EXHIBIT
      15.2








**D
      E V I S S E R G R A Y L L P**


**CHARTERED
      ACCOUNTANTS**





401
      - 905
      West Pender Street


Vancouver,
      BC Canada


V6C
      1L6





Tel:
      (604) 687-5447


Fax:
      (604) 687-6737


**AUDITORS'
      REPORT**





To
      the
      Shareholders of Atna Resources Ltd.





We
      have
      audited the consolidated balance sheets of Atna Resources Ltd. as at December
      31, 2006 and 2005 and the consolidated statements of operations and deficit
      and
      cash flows for each of the years in the three-year period ended December 31,
      2006. These financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these financial
      statements based on our audits.





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





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





“DeVisser
      Gray LLP”





**CHARTERED
      ACCOUNTANTS**





Vancouver,
      British Columbia


March
      20,
      2007











**ATNA
                RESOURCES LTD.****CONSOLIDATED
                BALANCE SHEETS****December
                31**2006
            
            2005***ASSETS***CURRENT
                ASSETSCash
                and cash equivalents
            $
            3,534,772
            
            $
            10,201,409Temporary
                investments (Note 2d)
            
            9,982,252
            
            
            5,623,470Marketable
                securities (Note 3)
            
            459,000
            
            
            493,405Accounts
                receivable
            
            404,630
            
            
            99,418Prepaid
                expenses
            
            81,611
            
            
            59,96814,462,265
            
            
            16,477,670DEPOSITS
                FOR RECLAMATION (Note 4)
            
            63,369
            
            
            527,758MINERAL
                INTERESTS (Note 5)
            
            18,503,743
            
            
            16,652,809EQUIPMENT
                (Note 2(f))
            
            803,165
            
            
            87,964$
            33,832,542
            
            $
            33,746,201**LIABILITIES**CURRENT
                LIABILITIESAccounts
                payable and accrued liabilities
            $
            534,908
            
            $
            1,479,305ASSET
                RETIREMENT OBLIGATION (Note 4)
            
            247,000
            
            
            247,000781,908
            
            
            1,726,305**SHAREHOLDERS’
                EQUITY**SHARE
                CAPITAL (Note 6)
            
            60,839,308
            
            
            51,286,111SPECIAL
                WARRANTS (Note 7)
            
            -
            
            
            8,736,833CONTRIBUTED
                SURPLUS (Note 6(g))
            
            1,802,449
            
            
            860,566DEFICIT
            
            (29,591,123)
            
            
            (28,863,614)33,050,634
            
            
            32,019,896$
            33,832,542
            
            $
            33,746,201





NATURE
      OF
      OPERATIONS (Note 1)


COMMITMENTS
      (Note 11)




SUBSEQUENT
      EVENTS (Note 15)







ON
      BEHALF
      OF THE BOARD:





*“William
      J. Coulter”*   *“David
      H. Watkins”*


William
      J. Coulter, Director  David
      H.
      Watkins, Director














*See
      accompanying notes to the financial statements*








**ATNA
                RESOURCES LTD.****CONSOLIDATED
                STATEMENTS OF OPERATIONS AND DEFICIT****For
                the Years Ended December 31**2006
            2005
            2004**EXPENSES**Stock-based
                compensation expense (Note 6(e))
            $
            1,018,572
            $
            148,866
            $
            94,770Wages
                and benefits
            
            435,490
            
            232,593
            
            202,546Investor
                relations
            
            294,959
            
            403,138
            
            363,859Exploration
                and business development
            
            249,904
            
            84,503
            
            208,268Legal
                and audit
            
            151,226
            
            132,157
            
            40,169Office
                and miscellaneous
            
            140,588
            
            178,123
            
            49,316Amortization
            
            119,534
            
            26,343
            
            7,929Rent
                and services
            
            68,632
            
            74,900
            
            80,661Listing
                and transfer agent fees
            
            62,883
            
            45,241
            
            42,086Consultants
                fees
            
            50,825
            
            193,781
            
            5,459Insurance
            
            49,741
            
            18,109
            
            1,956(2,642,354)
            
            (1,537,754)
            
            (1,097,019)**OTHER
                INCOME (EXPENSES)**Investment
                and miscellaneous income
            
            543,053
            
            386,406
            
            119,315Foreign
                exchange gain (loss)
            
            (4,057)
            
            39,395
            
            (7,306)Loss
                on disposal of equipment
            
            -
            
            (1,207)
            
            (2,206)Gain
                on sale of marketable securities
            
            1,684,206
            
            411,877
            
            45,858Write
                down of marketable securities
            
            (1,000)
            
            (233,244)
            
            -Gain
                (loss) on sale of resource properties
            
            -
            
            -
            
            (1,659,561)Gain
                on sale of subsidiary
            
            -
            
            46,500
            
            -Reserve
                against asset sale
            
            (185,000)
            
            -
            
            -Resource
                properties written-down (Note 5)
            
