no
common share purchase warrants or agent's warrants had been exercised.

Stock options were  exercised  which resulted in cash proceeds of $59,500 during
2007. No warrants were exercised in 2007.

The Company has received  $Nil from the  exercise of options and  warrants  from
January 1 to February 29, 2008. As at February 29, 2008, the Company had working
capital of approximately $25,485,000.

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 identify,  acquire and
conduct 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
Company's exploration programs.

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

Except  as  otherwise  disclosed,  the  Company  knows of no  other  contractual
obligations during the period from January 1, 2008 through December 31, 2008.

<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>

                                     - 22 -
<PAGE>



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>

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 70

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

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.
and Director                              management  services to various              Corporate  Secretary from  August
Age 64                                    clients from 1999 to April 2004              2005 to December 2007.
                                          through Arthur G Lang Inc., a private
                                          BC company.

---------------------------------------------------------------------------------------------------------------------------
NIKOLAOS CACOS                            President, CEO and director of Amera         Vice President since June, 2005 to
Vice President                            Resources Corporation, a public              present.
Age 41                                    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 41                                    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 59                                    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.

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

DAVID TERRY                               Vice President for the Company from          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 42                                    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 71                                    1996 to present.

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

LEONARD HARRIS                            Retired Mining Consultant since 1995.        Director since August 2005 to
Director                                                                               present.
Age 80

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



                                     - 23 -
<PAGE>


<TABLE>
<CAPTION>

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

CARLOS D'AMICO                            President of Desarrollo de Inversiones       President since May 2007 to present
President (of subsidiary)                 S. A. from November 2006 to present          of subsidiary.
Age 50                                    President of Punto Dorado S.A, .a
                                          subsidiary of the Company, from May
                                          2007 to present.  President from
                                          February 2005 and General Manager from
                                          2003 to November 2006 of Inversiones
                                          Mineras Argentinas S.A.

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

LINDA MCCLUSKY                            Corporate Secretary for Grosso Group         Corporate Secretary since December
Corporate Secretary                       companies since October 2005.  From          4, 2007.
Age 65                                    1999 to 2005, paralegal, Corporate
                                          Legal Department, Imperial Parking
                                          Canada Corporation.

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


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

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>

Arthur Lang                     Golden Arrow Resources Corporation      Director, CFO ,VP     Jul/04 to present
                                Amera Resources Corporation             CFO                   Mar/05 to present
                                Astral Mining Corporation               CFO                   Feb/07 to present
                                Blue Sky Uranium Corp.                  CFO                   Mar/07 to present
-------------------------------------------------------------------------------------------------------------------
</TABLE>


                                     - 24 -
<PAGE>

<TABLE>
<CAPTION>

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

Joseph Grosso                   Amera Resources Corporation             Chairman/Director     Feb/04 to present
                                Golden Arrow Resources Corporation      Chairman/President/   Jul/04tto present
                                                                        CEO/Director
-------------------------------------------------------------------------------------------------------------------

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

David Terry                     Amera Resources Corporation             Director              Dec/07 to present
                                                                        VP, Exploration       Mar/04 to Dec/07
                                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
                                Golden Arrow Resources Corp.            Director              Jan/08 to present
-------------------------------------------------------------------------------------------------------------------

Jerry Minni                     Raytec Development Corp.                Director & CEO        Feb/92 to present
                                Mantra Mining Inc.                      Director & CEO        Jul/98 to present
                                Avantec Technologies Inc.               Director              Jun/99 to present
                                Amera Resources Corporation             Director              Nov/02 to present
                                Weststar Resources Ltd.                 Director & CFO        Jun/05 to present
-------------------------------------------------------------------------------------------------------------------
</TABLE>


COMPENSATION

During the fiscal year ended  December 31, 2007,  the  directors and officers of
the Company, as a group, had received or charged the Company a total of $353,283
(2006-$533,917;  2005-$241,088  ) 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
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.



                                     - 25 -
<PAGE>


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, 2007,  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, 2005 , 2006 and 2007.


<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)        2007      $250,000       Nil       Nil            Nil            Nil           Nil         Nil
President and           2006      $200,667    $150,000     Nil         48,000            Nil           Nil         Nil
Chief Executive         2005      $102,000       Nil       Nil        150,000            Nil           Nil         Nil
Officer
------------------      ----      ------------------------------    ----------------------------    -------    ---------

Arthur Lang, Chief      2007      $59,834(4)     Nil       Nil            Nil            Nil           Nil         Nil
Financial Officer       2006      $59,400(5)   $50,000     Nil         35,000            Nil           Nil         Nil
                        2005      $68,927(6)     Nil       Nil        100,000            Nil           Nil         Nil
------------------      ----      ------------------------------    ----------------------------    -------    ---------

</TABLE>

(1)  Fiscal years ended December 31, 2007, 2006 and 2005.
(2)  See "Options and Stock Appreciation Rights".
(3)  See the description of termination payment provisions in the agreement with
     Oxbow  International  Marketing Corp.  dated July 1, 1999 for Mr. Grosso in
     "Item 6.  Directors,  Senior  Management  and  Employees -  Compensation  -
     Management Contracts."
(4)  During the year ended December 31, 2007 Mr. Lang's total  compensation from
     the Grosso  Group was  $150,000,  of which  $59,834  was  allocated  to the
     Company as part of the Grosso Group fees for the year.
(5)  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.
(6)  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  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.



                                     - 26 -
<PAGE>



OPTION GRANTS

The following  table sets forth stock options  granted by the Company during the
financial  year ended December 31, 2007 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              nil                  n/a               n/a                 n/a                 n/a
-------------------------------------------------------------------------------------------------------------------
Arthur Lang                nil                  n/a               n/a                 n/a                 n/a
-------------------------------------------------------------------------------------------------------------------
</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                 548,000 / Nil                    $0 / N/A
---------------------------------------------------------------------------------------------------------------------

Arthur Lang                  Nil                  Nil                 185,000 / Nil                    $0 / N/A
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All options are exercisable to acquire the Company's Common Shares.

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, 2007 for
their services in their capacity as directors.

During the last completed  financial year ending  December 31, 2007, the Company
paid directly  $250,000 and indirectly  $84,413 (as part of the allocated Grosso
Group monthly fees) to its directors who are not Named



                                     - 27 -
<PAGE>

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          Nil                 Nil               N/A                N/A                N/A
who are not Named
Executive Officers
-------------------------------------------------------------------------------------------------------------------
</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              Nil                  Nil                 865,000 / N/A                   $0 / N/A
group, who are not
Named Executive
Officers
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All options are exercisable to acquire the Company Common Shares.

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.

MANAGEMENT CONTRACTS

GROSSO GROUP MANAGEMENT LTD.

Pursuant  to the terms of an  Administration  Services  Agreement,  the  Company
engages Grosso Group  Management Ltd. (the "Grosso  Group") to provide  services
and  facilities to the Company.  The Grosso Group is a private  company owned by
the Company, Golden Arrow, Amera Resources Corporation ("Amera"),  Astral Mining
Corporation  ("Astral"),  Gold Point Energy  Corp.  ("GPE") and Blue Sky Uranium
Corp.  ("Blue Sky"), each of which owns one share. The Grosso Group provides its
shareholder companies with geological, corporate


                                     - 28 -
<PAGE>


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 2007, the Company
incurred fees of $349,143 (2006: $724,902;  2005: $730,802) to the Grosso Group:
$330,305 (2006:  $764,115;  2006: $764,012 ) was paid in twelve monthly payments
and  $18,838  (2006:  $39,213  included  in amounts  receivable;  2005:  $33,210
included in amounts receivable) is included in accounts payable 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 (2006: $205,000;  2005: $205,000) deposit to the
Grosso Group for the purchase of equipment  and leasehold  improvements  and for
operating working capital. Effective February 29, 2008, GPE withdrew from Grosso
Group.

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, Colombia 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 29, 2008,
the  directors of the Grosso Group are Nikolaos  Cacos,  Joseph  Grosso,  Arthur
Lang, Manfred Kurschner and Sean Hurd. Messrs.  Lang and Grosso are officers and
directors  of the  Company.  Mr. Lang is also an officer and  director of Golden
Arrow  and an  officer  of Amera,  Blue Sky and  Astral.  Mr.  Grosso is also an
officer and  director of Golden  Arrow and of Amera.  Mr. Cacos is an officer of
the Company and is also 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.  Mr. Hurd is an officer of the Company and  President
and Director of Blue Sky.

Each of the public company shareholders of the Grosso Group has 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.

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

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

JOSEPH GROSSO

The Company is party to an agreement  with Oxbow,  effective as of July 1, 1999,
subsequently  amended  on May 1, 2006,  pursuant  to which Mr.  Grosso  provides
executive  services as President and Chief Executive Officer of the Company.  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.  During the fiscal
year ended December 31, 2007, Oxbow was paid $250,000 (2006 - $350,667).

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



                                     - 29 -
<PAGE>


Company's  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.

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

NIKOLAOS CACOS

As of January 2005,  Mr. Cacos provides  executive  services to the Company as a
consultant of the Grosso  Group.  During the year ended  December 31, 2007,  Mr.
Cacos's  total  compensation  from the Grosso Group was $22,500 (2006 - $22,500,
2005 - $22,500), of which $938 was allocated to the Company (2006 - $9,225, 2005
- $14,862) as part of the Grosso Group fees for the year.

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

SEAN HURD

As of January 2005,  Mr. Hurd provides  executive  services to the Company as an
employee of the Grosso  Group.  During the year ended  December  31,  2007,  Mr.
Hurd's total  compensation  from the Grosso Group was $120,000 (2006 - $112,000,
2005 - $96,000),  of which $25,497 was allocated to the Company (2006 - $45,920,
2005 - $72,216) as part of the Grosso Group fees for the year.

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

ARTHUR LANG

As of January 2005,  Mr. Lang provides  executive  services to the Company as 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, 2007,  Mr.  Lang's  total  compensation  from the Grosso Group was
$150,000  of which  $59,834 was  allocated  to the Company as part of the Grosso
Group fees and $Nil was paid directly as a bonus.

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

DAVID TERRY

As of January 1, 2005, Mr. Terry provides executive services to the Company as a
consultant of 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.  On July 9, 2007 the Grosso  Group
increased Mr. Terry's monthly fee to $16,667 ($200,000  annually) effective July
1, 2007. During the year ended December 31, 2007, Mr. Terry's total compensation
from the Grosso Group was $175,000 of which $24,579 was allocated to the Company
as part of the Grosso Group fees.

See ""Item 7. Major  Shareholders and Related Party Transactions - Related Party
Transactions."

LINDA MCCLUSKY

Mrs. Linda McClusky provides executive services to the Company as an employee of
the Grosso Group.  Mrs.  McClusky was appointed  Corporate  Secretary  effective
December 4, 2007. During the year ended December 31, 2007 Mrs.  McClusky's total
compensation from the Grosso Group was $67,000 of which $18,358 was allocated to
the Company as part of the Grosso Group fees.



                                     - 30 -
<PAGE>


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   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.



                                     - 31 -
<PAGE>



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.

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.



                                     - 32 -
<PAGE>


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

                               TERMS OF REFERENCE
                                     FOR THE
                                 AUDIT COMMITTEE
General

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, Minni 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.

The Audit Committee's Charter is attached hereto as Exhibit 4.72.

EMPLOYEES

As of December  31, 2007,  the Company  uses the  services of the Grosso  Group,
which had 23 full-time employees and 2 part-time employees. The Company also has
two part-time employees in Argentina and Joseph Grosso through the contract with
Oxbow. See "Item 6. Directors,  Senior Management and Employees - Compensation -
Management  Contracts".  Exploration  activities  are conducted by  consultants,
laborers and technicians hired for the duration of the exploration program.



                                     - 33 -
<PAGE>


SHARE OWNERSHIP

As of February 29, 2008,  the Company had  52,132,064  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 29,
2008.

<TABLE>
<CAPTION>

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


Common Stock         Joseph Grosso                                         1,744,667(2)               3.3%
Common Stock         Nikolaos Cacos                                          188,151(3)               0.4%
Common Stock         Sean Hurd                                               310,000(4)               0.6%
Common Stock         Gerald Carlson (former director)                        252,500(5)               0.6%
Common Stock         David Terry                                             222,000(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                                             195,000(9)               0.4%
Common Stock         David Horton                                            160,300(10)              0.3%
Common Stock         Leonard Harris                                          105,000(11)              0.2%
--------------------------------------------------------------------------------------------------------------------

Common Stock         Officers and Directors (as a group, 10 persons)       3,682,618(12)              7.6%
--------------------------------------------------------------------------------------------------------------------
</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 52,132,064  shares of common stock  outstanding  as
     February 29, 2008.
(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)  703,219 shares held by Mr. Grosso;
     (b)  348,448 shares held by Oxbow (50%);
     (c)  75,000 Options held by Mr. Grosso's wife (50%)
     (d)  548,000  Options held by Mr.  Grosso to acquire  548,000  shares.  See
          "Item  6.  Directors,  Senior  Management  and  Employees  -  Options,
          Warrants and Other Rights to Acquire Securities - Stock Options."; and
     (e)  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  50,000  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."
(6)  Includes  22,000  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  200  shares and  160,000  options  held by Mr.  Horton to acquire
     160,000 shares. Mr. Horton also holds 100 Warrants to acquire an additional
     100 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."



                                     - 34 -
<PAGE>


(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."
(13) Effective  March  19,  2008 Mr.  Idziszek  tendered  his  resignation  as a
     director.

OPTIONS, WARRANTS AND OTHER RIGHTS TO ACQUIRE SECURITIES

As of February  29,  2008,  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 7,834,404 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,  June 14,  2006 and  December  4, 2007,
respectively,  the 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 or by the  Compensation  Committee of the Company's  Board of
Directors  consisting of not less than two of its members. The Stock Option Plan
is currently administered by the Compensation 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  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.



                                     - 35 -
<PAGE>


Options  granted  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 Compensation  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  Compensation  Committee shall make  adjustments to the Stock
Option Plan and to the options  then  outstanding  under it as the  Compensation
Committee  determines to be appropriate and equitable  under the  circumstances,
unless  the  Compensation  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  29,  2007,  the Company  has issued  4,330,000  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                      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

G. Carlson                Former 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                     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
</TABLE>



                                     - 36 -
<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>

E. Grosso(2)              Consultant                     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        $3.1 0     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

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                  Consultant                     10,000        $3.10      Mar. 24/09          $3.10
                                                          5,000        $4.16      Mar. 16/10          $4.16

C. Sandoval               Consultant                     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

M. De Simone              Director (of                   80,000        $3.10      Mar. 24/09          $3.10
                          subsidiary-exempted
                          from reporting)

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

</TABLE>

                                     - 37 -
<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>

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

F. Riedl                  Consultant                     30,000        $4.16      Mar. 16/10          $4.16

A. Baertl                 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               Officer                        10,000        $3.21      Jun. 22/11          $3.21

B. Dubowska               Consultant                      5,000        $3.21      Jun. 22/11          $3.21

G. Myers                  Consultant                    100,000        $0.47      Oct. 23/12          $0.47
----------------------------------------------------------------------------------------------------------------
TOTAL                                                 4,330,000
                                                      =========
----------------------------------------------------------------------------------------------------------------
</TABLE>

Officers and directors, as a group (10 persons)(4)    2,193,000
                                                      =========

(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.

WARRANTS AND OTHER COMMITMENTS

As of February  29, 2008,  there were  3,271,070  non-transferable  common share
purchase warrants exercisable.


As of February 29, 2008,  the  Company's  officers  and  directors,  as a group,
including  entities  controlled or under  significant  influence of officers and
directors of the Company,  held 100  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.


                                     - 38 -
<PAGE>



ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

PRINCIPAL HOLDERS OF VOTING SECURITIES

To the best of the Company's  knowledge,  the following table sets forth certain
information  regarding ownership of the Company's common shares by the Company's
major shareholders as of February 29, 2008.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                                  Shares and Rights
                                                                    Beneficially
 Title of Class    Name and Address of Owner                    Owned or Controlled (1)       Percent of Class (1)
-----------------------------------------------------------------------------------------------------------------
<S>              <C>                                               <C>                            <C>

     Common        Exploration Capital Partners 2006                  5,000,000                      9.6%
      Stock        Limited Partnership (2)
                   7770 El Camino Real
                   Carlsbad, California 92009
                   Citizenship: California
-----------------------------------------------------------------------------------------------------------------

                   Resource Investment Management                     5,000,000                      9.6%
                   Corporation (2)
                   7770 El Camino Real
                   Carlsbad, California 92009
                   Citizenship: California
-----------------------------------------------------------------------------------------------------------------

                   Rule Family Trust udt 12/17/98 (2)                 5,000,000                      9.6%
                   7770 El Camino Real
                   Carlsbad, California 92009
                   Citizenship: California
-----------------------------------------------------------------------------------------------------------------

                   Arthur Richards Rule (2)                           5,000,000                      9.6%
                   7770 El Camino Real
                   Carlsbad, California 92009
                   Citizenship: California
-----------------------------------------------------------------------------------------------------------------
</TABLE>

NOTES:

(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common  stock  through  the  exercise of  outstanding  options or
     warrants within 60 days from February 29, 2008, 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 52,132,064  shares of common stock  outstanding as of February 29,
     2008.
(2)  These shares are held by affiliated entities as follows: (i) by Exploration
     Capital Partners 2006 Limited  Partnership,  as the direct beneficial owner
     of  5,000,000  Common  Shares of the Issuer;  (ii) by  Resource  Investment
     Management  Corporation  by virtue of its  position  as General  Partner of
     Exploration  Capital Partners 2006 Limited  Partnership;  (iii) by the Rule
     Family Trust udt 12/17/98 by virtue of its indirect  ownership  and control
     of Exploration  Capital Partners 2006 Limited Partnership (as owner of 100%
     of Resource Investment Management Corporation); and (iv) by Arthur Richards
     Rule  by  virtue  of his  positions  with  Resource  Investment  Management
     Corporation  and ownership  interest in the Rule Family Trust udt 12/17/98.
     Mr.  Rule is  President  and a  Director  of RIMC and,  with his  wife,  is
     co-Trustee  of the Rule  Family  Trust  udt  12/17/98,  which  owns 100% of
     Resource Investment Management Corporation.

CHANGES IN OWNERSHIP BY MAJOR SHAREHOLDERS

To the  best of the  Company's  knowledge  there  have  been no  changes  in the
ownership of the Company's shares other than disclosed herein.



                                     - 39 -
<PAGE>



SHARES HELD IN THE UNITED STATES

As of February 29, 2008, 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 Company's  52,013,065  outstanding  shares at February 29,
2008).

CHANGE OF CONTROL

As of February 29, 2008,  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.

RELATED PARTY TRANSACTIONS

Other than as disclosed  below,  from January 1, 2007 through February 29, 2008,
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.  The Company  engages Grosso Group  Management Ltd. (the "Grosso Group")
         to provide services and facilities to the Company.  The Grosso Group is
         a private company owned by the Company,  Golden Arrow,  Amera,  Astral,
         GPE and Blue  Sky,  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  2007,  the Company  incurred  fees of  $349,143  (2006:
         $724,902;   2005:  $730,802)  to  the  Grosso  Group:  $330,305  (2006:
         $764,115;  2006:  $764,012 ) was paid in twelve  monthly  payments  and
         $18,838 (2006:  $39,213 included in amounts  receivable;  2005: $33,210
         included in amounts  receivable)  is included in accounts  payable 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
         (2006:  $205,000;  2005:  $205,000) deposit to the Grosso Group for the
         purchase of equipment  and  leasehold  improvements  and for  operating
         working capital.  Effective February 29, 2008, GPE withdrew from Grosso
         Group.  The  Administration  Services  Agreement may be terminated by a
         shareholder  company after January 1, 2007, upon 30 days written notice
         to the Grosso Group.  See "Item 6.  Directors,  Senior  Management  and
         Employees - Compensation - Management Contracts".