            (122,357)
            
            (315,809)
            
            (1,881,155)VAT
                receivables written-off
            
            -
            
            -
            
            (40,537)**LOSS
                FOR THE YEAR**
            
            (727,509)
            
            (1,203,836)
            
            (4,522,611)**DEFICIT,
                BEGINNING OF YEAR**
            
            (28,863,614)
            
            (27,659,778)
            
            (23,137,167)**DEFICIT,
                END OF YEAR**
            $
            (29,
                591,123)
            $
            (28,863,614)
            $
            (27,659,778)**BASIC
                AND DILUTED LOSS PER SHARE**
            $
            (0.01)
            $
            (0.03)
            $
            (0.14)**WEIGHTED
                AVERAGE NUMBER OF SHARES OUTSTANDING**
            
            63,112,895
            
            44,785,582
            
            31,156,922





















































*See
      accompanying notes to the financial statements*








**ATNA
                RESOURCES LTD.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****For
                the Years Ended December 31**2006
            2005
            2004**CASH
                PROVIDED BY (USED FOR):****OPERATING
                ACTIVITIES**Loss
                for the year
            $
            (727,509)
            $
            (1,203,836)
            $
            (4,522,611)Less:
                non-cash itemsAmortization
            
            119,534
            
            26,343
            
            7,929Loss
                on disposition of asset
            
            -
            
            1,207
            
            2,206Temporary
                investment income
            
            (331,604)
            
            -
            
            -Marketable
                securities written-down
            
            1,000
            
            233,244
            
            -Net
                gain on sales of marketable securities
            
            (1,684,206)
            
            (411,877)
            
            (45,858)Loss
                on sales of resource properties
            
            -
            
            -
            
            1,659,561Reserve
                against asset sale
            
            185,000
            
            -
            
            -Resource
                properties written-down
            
            122,357
            
            315,809
            
            1,881,155Stock-based
                compensation expense
            
            1,018,572
            
            148,866
            
            94,770(1,296,856)
            
            (890,244)
            
            (922,848)Net
                change in non-cash working capital itemsTemporary
                investments
            
            -
            
            (1,968,706)
            
            (3,654,764)Accounts
                receivable
            
            (305,212)
            
            (80,221)
            
            (7,022)Accounts
                payable
            
            (182,173)
            
            (439,107)
            
            605,971Prepaid
                expenses
            
            (21,643)
            
            (37,254)
            
            (14,721)(1,805,884)
            
            (3,415,532)
            
            (3,993,384)**FINANCING
                ACTIVITIES**Shares
                issued for cash, net of issue costs
            
            739,674
            
            10,550,526
            
            4,216,718Special
                warrants issued for cash, net of issue costs
            
            -
            
            9,237,364
            
            -739,674
            
            19,787,890
            
            4,216,718**INVESTING
                ACTIVITIES**Acquisition
                of resource properties
            
            (12,647)
            
            (235,139)
            
            (618,513)Exploration
                and development
            
            (4,593,668)
            
            (10,934,512)
            
            (2,815,617)Option
                payments
            
            128,172
            
            190,850
            
            152,427Exploration
                recoveries and operating fees
            
            602,541
            
            77,314
            
            207,747Net
                purchases of equipment
            
            (7,648)
            
            (59,722)
            
            (55,444)Purchase
                of marketable securities
            
            (1,600,000)
            
            -
            
            -Proceeds
                from disposal of marketable securities
            
            3,445,612
            
            2,368,377
            
            163,950Proceeds
                from sales of resource properties
            
            -
            
            -
            
            2,000,000Purchase
                of temporary investments
            
            (3,562,789)Reclamation
                bond
            
            -
            
            (520,808)
            
            (6,950)(5,600,427)
            
            (9,113,640)
            
            (972,400)**INCREASE
                (DECREASE) IN CASH AND CASH EQUIVALENTS
                ANDEQUIVALENTS**
            
            (6,666,637)
            
            7,258,718
            
            (749,066)**CASH
                AND CASH EQUIVALENTS, BEGINNING OF YEAR**
            
            10,201,409
            
            2,942,691
            
            3,691,757**CASH
                AND CASH EQUIVALENTS, END OF YEAR**
            $
            3,534,772
            $
            10,201,409
            $
            2,942,691





Supplemental
      disclosure with respect to cash flows (Note 8)














*See
      accompanying notes to the financial statements*








**1.**  **NATURE
      OF OPERATIONS**





The
      Company is incorporated in British Columbia and is involved in the acquisition
      of resource properties that are considered sites of potential economic
      mineralization, and is currently engaged in the exploration of these properties.
      Certain of the Company’s properties contain defined mineral resources that
      cannot be considered economic until a commercial feasibility study is carried
      out. The ability of the Company to realize the costs it has incurred to date
      on
      these properties is dependent upon it being able to develop a commercial ore
      body, to finance the required exploration and development costs and to acquire
      environmental, regulatory, and other such permits as may be required for the
      successful development of the property.