     2.  The Company is party to an agreement with Oxbow,  pursuant to which Mr.
         Grosso,  an officer and  director of the  Company,  provides  executive
         services  to the  Company.  During the fiscal year ended  December  31,
         2007, Oxbow was paid $250,000 (2006 - $350,667,  2005 - $102,000).  See
         "Item 6.  Directors,  Senior  Management and Employees - Compensation -
         Management Contracts".

     3.  On July 7, 2004, the Company entered into an indemnity  agreement,  for
         any costs or losses  incurred  by Golden  Arrow in respect of the legal
         action commenced by Minera Aquiline Argentina S.A. against the Company.
         See "Item 8. Financial Information - Legal Proceedings."

     4.  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 and 2006,  the
         balance of the existing  lease term,  and  recovered  the 2006 and 2005
         rent it had paid Effective  January 1,



                                     - 40 -
<PAGE>

         2007  Beauregard  and  Grosso  Group  executed  a lease for the  office
         premises. During the fiscal years ended December 31, 2006 and 2005, the
         Company paid rent to Beauregard in the amount of $141,203 and $128,722,
         respectively.  During the year ended  December 31, 2007,  the Company's
         rent  allocated  from the  Grosso  Group  was  $32,966.  - See "Item 4.
         Information  on the  Company  -  Properties,  Plants  and  Equipment  -
         Principal Office".

     5.  As of January  2005,  Mr.  Terry  provides  executive  services  to the
         Company  as a  consultant  of 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.  On July 9,
         2007 the  Board  accepted  the  recommendation  from  the  Compensation
         Committee  to increase  Mr.  Terry's  monthly fee to $16,667  ($200,000
         annually)  effective  July 1, 2007.  During the year ended December 31,
         2007,  Mr.  Terry's  total  compensation  from  the  Grosso  Group  was
         $175,000,  of which $24,579 was allocated to the Company.  See "Item 6.
         Directors,  Senior Management and Employees - Compensation - Management
         Contracts."

     6.  As of January 2005, Mr. Lang provides executive services to the Company
         as an employee of the Grosso Group.  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.  During the year ended December 31, 2007,
         Mr.  Lang's  total  compensation  from the Grosso Group was $151,000 of
         which  $59,834 was  allocated to the Company.  See "Item 6.  Directors,
         Senior Management and Employees - Compensation - Management Contracts."

     7.  As of January  2005,  Mr.  Cacos  provides  executive  services  to the
         Company  as a  consultant  of the Grosso  Group.  During the year ended
         December 31, 2007, Mr. Cacos's total compensation from the Grosso Group
         was  $22,500  (2006 -  $22,500,  2005 -  $22,500),  of  which  $938 was
         allocated to the Company (2006 - $9,225, 2005 - $14,862) as part of the
         Grosso  Group  fees  for the  year.  See  "Item  6.  Directors,  Senior
         Management and Employees - Compensation - Management Contracts."

     8.  As of January 2005, Mr. Hurd provides executive services to the Company
         as an employee of the Grosso Group.  During the year ended December 31,
         2007, Mr. Hurd's total  compensation from the Grosso Group was $120,000
         (2006 - $112,000,  2005 - $96,000),  of which  $25,497 was allocated to
         the  Company  (2006 - $45,920,  2005 -  $72,216)  as part of the Grosso
         Group fees for the year. See "Item 6. Directors,  Senior Management and
         Employees - Compensation - Management Contracts."

     9.  On February 14, 2006 and effective January 1, 2006, the Company 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.  In 2007,  the Company  paid RSA $66,050  (2006 -
         $68,350). This agreement was terminated by mutual agreement,  effective
         December 31, 2007.


                                     - 41 -
<PAGE>



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

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

FINANCIAL STATEMENTS

DESCRIPTION                                                              PAGE
-----------                                                           ----------
Consolidated Financial Statements for the Years Ended
     December 31, 2007, 2006 and 2005.                                F-1 - F-27

SIGNIFICANT CHANGES

There are no  significant  changes to report between the year ended December 31,
2007 and the date of this annual report.

LEGAL PROCEEDINGS

There are no legal proceedings as at February 29, 2008.

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 2007 through February 2008.

          TSX VENTURE EXCHANGE (OR PREDECESSOR) STOCK TRADING ACTIVITY



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

December 31, 2007            39,182,400                $1.20           $0.355
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



                                     - 42 -
<PAGE>



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

December 31, 2007             3,506,800                $0.60           $0.39
September 30, 2007            5,725,900                $0.51           $0.42
June 30, 2007                25,684,600                $1.20           $.355
March 31, 2007                4,265,100                $0.95           $0.57
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


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

February 29, 2008             1,801,100                $0.45           $0.365
January 31, 2008              2,305,700                $0.425          $0.37
December 31, 2007             1,696,600                $0.51           $0.39
November 30, 2007               818,400                $0.55           $0.45
October 31, 2007                991,800                $0.60           $0.43
September 30, 2007              866,800                $0.485          $0.43


           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, 2007            18,219,300                $1.30           $0.25
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


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

December 31, 2007             2,080,100                $0.62           $0.25
September 30, 2007            2,863,800                $0.52           $0.38
June 30, 2007                 9,374,600                $1.30           $0.31
March 31, 2007                3,900,800                $.83            $0.48
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


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

February 29, 2008             1,158,000                $0.45           $0.36
January 31, 2008                787,100                $0.44           $0.31
December 31, 2007               710,900                $0.50           $0.25
November 30, 2007               447,800                $0.58           $0.44
October 31, 2007                921,400                $0.62           $0.42
September 30, 2007              648,000                $0.48           $0.40




                                     - 43 -
<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.

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.

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.


                                     - 44 -
<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.



                                     - 45 -
<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 52,132,064  common shares were issued and  outstanding as of February
29, 2008.  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 February 29, 2008 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.



                                     - 46 -
<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.

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.

SPECIAL MAJORITY FOR RESOLUTIONS

The Company's  Articles  require a majority of two-thirds of the votes cast on a
resolution.

INDEMNITY PROVISION

The  Company's  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.

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

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 an interest.


                                     - 47 -
<PAGE>


MATERIAL CONTRACTS

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

     1.  The Company is party to an agreement  with Oxbow,  effective as of July
         1, 1999,  subsequently  amended on May 1, 2006,  pursuant  to which Mr.
         Grosso  provides  executive  services as President and Chief  Executive
         Officer of the Company.  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 Company's 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. During the fiscal year
         ended December 31, 2007, Oxbow was paid $250,000 (2006 - $350,667, 2005
         - $102,000). See "Item 6. Directors,  Senior Management and Employees -
         Compensation - Management Contracts".

     2.  By  agreement  dated  April  1,  2004,  between  the  Company  and  KGE
         Management Ltd. ("KGE"), a private company owned by Mr. Carlson, former
         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, 2007, the Company paid $Nil to KGE (2006
         - $3,300 2005 - $24,000).

     3.  In July 2004, 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."

     4.  Pursuant to the terms of an  Administration  Services  Agreement  dated
         January 1,  2005,  the  Company  engages  the  Grosso  Group to provide
         services and  facilities to the Company.  The Grosso Group is a private
         company owned by the Company,  Golden Arrow, Amera,  Astral, Gold Point
         and Blue Sky, 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 2007,  the Company  incurred fees of $349,143  (2006:  $724,902;
         2005:  $730,802)  to the  Grosso  Group:  $330,305  was paid in  twelve
         monthly payments (2006:  $764,115;  2006:  $764,012) and $18,838 (2006:
         $39,213  included  in amounts  receivable;  2005:  $33,210  included in
         amounts  receivable)  is included in accounts  payable 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 deposit to the
         Grosso Group for the purchase of equipment and  leasehold  improvements
         and for operating  working capital (2006:  $205,000;  2005:  $205,000).
         Effective February 29, 2008, Gold Point withdrew from Grosso Group. The
         Administration  Services  Agreement  may be terminated by a shareholder
         company  after  January 1,  2007,  upon 30 days  written  notice to the
         Grosso Group. See "Item 6. Directors, Senior Management and Employees -
         Compensation - Management Contracts".

     5.  As of January  2005,  Mr.  Terry  provides  executive  services  to the
         Company  as a  consultant  of 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.  On July 9,
         2007 the  Board  accepted  the  recommendation  from  the  Compensation
         Committee  to increase  Mr.  Terry's  monthly fee to $16,667



                                     - 48 -
<PAGE>


         ($200,000  annually)  effective  July 1,  2007.  During  the year ended
         December 31, 2007, Mr. Terry's total compensation from the Grosso Group
         was $175,000,  of which $24,579 was allocated to the Company. See "Item
         6.  Directors,   Senior  Management  and  Employees  -  Compensation  -
         Management Contracts."

     6.  As of January 2005, Mr. Lang provides executive services to the Company
         as an employee of the Grosso Group.  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.  During the year ended December 31, 2007,
         Mr.  Lang's  total  compensation  from the Grosso Group was $151,000 of
         which  $59,834 was  allocated to the Company.  See "Item 6.  Directors,
         Senior Management and Employees - Compensation - Management Contracts."

     7.  As of January  2005,  Mr.  Cacos  provides  executive  services  to the
         Company  as a  consultant  of the Grosso  Group.  During the year ended
         December 31, 2007, Mr. Cacos's total compensation from the Grosso Group
         was  $22,500  (2006 -  $22,500,  2005 -  $22,500),  of  which  $938 was
         allocated to the Company (2006 - $9,225, 2005 - $14,862) as part of the
         Grosso  Group  fees  for the  year.  See  "Item  6.  Directors,  Senior
         Management and Employees - Compensation - Management Contracts."

     8.  As of January 2005, Mr. Hurd provides executive services to the Company
         as an employee of the Grosso Group.  During the year ended December 31,
         2007, Mr. Hurd's total  compensation from the Grosso Group was $120,000
         (2006 - $112,000,  2005 - $96,000),  of which  $25,497 was allocated to
         the  Company  (2006 - $45,920,  2005 -  $72,216)  as part of the Grosso
         Group fees for the year. See "Item 6. Directors,  Senior Management and
         Employees - Compensation - Management Contracts."

     9.  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 and 2006,  the
         balance of the existing  lease term,  and  recovered  the 2006 and 2005
         rent it had paid Effective  January 1, 2007 Beauregard and Grosso Group
         executed a lease for the office premises. During the fiscal years ended
         December 31, 2006 and 2005,  the Company paid rent to Beauregard in the
         amount of $141,203 and  $128,722,  respectively.  During the year ended
         December  31,  2007,  the  Company's  rent  from the  Grosso  Group was
         $235,471, of which $32,966 was allocated to the Company. - See "Item 4.
         Information  on the  Company  -  Properties,  Plants  and  Equipment  -
         Principal Office".

     10. On February 14, 2006 and effective January 1, 2006, the Company 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.  In 2007,  the Company  paid RSA $66,050  (2006 -
         $68,350). This agreement was terminated by mutual agreement,  effective
         December 31, 2007.

     11. On October 18, 2006, the Company and Aquiline  entered into 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  principal  terms  and  conditions  of  the  Interim
         Agreement were as follows:


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

         (ii)     the  Company  and  Aquiline  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 and

         (iii)    in the event that the Company was unsuccessful on appeal,  the
                  Company was to be paid such $18,500,000 amount



                                     - 49 -
<PAGE>


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

         The Company's appeal of this judgment was heard by the British Columbia
         Court of  Appeal  between  April 10 and April  12,  2007.  The Court of
         Appeal  dismissed the Company's  appeal and released  their reasons for
         judgment on June 7, 2007. The Company filed an application for leave to
         appeal to the Supreme  Court of Canada in October 2007. On December 20,
         2007,  the Supreme Court of Canada denied the  Company's  appeal.  This
         brought the lawsuit to a close. As a result,  the Navidad  property has
         been  transferred  to  Aquiline.  The Company was paid  $18,500,000  as
         consideration  for these assets.  The Company received the $7.5 million
         held in trust on January 8, 2008, plus interest that had accrued in the
         amount of  $341,380.  The $11 million  balance was received on February
         11, 2008. "Item 4. Information on the Company - History and Development
         of the Company."

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.

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:



                                     - 50 -
<PAGE>


(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:

         (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.



                                     - 51 -
<PAGE>


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.

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.



                                     - 52 -
<PAGE>


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 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.



                                     - 53 -
<PAGE>


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.

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.


                                     - 54 -
<PAGE>


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.


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

DISCLOSURE 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, 2007. As a result
of a material weakness identified and described in the accompanying Management's
Report on Internal Control over Financial  Reporting,  Messrs.  Grosso and Lang,
have  concluded  that the  design  and  operation  of the  Company's  disclosure
controls and procedures were not effective at the time the material weakness was
identified.

The material weakness occurred because the Company did not initially reflect the
impact of the  Realization  of Navidad  interest under U.S. GAAP as set forth in
Note 11 to the Company's audited financial statements. The material weakness was
limited solely to the Note 11 U.S. GAAP reconciliation and did not impact in any
way the Company's  financial  statements  prepared in  accordance  with Canadian
GAAP.  This material  weakness has since been corrected and does not exist as of
the date of this filing.



                                     - 55 -
<PAGE>


MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company's  management,  including Mr. Grosso,  the Company's Chief Executive
Officer, and Mr. Lang, the Company's Chief Financial Officer, is responsible for
establishing  and  maintaining  adequate  internal  control  over the  Company's
internal  control  over  financial  reporting,  as such term is  defined in Rule
13a-15(f) under the Exchange Act. The Company's  internal control over financial
reporting is a process designed to provide  reasonable  assurance  regarding the
reliability of financial  reporting and the preparation and fair presentation of
financial statements for external purposes in accordance with generally accepted
accounting  principles.  Because of its inherent  limitations,  internal control
over  financial  reporting  may  not  prevent  or  detect  misstatements.  Also,
projections of any evaluation of  effectiveness to future periods are subject to
the risk that controls may become  inadequate  because of changes in conditions,
or  that  the  degree  of  compliance   with  the  policies  or  procedures  may
deteriorate.

The Company's  management,  (with the participation of Mr. Grosso, the Company's
Chief Executive Officer,  and Mr. Lang, the Company's Chief Financial  Officer),
conducted an evaluation of the  effectiveness of the Company's  internal control
over financial  reporting as of December 31, 2007.  This evaluation was based on
the criteria set forth in Internal  Control-Integrated  Framework  issued by the
Committee of Sponsoring Organizations of the Treadway Commission.  Based on this
evaluation,   management   identified  a  material   weakness  relating  to  the
preparation  and review of the US GAAP  reconciliation  note and concluded  that
because there was a material weakness in the Company's  internal  controls,  its
internal  control over  financial  reporting  was not  effective at the time the
material weakness was identified.

The material weakness occurred because the Company did not initially reflect the
impact of the  Realization  of Navidad  interest under U.S. GAAP as set forth in
Note 11 to the Company's audited financial statements. The material weakness was
limited solely to the Note 11 U.S. GAAP reconciliation and did not impact in any
way the Company's  financial  statements  prepared in  accordance  with Canadian
GAAP.  This material  weakness has since been corrected and does not exist as of
the date of this filing.

This  Annual  Report  does not include an  attestation  report of the  Company's
independent  auditors  regarding  internal  control  over  financial  reporting.
Management's report was not subject to attestation by the Company's  independent
auditors  pursuant  to  temporary  rules of the SEC that  permit the  Company to
provide only management's report in this Annual Report.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the fiscal year ended  December  31,  2007,  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.  Mr Horton is an  independent
director and serves on the Company's audit committee.


ITEM 16B.  CODE OF BUSINESS CONDUCT AND ETHICS.
--------------------------------------------------------------------------------
The Board of Directors of 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.


                                     - 56 -
<PAGE>


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.

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.


                                     - 57 -
<PAGE>


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 Audit 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 the Company's  Code of Business  Conduct and
Ethics.


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

AUDIT FEES

For the fiscal year ended  December  31,  2007,  the  Company's  auditor  billed
approximately  $39,000,  and for the fiscal year ended  December 31,  2006,  the
Company's  auditor billed  approximately  $44,500 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, 2007 and 2006,  the  Company's  auditor
billed $Nil and billed $58,303, 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, 2007 and 2006,  the  Company's  auditor
billed $Nil and billed $14,232, 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.



                                     - 58 -
<PAGE>


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.


                                    PART III

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

See pages F-1 though F-27.


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

Not applicable.

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

ITEM 19.  EXHIBITS.

    EXHIBIT
     NUMBER      DESCRIPTION

      1.1        Notice of Articles (8)
      1.2        Articles (12)
      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)



                                     - 59 -
<PAGE>


    EXHIBIT
     NUMBER      DESCRIPTION


      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 Ltd) 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)
     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)



                                     - 60 -
<PAGE>


    EXHIBIT
     NUMBER      DESCRIPTION


     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)
     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)


                                     - 61 -
<PAGE>


    EXHIBIT
     NUMBER      DESCRIPTION


     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)
     4.75        Interim Project  Development  Agreement between IMA Exploration
                 Inc. and Aquiline Resources Inc. dated October 18, 2006.(11)
     4.76        Amended and restated Management Agreement between IMA and Oxbow
                 dated May 1, 2006
      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

(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.
(12) Previously  filed as an exhibit to the Company's Annual Report on Form 20-F
     filed April 2, 2007. File Number 01-32558.



                                     - 62 -
<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 25, 2008           /s/ Arthur Lang
                                       -------------------------------------
                                       Arthur Lang,
                                       Chief Financial Officer, and Director



                                     - 63 -
<PAGE>







                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2007, 2006 AND 2005
                         (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  judgment.  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 28, 2008




                                      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. (the
"Company") as at December 31, 2007 and 2006 and the  consolidated  statements of
loss,  comprehensive  loss and deficit,  cash flows and changes in shareholders'
equity for each of the years in the  three-year  period ended December 31, 2007.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with 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, 2007
and 2006 and the  results of its  operations  and its cash flows for each of the
years in the  three-year  period  ended  December  31, 2007 in  accordance  with
Canadian generally accepted accounting principles.