**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**


**(a)**  **Basis
      of Presentation**




These
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries: Atna Resources Inc., incorporated in the State of
      Nevada, U.S.A.; Minera Atna Chile Limitada, incorporated in Chile; and Atna
      Cayman Ltd., incorporated in Cayman Islands. Atna Cayman Ltd. was wound up
      during 2004 and Minera Atna Chile was sold during 2005. The financial statements
      are prepared in accordance with Canadian generally accepted accounting
      principles (“GAAP”), which differ from U.S. GAAP as described in Note
      13.





**(b)**  **Use
      of Estimates**





The
      preparation of financial statements in conformity with Canadian generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Significant areas requiring the use of management estimates
      relate to the determination of environmental and site reclamation obligations,
      impairment of property and equipment and rates for amortization. Actual results
      could differ from those estimates.





**(c)**  **Fair value of financial instruments**





**(i)**  **Fair
      value**





The
      carrying values of cash and cash equivalents, investments, amounts receivable,
      and accounts payable and accrued liabilities approximate their fair values
      due
      to the short terms to maturity of the instruments.





**(ii)**  **Interest
      rate risk**





The
      Company is not exposed to significant interest rate risk due to the short-term
      maturity of its monetary current assets and current liabilities.





**(iii)**  **Credit
      risk**





The
      Company is not exposed to significant credit risk on its financial assets due
      to
      cash, cash equivalents and investments being placed with major financial
      institutions and amounts receivable due from government agencies.











**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** (Continued)





**(c)**  **Fair
      value of financial instruments** (Continued)





**(iv)**  **Currency
      risk**





The
      Company is exposed to foreign currency fluctuations to the extent certain
      expenditures incurred are not denominated in Canadian dollars. As at December
      31, 2006, cash included approximately $162,749 (2005 - $627,125) denominated
      in
      US Dollars.





**(d)**  **Cash
      and Investments**





Cash
      equivalents consist of temporary investments in commercial paper and money
      market deposits that are highly liquid and readily convertible to known amounts
      of cash. All cash equivalents are carried at their current market values, with
      any adjustments from cost recorded with interest income. Cash equivalents are
      inclusive of accrued interest amounts on securities that bear coupon interest,
      as receipt of these amounts is also considered to be certain and measurable.
      Temporary investments are represented by holdings of trust units of pooled
      income and equity funds that are readily convertible to cash and are carried
      at
      the lower of cost or current market value.





**(e)**  **Mineral
      Properties**





The
      Company capitalizes all costs related to investments in mineral property
      interests on a property-by-property basis. Such costs include mineral property
      acquisition costs and exploration and development expenditures, net of any
      recoveries. Costs are deferred until the extent of mineralization has been
      determined and economic feasibility can be established, and then depleted on
      a
      systematic and rational basis if the property achieves commercial production,
      or
      written off if the property is proven to be uneconomic, management elects to
      cease exploration work or if the Company’s rights to acquire the applicable
      mineral claims are allowed to lapse or are abandoned. The amounts shown for
      acquisition costs and deferred exploration expenditures represent costs incurred
      to date and do not necessarily reflect present or future values.





All
      deferred mineral property expenditures are reviewed, on a property-by-property
      basis, to consider whether there are any conditions that may indicate
      impairment. When the carrying value of a property exceeds its net recoverable
      amount that may be estimated by quantifiable evidence of an economic geological
      resource or reserve, or the Company’s assessment of its ability to sell the
      property for an amount exceeding the deferred costs, provision is made for
      the
      impairment in value.





From
      time
      to time, the Company may acquire or dispose of a mineral property interest
      pursuant to the terms of an option agreement. As such options are typically
      exercisable entirely at the discretion of the optionee, the amounts payable
      or
      receivable are recorded as property costs or recoveries when the payments are
      made or received. The Company may also periodically receive grants or assistance
      pursuant to various Canadian government programs. These amounts are recorded
      as
      recoveries against the capitalized cost of the property or properties to which
      they relate. When the amount of recoveries exceeds the total amount of
      capitalized costs of the property, the amount in excess of costs is credited
      to
      income.








**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES** (Continued)





**(f)**  **Equipment**





December
                31, 2006
            
            
            
            December
                31, 2005Accum
            
            Net
                Book
            
            
            
            Accum
            
            Net
                BookCost
            
            Amortization
            
            Value
            
            Cost
            
            Amortization
            
            ValueBuilding
            $
            790,771
            $
            77,821
            $
            712,950
            $
            -
            $
            -
            $
            -Office
                furniture, equipment
            
            31,973
            
            26,095
            
            5,878
            
            31,973
            
            24,647
            
            7,326Field
                equipment
            
            32,588
            
            27,370
            
            5,218
            
            32,588
            
            26,078
            
            6,510Computer
                equipment.
            