(signed) PricewaterhouseCoopers LLP


CHARTERED ACCOUNTANTS

Vancouver, B.C.
March 19, 2008


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, 2007 AND 2006
                         (Expressed in Canadian Dollars)


                                                       2007            2006
                                                         $               $
                                     ASSETS

CURRENT ASSETS
Cash                                                    183,628         391,420
Short-term investments (Note 4)                       6,813,462       8,500,000
Other receivables, prepaids and deposits (Note 8)       627,400         405,205
Navidad interest (Notes 2 and 13)                    18,500,000               -
                                                   ------------    ------------

                                                     26,124,490       9,296,625

NAVIDAD INTEREST (Note 2)                                     -      17,949,521
                                                   ------------    ------------
                                                     26,124,490      27,246,146
                                                   ============    ============


                                   LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 8)       105,724         236,612
                                                   ------------    ------------

                              SHAREHOLDERS' EQUITY

SHARE CAPITAL (Note 6)                               58,753,501      58,664,727

WARRANTS (Note 6)                                     1,281,946       1,281,946

CONTRIBUTED SURPLUS (Note 7)                          6,157,412       6,152,265

DEFICIT                                             (40,174,093)    (39,089,404)
                                                   ------------    ------------
                                                     26,018,766      27,009,534
                                                   ------------    ------------
                                                     26,124,490      27,246,146
                                                   ============    ============

NATURE OF OPERATIONS (Note 1)

NAVIDAD INTEREST (Notes 2 and 13)

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 LOSS, COMPREHENSIVE LOSS AND DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)


<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

EXPENSES

Administrative and management services                  209,201         461,553         294,828
Corporate development and investor relations            167,817         328,779         496,538
General exploration                                      99,589         186,572          55,914
Office and sundry                                       238,220         181,913         148,015
Professional fees                                     1,022,321       1,124,144       2,212,190
Rent, parking and storage                                49,023          96,263          72,791
Salaries and employee benefits                          244,337         652,530         585,560
Stock-based compensation (Note 6)                        34,421         393,120       1,800,000
Telephone and utilities                                  12,053          17,432          26,648
Transfer agent and regulatory fees                       80,122         103,457         199,715
Travel and accommodation                                 35,230          93,392         256,035
Navidad holding costs (Note 2)                          109,666         312,349               -
                                                   ------------    ------------    ------------
                                                      2,302,000       3,951,504       6,148,234
                                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS                              (2,302,000)     (3,951,504)     (6,148,234)
                                                   ------------    ------------    ------------
OTHER INCOME (EXPENSE)
Foreign exchange gain (loss)                             (8,324)         (2,865)        232,954
Interest and other income                               675,156         373,009         150,406
Navidad recovery (Note 2)                               550,479               -               -
                                                   ------------    ------------    ------------
                                                      1,217,311         370,144         383,360
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR             (1,084,689)     (3,581,360)     (5,764,874)

DEFICIT - BEGINNING OF YEAR                         (39,089,404)    (35,508,044)    (29,597,304)

DISTRIBUTION OF EQUITY ON SPIN-OFF OF ASSETS
   TO GOLDEN ARROW RESOURCES CORPORATION                      -               -        (145,866)
                                                   ------------    ------------    ------------
DEFICIT - END OF YEAR                               (40,174,093)    (39,089,404)    (35,508,044)
                                                   ============    ============    ============


BASIC AND DILUTED LOSS PER COMMON SHARE                  $(0.02)         $(0.07)         $(0.12)
                                                   ============    ============    ============
WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                         52,099,787      51,263,575      46,197,029
                                                   ============    ============    ============
</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, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)


<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Loss for the year                                    (1,084,689)     (3,581,360)     (5,764,874)
Items not affecting cash
   Stock-based compensation                              34,421         393,120       1,800,000
   Navidad recovery (Note 2)                           (550,479)              -               -
                                                   ------------    ------------    ------------
                                                     (1,600,747)     (3,188,240)     (3,964,874)
Change in non-cash working capital
   balances(Note 12)                                   (353,083)       (596,912)        115,256
                                                   ------------    ------------    ------------
                                                     (1,953,830)     (3,785,152)     (3,849,618)
                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Expenditures on mineral properties and
   deferred costs                                             -      (4,491,524)     (7,025,492)
Increase (decrease) in short-term investments         1,686,538        (920,000)     (3,280,000)
Proceeds from sale of equipment                               -               -          46,589
                                                   ------------    ------------    ------------
                                                      1,686,538      (5,411,524)    (10,258,903)
                                                   ------------    ------------    ------------
FINANCING ACTIVITIES

Issuance of common shares                                59,500      10,308,450      14,215,165
Share issuance costs                                          -        (871,749)       (736,737)
                                                   ------------    ------------    ------------
                                                         59,500       9,436,701      13,478,428
                                                   ------------    ------------    ------------
INCREASE (DECREASE) IN CASH                            (207,792)        240,025        (630,093)

CASH TRANSFERRED TO GOLDEN ARROW
   RESOURCES CORPORATION                                      -               -        (145,866)
                                                   ------------    ------------    ------------
NET INCREASE (DECREASE) IN CASH                        (207,792)        240,025        (775,959)

CASH - BEGINNING OF YEAR                                391,420         151,395         927,354
                                                   ------------    ------------    ------------
CASH - END OF YEAR                                      183,628         391,420         151,395
                                                   ============    ============    ============

</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 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         (Expressed in Canadian Dollars)


<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

SHARE CAPITAL

Balance at beginning of year                         58,664,727      50,414,672      36,982,307
Private placements                                            -      10,027,500      10,000,020
Warrant valuation                                             -      (1,298,981)              -
Exercise of options                                      59,500         280,950         577,000
Contributed surplus reallocated on the
   exercise of options                                   29,274          95,300         131,270
Exercise of warrants                                          -               -       3,784,011
Proceeds collected and paid on behalf of
   Golden Arrow shares                                        -               -        (145,866)
Share issue costs                                             -        (854,714)       (914,070)
                                                   ------------    ------------    ------------
Balance at end of year                               58,753,501      58,664,727      50,414,672
                                                   ------------    ------------    ------------
WARRANTS

Balance at beginning of year                          1,281,946               -               -
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 at end of year                                1,281,946       1,281,946               -
                                                   ------------    ------------    ------------
CONTRIBUTED SURPLUS

Balance at beginning of year                          6,152,265       5,854,445       3,428,382
Contributed surplus as a result of
   stock options granted                                 34,421         393,120       2,380,000
Warrant valuation from agent's warrants granted               -               -         177,333
Contributed surplus reallocated on the
   exercise of stock options                            (29,274)        (95,300)       (131,270)
                                                   ------------    ------------    ------------
Balance at end of year                                6,157,412       6,152,265       5,854,445
                                                   ------------    ------------    ------------

DEFICIT

Balance at beginning of year                        (39,089,404)    (35,508,044)    (29,597,304)
Loss for the year                                    (1,084,689)     (3,581,360)     (5,764,874)
Distribution of equity on spin-off of assets to
   Golden Arrow Resources Corporation                         -               -        (145,866)
                                                   ------------    ------------    ------------

Balance at end of year                              (40,174,093)    (39,089,404)    (35,508,044)
                                                   ------------    ------------    ------------

TOTAL SHAREHOLDERS' EQUITY                           26,018,766      27,009,534      20,761,073
                                                   ============    ============    ============
</TABLE>



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







                                      F-7
<PAGE>


                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



1.       NATURE OF OPERATIONS

         IMA  Exploration  Inc. (the  "Company") is a natural  resource  company
         engaged in the business of acquisition,  exploration and development of
         mineral  properties.  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, 2007 the Company had no
         mineral property interests.  The Company considers that it has adequate
         resources to maintain its core operations for the next fiscal year.


2.       NAVIDAD INTEREST

         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."

         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 were 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.


                                      F-8
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



2.       NAVIDAD INTEREST (continued)

         The effective date of the transfer of the Navidad  project was November
         16, 2006.

         The Company's appeal of this judgment was heard by the British Columbia
         Court of  Appeal  between  April 10 and April  12,  2007.  The Court of
         Appeal  dismissed the Company's  appeal and released  their reasons for
         judgment on June 7, 2007.

         The  Company  filed an  application  for leave to appeal to the Supreme
         Court of Canada in October 2007. On December 20, 2007 the Supreme Court
         of Canada  denied the Company's  appeal.  This brought the lawsuit to a
         close. The Navidad property has been transferred to Aquiline.

         As at December  31, 2007,  the Company has recorded a Navidad  interest
         balance of $18,500,000, the components of which are as follows:

                                                                         $

                  Mineral properties and deferred costs (i)          17,763,521
                  Marketable securities (ii)                            186,000
                                                                   ------------
                                                                     17,949,521
                  Navidad recovery (iii)                                550,479
                                                                   ------------
                  Navidad interest                                   18,500,000
                                                                   ============

         (i)      The mineral property and deferred costs represent the carrying
                  value of the acquisition and exploration costs the Company has
                  incurred in the development of the Navidad project.

         (ii)     Marketable  securities  represents  the carrying  value of the
                  common  shares  of  publicly  traded   companies  the  Company
                  received as partial consideration for entering into option and
                  sale agreements for certain of its non-core  mineral  property
                  holdings relating to the Navidad Project.  Accordingly,  these
                  marketable  securities were subject to transfer to Aquiline in
                  relation to the July 2006 court order.

         (iii)    The Company has recorded an additional recovery of $550,479 to
                  bring  the  total  Navidad  interest  amount   recoverable  to
                  $18,500,000.

         The Company  received the $7.5 million held in trust on January 8, 2008
         plus interest  that had accrued in the amount of $341,380.  The balance
         of $11 million was received on February 11, 2008.

         The  Company  expensed  Navidad  holding  costs of $109,666 in the year
         ended December 31, 2007.  These are costs the Company incurred in order
         to maintain basic operations in Argentina subsequent to the transfer of
         control of the Navidad project to Aquiline.


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.


                                      F-9
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         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 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.

         CASH AND CASH EQUIVALENTS

         Cash and cash  equivalents  include cash and money market  investments,
         maturing less than 3 months from the date of initial investment.

         SHORT-TERM INVESTMENTS

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

         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.

         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,  any remaining balance of
         the payments received is recorded as a gain on option or disposition of
         mineral property.


                                      F-10
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         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, 2007 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.

         INCOME TAXES

         The  Company  uses the asset and  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.



                                      F-11
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         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 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.

         RECENT ACCOUNTING PRONOUNCEMENTS

         Effective  January 1, 2007,  the  Company  adopted  the  following  new
         accounting  standards  issued by the  Canadian  Institute  of Chartered
         Accountants ("CICA").

         (a)      Section  3855,   Financial   Instruments  -  Recognition   and
                  Measurement   and  Section  3861,   Financial   Instruments  -
                  Disclosure  and  Presentation,   prescribe  the  criteria  for
                  recognition and  presentation of financial  instruments on the
                  balance  sheet and the  measurement  of financial  instruments
                  according to prescribed  classifications.  These sections also
                  address how financial  instruments are measured  subsequent to
                  initial   recognition   and  how  the  gains  and  losses  are
                  recognized.

                  The Company is required to designate its financial instruments
                  into one of the following five  categories:  held for trading;
                  available for sale; held to maturity;  loans and  receivables;
                  and other financial liabilities. All financial instruments are
                  to be initially measured at fair value.  Financial instruments
                  classified  as held  for  trading  or  available  for sale are
                  subsequently  measured  at fair  value with any change in fair
                  value recorded in net earnings and other comprehensive income,
                  respectively. All other financial instruments are subsequently
                  measured at amortized cost.

                  The  Company  has  designated  its  financial  instruments  as
                  follows:

                  (i)     Cash and  short-term  investments  are  classified  as
                          "Available-for-sale".  Due to their short-term nature,
                          their carrying value is equal to their fair value.
                  (ii)    Amounts  receivable  and  deposits are  classified  as
                          "Loans and  Receivables".  These financial  assets are
                          recorded at values that  approximate  their  amortized
                          cost using the effective interest method.
                  (iii)   Accounts   payable   and   accrued   liabilities   are
                          classified  as "Other  Financial  Liabilities".  These
                          financial  liabilities  are  recorded  at values  that
                          approximate  their  amortized cost using the effective
                          interest method.

                  As a result of  adopting  Section  3855,  on  January  1, 2007
                  interest accrued from short-term  investments in the amount of
                  $65,075 was reclassified from amounts receivable, prepaids and
                  deposits to short-term investments.

         (b)      Section 1530, Comprehensive Income, introduces a new financial
                  statement  "Statement  of  Comprehensive  Income" and provides
                  guidance for the reporting and display of other  comprehensive
                  income.  Comprehensive  income represents the change in equity
                  of an enterprise  during a period from  transactions and other
                  events  arising from  non-owner  sources  including  gains and
                  losses  arising  on  translation  of  self-sustaining  foreign
                  operations,  gains and  losses  from  changes in fair value of
                  available  for sale  financial  assets and changes in the fair
                  value  of  the   effective   portion  of  cash  flow   hedging
                  instruments.  The Company has not recognized  any  adjustments
                  through other comprehensive income for the year ended December
                  31, 2007.


                                      F-12
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         (c)      Section 3865,  Hedges specifies the criteria under which hedge
                  accounting  may be  applied,  how hedge  accounting  should be
                  performed under permitted hedging  strategies and the required
                  disclosures.  This  standard  did not  have an  impact  on the
                  Company for the year ended December 31, 2007.

         Effective January 1, 2008, new accounting  standards were issued by the
         Canadian Institute of Chartered  Accountants  ("CICA") which may impact
         the Company in the future as follows:

         GENERAL STANDARDS ON FINANCIAL STATEMENT PRESENTATION

         CICA Handbook Section 1400,  General  Standards on Financial  Statement
         Presentation,  has been amended to include  requirements  to assess and
         disclose  a  company's  ability to  continue  as a going  concern.  The
         changes  are  effective  for interim  and annual  financial  statements
         beginning  January 1, 2008. The Company does not expect the adoption of
         these changes to have an impact on its financial statements.

         ACCOUNTING CHANGES

         Effective  January  1, 2007,  the  Company  adopted  the  revised  CICA
         Handbook Section 1506 "Accounting Changes",  which requires that: (a) a
         voluntary change in accounting  principals can be made if, and only if,
         the changes  result in more  reliable  and  relevant  information,  (b)
         changes in accounting  policies are  accompanied  with  disclosures  of
         prior  period  amounts  and  justification  for the  change and (c) for
         changes in  estimates,  the  nature and amount of the change  should be
         disclosed.  The Company has not made any voluntary change in accounting
         principles since the adoption of the revised standard.

         CAPITAL DISCLOSURES

         CICA Handbook Section 1535, Capital Disclosures,  establishes standards
         for disclosing  information  about the company's  capital and how it is
         managed.  Under this  standard the Company will be required to disclose
         the  following,  based on the  information  provided  internally to the
         company's key management personnel:

                  (i)      qualitative   information   about   its   objectives,
                           policies and processes for managing capital.
                  (ii)     summary  quantitative  data  about what it manages as
                           capital.
                  (iii)    whether  during  the  period  it  complied  with  any
                           externally  imposed capital  requirements to which it
                           is subject.
                  (iv)     when  the   company  has  not   complied   with  such
                           externally   imposed   capital   requirements,    the
                           consequences of such non-compliance.

         This standard is effective for interim and annual financial  statements
         beginning on January 1, 2008.  The Company has not yet  determined  the
         impact  of  the  adoption  of  this  change  on the  disclosure  in our
         financial statements.


                                      F-13
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         INVENTORIES

         CICA  Handbook  Section 3031,  Inventories  prescribes  the  accounting
         treatment for inventories and provides guidance on the determination of
         costs and its  subsequent  recognition  as an  expense,  including  any
         writedown to net  realizable  value.  It also provides  guidance on the
         cost formulas that are used to assign costs to inventories.

         This standard is effective for interim and annual financial  statements
         beginning on January 1, 2008.  The Company has not yet  determined  the
         impact  of  the  adoption  of  this  change  on the  disclosure  in our
         financial statements.

         GOODWILL AND INTANGIBLE ASSETS

         CICA Handbook Section 3064, Goodwill and Intangible Assets, establishes
         revised  standards  for  recognition,   measurement,  presentation  and
         disclosure  of goodwill  and  intangible  assets.  Concurrent  with the
         introduction  of this standard,  the CICA withdrew EIC 27, Revenues and
         Expenses during the preoperating  period. As a result of the withdrawal
         of EIC 27, companies will no longer be able to defer costs and revenues
         incurred  prior to commercial  production at new mine  operations.  The
         changes  are  effective  for interim  and annual  financial  statements
         beginning  January 1, 2009.  The  Company  has not yet  determined  the
         impact  of  the  adoption  of  this  change  on the  disclosure  in our
         financial statements.

         FINANCIAL INSTRUMENTS DISCLOSURES

         In March 2007,  the CICA issued  section 3862  Financial  Instruments -
         Disclosures  and Section 3863  Financial  Instruments  -  Presentation,
         which together  comprise a complete set of disclosure and  presentation
         requirements that revise and enhance current  disclosure  requirements.
         Section 3862  requires  disclosure  of  additional  detail by financial
         asset and liability categories.  Section 3863 establishes standards for
         presentation of financial instruments and non-financial derivatives.
          The standard deals with the  classification of financial  instruments,
         from the perspective of the issuer, between liabilities and equity, the
         classification  of related interest,  dividends,  losses and gains, and
         the  circumstances in which financial assets and financial  liabilities
         are offset.  These  sections are effective  January 1, 2008 but are not
         expected   to  have  an  impact  on  the   Company's   disclosure   and
         presentation.


4.       SHORT-TERM INVESTMENTS

         As  at  December  31,  2007  and  2006,  the  Company  held  short-term
         investments comprised of the following:

                                                       DECEMBER 31, 2007
                                                -------------------------------
                                                                     PRINCIPAL
                                                                    AND ACCRUED
                                                   MATURITY          INTEREST
                                                                         $
         12 month term deposit
          - 4.45% annual interest rate
            ($6,700,000 principal)              August 13, 2008       6,813,462
                                                ---------------    ------------
                                                                      6,813,462
                                                                   ============




                                      F-14
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



4.       SHORT-TERM INVESTMENTS (continued)

                                                      DECEMBER 31, 2006
                                               --------------------------------
                                                  MATURITY           PRINCIPAL
                                                                         $
         12 month term deposit
          - 3.7% annual interest rate            March 20, 2007         500,000
         12 month term deposit
          - 4.2% annual interest rate          November 5, 2007       8,000,000
                                               ----------------    ------------
                                                                      8,500,000
                                                                   ============

         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.  The principal and
         interest are unconditionally guaranteed by the Bank of Montreal.


5.       MARKETABLE SECURITIES
<TABLE>
<CAPTION>

                                                       2007            2006                    2005
                                                   ------------    ------------    ----------------------------
                                                                                                      QUOTED
                                                     RECORDED        RECORDED        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 under to the July 2006 court order.  Accordingly,  at December
         31,  2007,  the  carrying  value of these  marketable  securities  is a
         component of the Navidad interest balance (see Note 2 above).




                                      F-15
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



6.       SHARE CAPITAL

         Authorized   - unlimited  common shares without par value - 100,000,000
                      preferred shares without par value

                                                      NUMBER             $
         Issued - common shares                    ------------    ------------

         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

         Exercise of options                            119,000          59,500
         Contributed surplus reallocated on
            exercise of options                               -          29,274
                                                   ------------    ------------

         Balance, December 31, 2007                  52,132,064      58,753,501
                                                   ============    ============

         (a)      During fiscal 2007,  119,000  stock options were  exercised at
                  $0.50 per share for proceeds of $59,500.

         (b)      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

                  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, 2007,  no warrants or agent's  warrants had been
                  exercised.



                                      F-16
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



6.       SHARE CAPITAL (continued)

         (c)      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, 2007, all of
                  underwriter's warrants expired unexercised.