            136,228
            
            61,336
            
            74,892
            
            97,610
            
            37,044
            
            60,566Vehicles
            
            46,256
            
            42,029
            
            4,227
            
            40,912
            
            27,350
            
            13,562$
            1,037,816
            $
            234,651
            $
            803,165
            $
            203,083
            $
            115,119
            $
            87,964





Equipment
      is recorded at cost and amortized over its estimated useful economic life on
      a
      declining balance basis at annual rates of 30% and 20%, respectively, for
      computer and office equipment; on a straight-line basis over three years for
      exploration equipment. The Company has constructed and office and administration
      building on the Pinson property that is subject to the terms of the exploration
      agreement as set out in Note 5(a)(i) and is recorded at cost with amortization
      on a straight-line basis over ten years.





**(g)**  **Asset
      Retirement Obligations**





The
      Company follows the recommendations of the Canadian Institute of Chartered
      Accountants in accounting for asset retirement obligations. The standard
      requires that the fair value of a liability for an asset retirement obligation
      be recognized in the period in which it is incurred or acquired. Also, when
      a
      liability is initially recorded, a corresponding increase to the carrying amount
      of the related asset is recorded. The liability is increased over time
      (accreted) by the discount factor that was applied in the initial measurement
      of
      fair value and the asset is amortized over the estimated life of the related
      asset. The amount of the liability will be subject to re-measurement at each
      reporting period.





**(h)**  **Impairment
      of Long-Lived Assets**





Long-lived
      assets are assessed for impairment when events and circumstances warrant. The
      carrying value of a long-lived asset is impaired when the carrying amount
      exceeds the estimated undiscounted net cash flow from use and fair value. In
      that event, the amount by which the carrying value of an impaired long-lived
      asset exceeds its fair value is charged to earnings.





**(i)**  **Stock-Based
      Compensation**




The
      Company accounts for stock-based compensation expenses using the fair value
      based method with respect to all stock-based payments to directors, employees
      and non-employees, including awards that are direct awards of stock and call
      for
      settlement in cash or other assets, or stock appreciation rights that call
      for
      settlement by the issuance of equity instruments. Under this standard,
      stock-based payments are recorded as an expense over the vesting period or
      when
      the awards or rights are granted, with a corresponding increase to contributed
      surplus under shareholders’ equity. When stock options are exercised, the
      corresponding fair value is transferred from contributed surplus to capital
      stock.








**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**(Continued)





**(j)**  **Income
      Taxes**





The
      Company accounts for potential future tax assets and liabilities by recognizing
      the future tax consequences attributable to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax bases. Future tax assets and liabilities are measured using
      the
      tax rates that are expected to apply to taxable income in the years in which
      those temporary differences are expected to be settled. The effect on future
      tax
      assets and liabilities of a change in tax rates is recognized as income in
      the
      period that includes the date of the change. When the future realization of
      income tax assets does not meet the test of being more likely than not to occur,
      a valuation allowance in the amount of the potential future benefit is taken
      and
      no net future tax asset is recognized. Such an allowance currently applies
      fully
      to all of the Company’s potential income tax assets.





**(k)**  **Foreign
      Currency Translation**





The
      Company translates its foreign operations on the following basis: monetary
      assets and liabilities are translated at the rate of exchange in effect as
      at
      the balance sheet date and non-monetary assets and liabilities are translated
      at
      their applicable historical rates. Revenues and expenses are translated at
      the
      average rates prevailing for the year, except for amortization that is
      translated at the historical rates associated with the assets being amortized.





Foreign
      exchange gains and losses from the translation of foreign operations are
      recognized in the current period.





**(l)**  **Share
      Capital**




Common
      shares issued for non-monetary consideration are recorded at their fair market
      value, based either upon the trading price of the Company’s shares on the
      Toronto Stock Exchange (“TSX”) on the date of the agreement to issue the shares
      or the average closing price of the last ten trading days of the Company’s
      shares on the TSX prior to the date of issue. Costs incurred to issue common
      shares are deducted from share capital.





**(m)**  **Loss
      Per Share**





Basic
      loss per share is calculated based on the weighted average number of common
      shares outstanding during the period. The Company uses the treasury stock method
      for calculating diluted earnings per share. However, diluted loss per share
      has
      not been presented as the potential exercise of options and warrants outstanding
      would have the effect of reducing the loss per share. Therefore, basic and
      diluted loss per share is the same.







**3.**  **MARKETABLE
      SECURITIES**





Marketable
      securities are carried at the lower of cost or quoted market value. When market
      value is below cost any unrealized loss is charged to income.





During
      the year, marketable securities were written down by $1,000 (2005 - $233,244)
      to
      a carrying value of $459,000 (2005 - $493,405). The quoted market value of
      marketable securities at December 31, 2006 is $729,666 (2005 -
      $572,280).















**4.**
            **DEPOSITS
                FOR RECLAMATION**





The
      Company has posted environmental reclamation bonds in the amount of $5,300
      (US$6,950) (2005 - Cdn$527,758) with the Division of Environmental Protection,
      State of Nevada and the United States Department of the Interior to cover the
      estimated closure and reclamation costs of the Pinson Property and the Jarbidge
      Property.





The
      Company has posted environmental reclamation bonds in the amount of $56,419
      (US$50,600) with the United States Department of Agriculture, Forest Service
      to
      cover reclamation costs on the Jarbidge Properties in Nevada





At
      December 31, 2006 the Company has recorded $247,000 as an estimated asset
      retirement obligation relating to the current amount of reclamation required
      based on exploration and development conducted to date at the Pinson
      Property.





**5.**  **MINERAL
      PROPERTIES**


At
      December 31, 2006 and 2005, the Company incurred expenditures on its mineral
      properties as follows:





Pinson
            Jarbidge
            Beowawe
            Clover
            US
            
            Canada/NV
            NV
            NV
            NV
            Other
            Chile
            Yukon
            TotalBalance
                atDecember
                31, 2005
            $14,330,403
            $
                721,875
            $
                238,537
            $
                73,972
            $
                730,687
            $
                47,476
            $
                509,859
            $16,652,809Additions
                during the period:Acquisition
            -
            -
            -
            -
            12,647
            -
            -
            12,647Professional
                Fees and Wages
            -
            2,526
            -
            -
            -
            -
            -
            2,526Property
                and Development
            116,442
            106,429
            129,985
            18,432
            32,429
            -
            7,610
            411,327Drilling
            -
            295,257
            -
            -
            -
            -
            -
            295,257Permitting
            5,917
            16,149
            -
            -
            -
            -
            -
            22,066Geology
            4,025
            271,515
            1,475
            9,615
            71,563
            80
            30
            358,303Geochemistry
            -
            9,828
            -
            -
            6,332
            -
            -
            16,160Geophysics
            -
            -
            -
            -
            37,100
            -
            -
            37,100Environment
            -
            12,122
            -
            -
            -
            -
            -
            12,122Reserve
                Definition
            232,600
            
            -
            -
            -
            -
            -
            232,600Drilling
                Support
            535,939
            -
            -
            -
            -
            -
            -
            535,939Surface
                Drilling
            449,674
            -
            -
            -
            -
            -
            -
            449,674Surface
                Infrastructure
            113,475
            -
            -
            -
            -
            -
            -
            113,475Production
                Setup
            310,297
            -
            -
            -
            -
            -
            -
            310,297Dewatering
            61,066
            -
            -
            -
            -
            -
            -
            61,066Travel
                and transportation
            -
            2,245
            -
            -
            -
            -
            -
            2,245Field
                Office
            -
            37,466
            -
            -
            -
            -
            -
            37,466Admin/Indirect
                Costs
            748,820
            -
            -
            -
            -
            -
            -
            748,8202,578,255
            753,537
            131,460
            28,047
            147,424
            80
            7,640
            3,646,443Additions
                during period
            2,578,255
            753,537
            131,460
            28,047
            160,071
            80
            7,640
            3,659,090Cost
                Recoveries
            (999,640)
            -
            (351,635)
            (67,866)
            (10,085)
            -
            (402)
            (1,429,628)Option
                Payments
            -
            -
            -
            -
            -
            (28,171)
            (228,000)
            (256,171)Write-downs
            -
            -
            -
            -
            (136,015)
            -
            13,658
            (122,357)Balance
                atDecember
                31, 2006
            15,909,018
            1,475,412
            18,362
            34,153
            744,658
            19,385
            302,755
            18,503,743








**5.**  **MINERAL
      PROPERTIES** (Continued)




Pinson
            Jarbidge
            Beowawe
            Clover
            US
            