         (d)      Stock options and stock-based compensation

                  The Company has  established  a rolling stock option plan (the
                  "Plan"),  in which the maximum  number of common  shares which
                  can be  reserved  for  issuance  under  the Plan is 10% of the
                  issued and  outstanding  shares of the  Company.  The exercise
                  price of the  options is set at the  Company's  closing  share
                  price  on  the  grant  date,   less  allowable   discounts  in
                  accordance with the policies of the TSX Venture Exchange.  The
                  stock options  granted during 2007 are subject to a four month
                  hold  period and  exercisable  for a period of five  years.  A
                  summary of the Company's  outstanding  options at December 31,
                  2007,  2006 and 2005 and the changes  for the years  ending on
                  those dates is presented below:
<TABLE>
<CAPTION>

                                          ---------------------    ---------------------    ----------------------
                                                   2007                     2006                      2005
                                          ---------------------    ---------------------    ----------------------
                                            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       4,624,000    2.69        4,848,500    2.53        3,543,500     2.09
                  Granted                      100,000    0.47          283,000    3.21        1,360,000     3.74
                  Exercised                   (119,000)   0.50         (315,000)   0.61          (20,000)    2.48
                  Cancelled/Forfeited         (160,000)   3.66         (187,500)   2.96          (35,000)    4.16
                  Expired                     (115,000)   0.50           (5,000)   0.40                -        -
                                          ------------             ------------             ------------
                  Balance, end of year       4,330,000    2.72        4,624,000    2.69        4,848,500     2.53
                                          ============             ============             ============
</TABLE>

                  Stock options outstanding and exercisable at December 31, 2007
                  are as follows:

                      NUMBER          EXERCISE PRICE          EXPIRY DATE
                                            $

                       25,000              0.84               March 7, 2008
                      300,000              0.90               May 30, 2008
                    1,170,000              1.87               August 27, 2008
                    1,347,000              3.10               March 24, 2009
                      785,000              4.16               March 16, 2010
                      380,000              2.92               November 16, 2010
                      223,000              3.21               June 22, 2011
                      100,000              0.47               October 23, 2012
                  -----------
                    4,330,000
                  ===========


                                      F-17
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



6.       SHARE CAPITAL (continued)

                  During fiscal 2007, the Company  granted 100,000 stock options
                  (2006 - 273,000; 2005 - 1,360,000).

                  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:

                                               2007         2006         2005

                  Risk-free interest rate      4.21%       4.0%      3.3% - 3.7%
                  Estimated volatility          136%        70%       70% - 77%
                  Expected life              2.5 years    2.5 years    2.5 years
                  Expected dividend yield        0%           0%          0%

                  For 2007, stock-based compensation of $34,421 (2006: $393,120;
                  2005:  $2,380,000)  was  recorded  by the  Company,  of  which
                  $34,421  (2006:  $393,120;  2005:  $1,800,000)  is included in
                  expenses and Nil (2006: $Nil; 2005:  $580,000l) 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 $0.34 per  share  (2006:  $1.44;
                  2005:  $1.76).  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:

                                                                         $

                  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 and 2007                 1,281,946
                                                                   ============

                  A summary of the number of common shares reserved  pursuant to
                  the  Company's   outstanding   warrants  and  agents  warrants
                  outstanding  at  December  31,  2007,  2006  and  2005 and the
                  changes for the years ending on those dates is as follows:
<TABLE>
<CAPTION>

                                                       2007            2006            2005
                 <S>                              <C>             <C>             <C>

                  Balance, beginning of year          3,504,404       1,900,004       1,422,017
                  Issued                                      -       1,604,400       1,984,004
                  Exercised                                   -               -      (1,485,517)
                  Expired                              (233,334)              -         (20,500)
                                                   ------------    ------------    ------------
                  Balance, end of year                3,271,070       3,504,404       1,900,004
                                                   ============    ============    ============
</TABLE>


                                      F-18
<PAGE>


                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



6.       SHARE CAPITAL (continued)

                  Common shares reserved pursuant to warrants and agent warrants
                  outstanding at December 31, 2007 are as follows:

                    NUMBER            EXERCISE PRICE          EXPIRY DATE
                                            $
                    1,666,670              3.45               September 14, 2009
                      171,900              3.80               March 21, 2008
                    1,432,500              3.80               March 21, 2010
                  -----------
                    3,271,070
                  ===========


7.       CONTRIBUTED SURPLUS

         A continuity summary of contributed surplus is presented below:
<TABLE>
<CAPTION>

                                                                                         $
        <S>                                                                       <C>

         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

         Contributed Surplus as a result of stock options granted                        34,421
         Contributed Surplus reallocated on exercise of stock options                   (29,274)
                                                                                   ------------
         Balance, December 31, 2007                                                   6,157,412
                                                                                   ============
</TABLE>


8.       RELATED PARTY TRANSACTIONS

         (a)      The Company engages Grosso Group  Management Ltd. (the "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,  Amera  Resources  Corporation,
                  Astral Mining  Corporation,  Gold Point Energy Corp.  and Blue
                  Sky Uranium  Corp.,  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 2007,  the Company  incurred  fees of
                  $349,143 (2006: $724,902; 2005: $730,802) to the Grosso Group:
                  $330,305 (2006: $764,115;  2006: $764,012 ) was paid in twelve
                  monthly  payments and $18,838 is included in accounts  payable
                  (2006:  $39,213 included in amounts receivable;  2005: $33,210
                  included in amounts receivable) 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
                  (2006:  $205,000) deposit to the Grosso Group for the purchase
                  of equipment  and  leasehold  improvements  and for  operating
                  working capital which is callable on demand.

         (b)      During fiscal 2007, the Company paid $353,283 (2006: $533,917;
                  2005:   $241,088)  to  directors  and  officers  or  companies
                  controlled  by  directors  and  officers of the  Company,  for
                  accounting, management and consulting services provided.


                                      F-19
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



8.       RELATED PARTY TRANSACTIONS (continued)

         (c)      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
                  from  $8,500  and  to  pay a  bonus  of  $150,000.  The  total
                  compensation  paid to the President in 2007 was $250,000 (2006
                  - $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,  2007,  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.

                  Effective May 1, 2007, the Company negotiated  agreements with
                  the five other  shareholder  companies of the Grosso Group for
                  the President of the Company to provide services for a monthly
                  fee. The agreements may be terminated at any time at the other
                  companies' discretion upon 30 days written notice. The Company
                  reserves  its  right  to  restrict  services  provided  by the
                  President to the other shareholder  companies based on its own
                  requirements for the President's  services,  at which time the
                  fee would be adjusted accordingly. For the year ended December
                  31, 2007, the Company  received a total $66,667 from the other
                  shareholder  companies  which has been recorded as a reduction
                  in Administrative  and management  services expense.  The fees
                  will be reviewed and adjusted on a periodic basis.

         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.


9.       INCOME TAXES

         The recovery of income taxes shown in the  consolidated  statements  of
         loss,  comprehensive loss 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>

                                                       2007            2006            2005
        <S>                                       <C>             <C>             <C>

         Statutory tax rate                              34.12%          34.12%          34.12%
                                                   ============    ============    ============

                                                         $               $               $

         Loss for the year                            1,084,689      (3,581,360)     (5,764,874)

         Provision for income taxes based on
            statutory Canadian combined federal
               and provincial income tax rates         (370,096)     (1,221,960)     (1,966,975)
         Differences in foreign tax rates                  (707)           (526)              -
         Non-deductible differences                      26,288         149,332         625,988
         Losses for which an income tax benefit
            has not been recognized                     344,515         956,653       1,340,987
         Other                                                -         116,501               -
                                                   ------------    ------------    ------------
                                                              -               -               -
                                                   ============    ============    ============
</TABLE>


                                      F-20
<PAGE>




                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



9.       INCOME TAXES (continued)

         The  significant  components of the Company's  future tax assets are as
         follows:
<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
        <S>                                       <C>             <C>             <C>

         Future income tax assets
         Operating loss carryforward                  4,307,036       4,950,897       4,709,496
         Share issue costs                              288,455         509,317         472,437
         Resource deductions                            268,425         306,710               -
         Other                                           22,150          45,442               -
                                                   ------------    ------------    ------------
                                                      4,886,066       5,812,366       5,181,933
         Valuation allowance for future tax assets   (4,886,066)     (5,812,366)     (5,181,933)
                                                   ------------    ------------    ------------
                                                              -               -               -
                                                   ============    ============    ============
</TABLE>

         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.
                                       2007            2006            2005
                                         $               $               $
         Future income tax
            liabilities                       -               -       1,760,110
                                   ============    ============    ============

         The Company has  Canadian  capital loss  carryforwards  of $161,172 and
         non-capital loss carryforwards of $15,951,984 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                         $

                                         2008                           841,160
                                         2009                         1,317,730
                                         2010                         1,545,964
                                         2014                         2,752,324
                                         2015                         4,708,790
                                         2026                         3,282,352
                                         2027                         1,503,664
                                                                   ------------
                                                                     15,951,984
                                                                   ============


10.      SEGMENTED INFORMATION

         The  Company  is  involved  in  mineral   exploration  and  development
         activities.  The Company is in the exploration stage and,  accordingly,
         has no  reportable  segment  revenues or operating  results for each of
         fiscal 2007 and 2006.

         The Company's total assets are segmented geographically as follows:


                                      F-21
<PAGE>




                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



10.      SEGMENTED INFORMATION (continued)

                                                 DECEMBER 31, 2007
                                   --------------------------------------------
                                      CANADA         ARGENTINA         TOTAL
                                         $               $               $

         Current assets              26,102,160          22,330      26,124,490
                                   ------------    ------------    ------------
                                     26,102,160          22,330      26,124,490
                                   ============    ============    ============

                                                  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
                                   ============    ============    ============


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>

                                                                       2007             2006           2005
                                                                         $                $              $
        <S>                                                       <C>             <C>             <C>

         CONSOLIDATED STATEMENTS OF OPERATIONS

         Loss for the year under Canadian GAAP                       (1,084,689)     (3,581,360)      (5,764,874)
         Mineral properties and deferred costs for the year (i)               -      (4,491,524)      (8,480,509)
         Reversal of Future income tax liability (i)                          -               -          875,017
         Realization of Navidad interest (iv)                        17,682,521               -                -
                                                                   ------------    ------------    ------------
         Income (loss) for the year under US GAAP                    16,597,832      (8,072,884)     (13,370,366)
         Unrealized losses on available-for-sale securities (ii)              -          (3,000)                -
                                                                   ------------    ------------    ------------
         Comprehensive loss (iii)                                    16,597,832      (8,075,884)     (13,370,366)
                                                                   ============    ============    ============

         Basic and diluted income (loss) per share under US GAAP           0.32           (0.16)           (0.29)
                                                                   ============    ============    ============

         Weighted average number of common shares outstanding        52,099,787      51,263,575       46,197,029
                                                                   ============    ============    ============

                                                                       2007            2006            2005
                                                                         $               $               $
         SHAREHOLDERS' EQUITY

         Balance per Canadian GAAP                                   26,018,766      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                                         26,018,766       9,327,013       7,573,076
                                                                   ============    ============    ============
</TABLE>



                                      F-22
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)
<TABLE>
<CAPTION>

                                                                       2007             2006           2005
                                                                         $                $              $
        <S>                                                       <C>             <C>             <C>
         NAVIDAD INTEREST / MINERAL PROPERTIES

         Balance per Canadian GAAP                                   18,500,000      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                                         18,500,000         267,000               -
                                                                   ============    ============    ============

                                                                       2007             2006           2005
                                                                         $                $              $
         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                                                  -               -               -
                                                                   ============    ============    ============

                                                                       2007             2006           2005
                                                                         $                $              $
         CONSOLIDATED STATEMENTS OF CASH FLOWS

         OPERATING ACTIVITIES

         Cash used per Canadian GAAP                                 (1,953,830)     (3,785,152)     (3,849,618)
         Mineral properties and deferred costs (i)
            (In 2006, classified as a component of Navidad
               interest - Note 2)                                             -      (4,491,524)     (7,025,492)
                                                                   ------------    ------------    ------------
         Cash used per US GAAP                                       (1,953,830)     (8,276,676)    (10,875,110)
                                                                   ============    ============    ============

                                                                       2007             2006           2005
                                                                         $                $              $
         INVESTING ACTIVITIES

         Cash used per Canadian GAAP                                 (1,686,538)     (5,411,524)    (10,258,903)
         Mineral properties and deferred costs (i)
            (In 2006, classified as a component of Navidad
               interest - Note 2)                                             -       4,491,524       7,025,492
                                                                   ------------    ------------    ------------
         Cash provided by (used) per US GAAP                         (1,686,538)       (920,000)     (3,233,411)
                                                                   ============    ============    ============
</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.



                                      F-23
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

         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.   Subsequently,   the  marketable   securities  were
                  transferred  to  the  Navidad  interest  balance  (see  Note 2
                  above).

         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)      Realization of Navidad interest

                  For US GAAP purposes the Company had  previously  expensed the
                  exploration and other costs that comprised the amount shown as
                  Navidad  interest.  Following  the  conlcusion  of the  appeal
                  process,  the Company has  recognized  income of  $17,682,521.
                  (See Note 2).

                  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 adopted the provisions of this  Interpretation  in its
                  fiscal 2007 year. This  interpretation  did not have an impact
                  on the Company for the year ended December 31, 2007.

                  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.



                                      F-24
<PAGE>

                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  RECENTLY ISSUED US GAAP ACCOUNTING STANDARDS:

                  i)       In September  2006,  FASB issued SFAS No. 157,  "Fair
                           Value  Measurement",  effective  for  fiscal  periods
                           beginning  after November 15, 2007. SFAS defines fair
                           value, establishes a framework for measuring accepted
                           accounting principles,  and expands disclosures about
                           fair value  measurements.  In December 2007, the FASB
                           issued  SFAS157-b,  which  provided  for a  one  year
                           deferral  of  the  implementation  of  SFAS  157  for
                           non-financial assets and liabilities.  However,  SFAS
                           is still required to be adopted  effective January 1,
                           2008 for financial  assets and  liabilities  that are
                           carried  at fair  value.  The  Company  is  currently
                           evaluating   the  impact  of  the  adoption  of  this
                           standard on its Consolidated  Financial sv) Impact of
                           recently issued accounting standards.

                  ii)      In February  2007,  FASB  issued SFAS No. 159,  "Fair
                           value option for  financial  assets and  liabilities"
                           which permits  entities to choose to measure  various
                           financial instruments and certain other items at fair
                           value.   We  do  not  expect  the  adoption  of  this
                           Interpretation  to have a  significant  effect on the
                           Company's   results  of   operations   or   financial
                           position.

                  iii)     In December 2007, the FASB issued SFAS 160 a standard
                           on  accounting  for   noncontrolling   interests  and
                           transactions with non-controlling interest holders in
                           consolidated  financial  statements.  The standard is
                           converged with standards  issued by the AcSB and IASB
                           on  this  subject.   This  statement  specifies  that
                           non-controlling  interests  are  to be  treated  as a
                           separate  component of equity,  not as a liability or
                           other item outside of equity. Because non-controlling
                           interests  are an element of  equity,  increases  and
                           decreases in the  parent's  ownership  interest  that
                           leave  control  intact are  accounted  for as capital
                           transactions  rather  than as a step  acquisition  or
                           dilution gains or losses.  The carrying amount of the
                           non-controlling  interests is adjusted to reflect the
                           change in  ownership  interests,  and any  difference
                           between  the  amount  by  which  the  non-controlling
                           interests  are  adjusted  and the  fair  value of the
                           consideration paid or received is recognized directly
                           inequity attributable to the controlling interest.

                           This standard  requires net income and  comprehensive
                           income to be displayed for both the  controlling  and
                           the  non-controlling  interests.  Additional required
                           disclosures  and  reconciliations  include a separate
                           schedule  that shows the effects of any  transactions
                           with  the  non-controlling  interests  on the  equity
                           attributable to the controlling interest.

                           The statement is effective  for periods  beginning on
                           or after December 15, 2008.  SFAS 160 will be applied
                           prospectively  to  all   non-controlling   interests,
                           including any that arose before the  effective  date.
                           The  Company  has not  determined  the  effect of the
                           adoption  of  this  Interpretation  to the  Company's
                           results of operations or financial position.

                                      F-25

<PAGE>



                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



11.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  iv)      In December 2007, the FASB issued a revised  standard
                           on accounting for business  combinations,  SFAS 141R.
                           The  major   changes  to   accounting   for  business
                           combinations are summarized as follows:

                           -  all  business  acquisitions  would be  measured at
                              fair value.

                           -  the  existing  definition  of a business  would be
                              expanded.

                           -  pre-acquisition contingencies would be measured at
                              fair value.

                           -  most acquisition-related costs would be recognized
                              as expense as  incurred  (they  would no longer be
                              part of the purchase consideration).

                           -  obligations for contingent  consideration would be
                              measured   and   recognized   at  fair   value  at
                              acquisition  date  (would no  longer  need to wait
                              until contingency is settled).

                           -  liabilities  associated with restructuring or exit
                              activities  be  recognized  only if they  meet the
                              recognition  criteria of SFAS 146,  Accounting for
                              Costs Associated with Exit or Disposal Activities,
                              as of the acquisition date.

                           -  non-controlling  interests  would be  measured  at
                              fair value at the date of acquisition  (i.e.  100%
                              of the assets and liabilities would be measured at
                              fair value even when an  acquisition  is less than
                              100%).

                           -  goodwill,   if   any,   arising   on  a   business
                              combination  reflects the excess of the fair value
                              of the acquiree,  as a whole,  over the net amount
                              of the recognized identifiable assets acquired and
                              liabilities assumed.  Goodwill is allocated to the
                              acquirer and the non-controlling interest.

                           -  in accounting for business  combinations  achieved
                              in stages, commonly called step acquisitions,  the
                              acquirer  is  to   re-measure   its   pre-existing
                              non-controlling  equity investment in the acquiree
                              at  fair  value  as of the  acquisition  date  and
                              recognize any unrealized gain or loss in income.

                  The statement is effective  for periods  beginning on or after
                  December 15, 2008. The Company does not expect the adoption of
                  this  Interpretation  to  have  a  significant  effect  on the
                  Company's results of operations or financial position.


12.      SUPPLEMENTARY CASH FLOW INFORMATION

         Non-cash  investing  and  financing  activities  were  conducted by the
         Company as follows:
<TABLE>
<CAPTION>

                                                                       2007            2006            2005
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Investing activities

         Expenditures on mineral properties and deferred costs                -               -       (580,000)
         Stock-based compensation capitalized                                 -               -         580,000
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>



                                      F-26
<PAGE>


                              IMA EXPLORATION INC.
                         (An Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                         (Expressed in Canadian Dollars)



12.      SUPPLEMENTARY CASH FLOW INFORMATION (continued)
<TABLE>
<CAPTION>

                                                                       2007            2006            2005
                                                                         $               $               $
        <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                            29,274          74,800               -
         Contributed surplus                                            (29,274)        (74,800)        177,333
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============
</TABLE>


13.      SUBSEQUENT EVENTS

         The Company  received the funds  representing  the Navidad  interest as
         follows:

             o    $7.5 million,  which was previously  held in trust, on January
                  8,  2008  plus  interest  that had  accrued  in the  amount of
                  $341,380

             o    The balance of $11 million was received on February 11, 2008.


                                      F-27
<PAGE>