            Canada/NV
            NV
            NV
            NV
            Other
            Chile
            Yukon
            TotalBalance
                atDecember
                31, 2004
            $
                2,366,046
            $
                596,183
            $
                242,605
            $
                53,207
            $
                718,524
            $
                123,704
            $
                1,034,625
            $
                5,134,894Additions
                during the period:Acquisition
            20,485
            12,085
            87,013
            60,425
            51,650
            -
            3,481
            235,139Exploration
                and development:Professional
                Fees and Wages
            -
            26,778
            1,825
            3,299
            429
            -
            -
            32,331Property
                and Development
            10,637
            43,449
            17,711
            17,269
            15,205
            -
            -
            104,271Drilling
            487,790
            -
            1,450
            -
            -
            -
            -
            489,240Geology
            140,568
            18,316
            6,934
            15,498
            -
            -
            -
            181,316Environment
            -
            203
            -
            -
            -
            -
            -
            203Permitting
            24,945
            16,238
            -
            -
            -
            -
            -
            41,183Field
                Office
            -
            8,623
            -
            -
            -
            -
            -
            8,623Travel
                and Transportation
            -
            -
            -
            1,316
            -
            -
            -
            1,316Engineering
            134,887
            -
            -
            -
            -
            -
            -
            134,887Geochemistry
            28
            -
            -
            -
            -
            -
            -
            28Resource
                Estimation
            23,730
            -
            -
            -
            -
            -
            -
            23,730Reserve
                Definition
            2,617,696
            -
            -
            -
            -
            -
            -
            2,617,696Drilling
                Support
            413,089
            -
            -
            -
            -
            -
            -
            413,089Surface
                Drilling
            1,713,150
            -
            -
            -
            -
            -
            -
            1,713,150Surface
                Infrastructure
            1,557,929
            -
            -
            -
            -
            -
            -
            1,557,929Underground
                Infrastructure
            3,589
            -
            -
            -
            -
            -
            -
            3,589Production
                Setup
            956,985
            -
            -
            -
            -
            -
            -
            956,985Test
                Mining
            433,598
            -
            -
            -
            -
            -
            -
            433,598Dewatering
            1,245,649
            -
            -
            -
            -
            -
            -
            1,245,649Admin/Indirect
                Costs
            1,922,923
            -
            -
            -
            -
            -
            -
            1,922,923Depreciation
            9,679
            -
            -
            -
            -
            -
            -
            9,67911,696,872
            113,607
            27,920
            37,382
            15,634
            -
            -
            11,891,415Additions
                during period
            11,717,357
            125,692
            114,933
            97,807
            67,284
            -
            3,481
            12,126,554Asset
                retirement obligation
            247,000
            -
            -
            -
            -
            -
            -
            247,000Cost
                Recoveries
            -
            -
            (50,576)
            (16,617)
            (10,121)
            -
            -
            (77,314)Option
                Payments
            -
            -
            (68,425)
            (60,425)
            (45,000)
            -
            (288,666)
            (462,516)Write-Offs
            -
            -
            -
            -
            -
            (76,228)
            (239,581)
            (315,809)Balance
                atDecember
                31, 2005
            $14,330,403
            $
                721,875
            $
                238,537
            $
                73,972
            $
                730,687
            $
                47,476
            $
                509,859
            $16,652,809











**5.**  **MINERAL
      PROPERTIES** (Continued)





**(a)**  **United
      States**





**(i)**  **Pinson
      Property, Nevada**





The
      Company entered into an Exploration Agreement (“the agreement”), effective
      August 12, 2004, with Pinson Mining Company (“PMC”), a controlled subsidiary of
      Barrick Gold Corporation. Pursuant to the terms of the agreement, the Company
      completed obligations to earn a 70% interest in the Pinson Mine Property,
      Humboldt County, Nevada, and provided notice of its earn-in to PMC in January
      2006.





The
      Company’s earn-in triggered an election by PMC to back-in to the project by
      spending an additional US$30 million to advance exploration and development
      of
      the project over a 3-year period. PMC notified the company that it would elect
      to earn back into the property on April 6 th ,
      2006.
      Completion of qualifying expenditures by PMC, on or before April 5 th ,
      2009
      would result in the formation of a 70:30 joint venture with PMC holding a 70%
      interest. If PMC fails to make US$30 million of qualifying expenditures within
      3
      years the Company will retain a 70% interest in the project and again become
      operator.





The
      property is subject to net smelter return (“NSR”) royalties varying from 3.5% to
      7.5% on various claim groups within the property.





**(ii)**  **Jarbidge
      Properties, Nevada**





By
      an
      agreement dated December 5, 2003 the Company obtained an option to acquire
      a
      100% interest in the 127 Jarbidge claims located in Elko County, Nevada by
      paying a total of US$600,000 (US$35,000 paid) to the optionor by December 5,
      2009 and incurring aggregate exploration expenditures of US$300,000 in stages
      by
      December 5, 2006. The property is subject to NSR royalties ranging from
      1.5-2.5%.





On
      December 15, 2004, the Company signed a separate lease agreement and option
      to
      acquire 10 unpatented mining claims, subject to a 2.5% production royalty,
      adjacent to the Jarbidge claims. The Company must make lease payments totalling
      US$19,800 in stages to December 14, 2007 (US $4,200 paid) and annual payments
      of
      US$9,000 each year thereafter. The Company may purchase the property and the
      production royalty at any time for US$375,000.





In
      an
      agreement dated February 4, 2005, the Company obtained a mining lease with
      an
      option for the partial purchase of a royalty on eight (8) patented mining claims
      adjacent to the main Jarbidge claim group, subject to a 5% production royalty.
      Fifty percent (50%) of the production royalty may be purchased for US$2 million.
      The lease requires annual payments to the lessor by the Company totalling
      US$117,500 over the first eight (8) years of the agreement (an initial


payment
      of US$5,000 was paid upon signing on February 4, 2005 and US$5,000 was paid
      during 2005). Thereafter, an annual minimum royalty of US$25,000 is payable
      on
      or before the anniversary date of the agreement.





In
      an
      agreement dated February 4, 2005, the Company obtained an option to acquire
      a
      100% interest in six unpatented federal lode claims adjacent to the main
      Jarbidge claim group, subject to a 1.5% to 3.0% production royalty which varies
      with the price of gold sold. To exercise the option, the Company will pay to
      the
      Optionor an aggregate of US$19,500 during the first four years of the agreement
      (US $1,500 was paid upon signing on February 4, 2005). Thereafter, an annual
      advance royalty payment of US$6,000 is due on or before the anniversary date
      of
      the agreement until a total of US$500,000 is received by the
      owner.








**5.**  **MINERAL
      PROPERTIES** (Continued)





**(iii)**  **Beowawe
      Properties, Nevada**





During
      2002, the Company obtained an option to acquire a 100% interest, subject to
      a 3%
      royalty on gold revenue less US$15 per realized ounce, in the 95 Beowawe lode
      claims located at the north end of the Carlin Gold District in Nevada. To
      exercise the option, the Company has to pay to the optionor an aggregate of
      US$80,000 (paid) in cash, allot and issue to the optionor up to 150,000 common
      shares in three separate tranches of 50,000 shares each (100,000 shares issued),
      and carry out a combined minimum 20,000 feet of exploratory drilling (7,140
      feet
      drilled) on the Golden Cloud and/or Beowawe properties prior to November 6,
      2005. In consideration of a payment of US$50,000, the remaining required
      drilling has been reduced to 6,000 feet on or before November 6, 2006. Following
      exercise of the option, the Company will have to make annual advance royalty
      payments of US$50,000 and US$75,000, respectively, for the first two years
      and
      US$100,000 each subsequent year until the commencement of commercial production.
      A finder’s fee is payable to a third party, equal to 5% of the first US$500,000
      expenditures and payments made by the Company during the first two years of
      the
      agreement, and 3% of all expenditures and payments that are in excess of
      US$500,000 during the first two years of the agreement. The finder’s fee is
      capped at US$500,000.





In
      an
      agreement dated March 26, 2003, the Company obtained an option to acquire a
      100%
      interest in 40 acres of fee land adjacent to the main Beowawe claim group,
      subject to a 3% royalty on gold revenue which can be purchased for US$250,000
      or
      700 ounces of gold, whichever is greater, per percentage point. To exercise
      the
      option, the Company has to pay to the Optionor an aggregate of US$42,500
      (US$42,500 paid) in cash prior to December 1, 2006 and an annual minimum royalty
      of US$5,000 thereafter.





In
      a
      separate agreement dated June 5, 2003, the Company obtained an exclusive lease
      and option to acquire a 100% interest in an additional 40 acres of fee land
      adjacent to the main Beowawe claim group, subject to a 1% NSR royalty. The
      lease
      agreement requires the Company to pay advance royalties of US$500 (paid) on
      signing the agreement, US$1,000 (paid) prior to June 2004 and US$2,000 each
      subsequent year until the commencement of commercial production. The Company
      has
      the right to buy a 100% interest in the property, including surface and mineral
      rights, at any time for US$250,000.





Pursuant
      to an agreement dated September 21, 2005, the Company granted an option to
      Apolo
      Gold and Energy Inc. (“Apolo”) to acquire a 55% interest in the property by
      completing the following:





-
            Issuance
                to the Company of 100,000 common shares of Apolo on execution of
                the
                agreement (received);


-
            Issuance
                to the Company of 50,000 common shares or payment of US$50,000 of
                Apolo on
                the first anniversary of the agreement (US$50,000
                received);


-
            Incurring
                exploration expenditures on the property of US$1,700,000 over a four
                year
                period.





On
      February 16, 2007, the Company terminated its September 21, 2005 agreement
      with
      Apolo Gold and Energy Inc. as a result of a default of its obligations under
      the
      agreement. Through the execution of a Quitclaim and Release, Apolo has
      relinquished any and all rights to the property in favour of the
      Company.











**5.**  **MINERAL
      PROPERTIES** (Continued)





**(iv)**  **Clover
      Property, Nevada**





In
      an
      agreement dated March 11, 2003, the Company obtained an option to acquire a
      100%
      interest in 22 claims known as the Clover property, subject to a 3% NSR royalty,
      which can be purchased for US$1,000,000 per percentage point. Terms of the
      agreement include cumulative total payments to the vendor of US$305,000
      (US$80,000 paid) prior to March 11, 2010. The Clover property is subject to
      a
      Finder’s Agreement dated February 10, 2003, amended April 22, 2003, whereby the
      Company agreed to pay a finder’s fee of US$5,000 (paid) upon execution of the
      acquisition agreement, and US$10,000 (paid) and US$20,000, respectively, for
      the
      first two years after the agreement and US$30,000 on each subsequent anniversary
      until the commencement of commercial production (US$20,000 paid). The Finder’s
      fee is capped at a maximum of US$500,000.




The
      Company granted certain options on the Clover property and received US$50,000
      in
      option payments; these options were terminated subsequent to the year
      end.





On
      June
      19, 2006, the Company signed a Letter of Intent with Meridian Gold Incorporated
      (“Meridian”) whereby Meridian can earn a 51% working interest in the Clover
      property by making a cash payment of US$135,000 (US$60,000 paid) and exploration
      expenditures of US$300,000 in the first year; and paying an additional
      US$500,000 and incurring exploration expenditures of US$3,000,000 over a three
      year period. Meridian can earn an additional 19% working interest by completing
      a prefeasibility study on the property.





**(b)**  **United
      States -Other**





**(i)**  **Triple
      Junction and Dixie Fork Properties, Nevada**





The
      Company acquired a 100% interest, subject to a 3% NSR royalty (uncapped), in
      the
      36 ‘Triple Junction’ lode claims and the 31 ‘Dixie Fork’ lode claims located in
      Elko county, Nevada, by paying US$35,000 in cash and issuing 100,000 common
      shares.





In
      an
      agreement dated September 7, 2004, the Company granted an option to Sage Gold
      Inc. (“Sage”) to earn up to a 70% interest in the Company’s Triple
      Junction/Dixie Fork gold project. Sage may earn a 55% interest in the properties
      by drilling 10,000 feet before November 2007, and may then elect to form a
      joint
      venture with the Company, or to increase its interest to 70% before forming
      a
      joint venture, by funding and completing a bankable feasibility
      study.








**(ii)**  **Searchlight
      Property, Nevada**





In
      an
      agreement dated January 17, 2004, the Company purchased a 100% interest on
      the
      Searchlight property by the issuance of 30,000 common shares.





**(iii)**  **Lone
      Pine Property, Arizona**





The
      Company purchased a 100% interest in the three patented claims, subject to
      a 2%
      NSR royalty granted as a finder’s fee (capped at US$2,000,000) by making a cash
      payment of US$100,000.








**5.**  **MINERAL
      PROPERTIES** (Continued)





**(c** )  **Chile**





**(i)**  **Celeste
      Property**





The
      Company holds a 100% interest in the Celeste property, subject to a 2% NSR
      royalty. A land-use fee of US$50 per hectare of surface, payable if the land
      is
      used for waste dump, fill leaching or ancillary mining facilities, also
      applies.





A
      draft
      lease agreement is in place between the Company and Compania Cielo Azul Limitada
      (“CCAL”) whereby CCLA may lease the property for a period of twenty years by
      making the following lease payments to the Company: US$10,000 upon execution
      of
      an agreement (received); US$10,000 on the first anniversary of the agreement;
      US$25,000 on the second anniversary of the agreement; and US$50,000 on the
      third
      anniversary of the agreement and on all subsequent anniversary dates thereafter.
      The property will be subject to a 2.5% NSR royalty.





**(ii)**  **Cachinal
      Property**





The
      Company entered into an option agreement with Valencia Ventures (“Valencia”)
      wherein Valencia may earn up to 70% interest in the Company’s Cachinal de la
      Sierra property in Chile by making
      cash payments totaling CDN$95,000 (CDN$20,000 received) and spending
      CDN$1,500,000 within three years. During the year ended December 31, 2005,
      the
      property was written down to a nominal value.





**(d)**  **Canada**





**(i)**  **Wolverine
      Property, Yukon**





The
      Company had a 40% joint venture interest in the Wolverine property with Yukon
      Zinc Corporation (“YZC”) (formerly Expatriate Resources Ltd.) as the property
      operator and owner of the remaining 60% interest.





During
      the year ended December 31, 2004 the Company sold its interest to YZC for
      $2,000,000 cash and 10,000,000 units of YZC valued at $2,271,000. Each unit
      consisted of one common share and one half of a share purchase warrant; each
      whole warrant is exercisable to purchase one common share of YZC for a price
      of
      $0.32 for two years. The disposition resulted in a loss of $1,659,561; however,
      the Company retains an NSR royalty of up to 10% indexed to the price of
      silver.





The
      Company has currently accrued an additional liability of $185,000 to reflect
      an
      increase in the estimate of a residual obligation relating to the proceeds
      of
      sale of the Wolverine property in 2004. At December 31, 2006, the aggregate
      obligation in respect to this amount is $485,000 and is included in accounts
      payable and accrued liabilities.





**(ii)**  **Wolf
      Property, Yukon**





The
      Company holds a 65.6% interest in 18 mineral claims; due to a lack of recent
      exploration work conducted on the claims, at December 31, 2004, the Company
      wrote its interest in the Wolf property down to a nominal amount.











**5.**  **MINERAL
      PROPERTIES** (Continued)





**(d)**  **Canada** (Continued)





**(iii)**  **Marg
      Property, Yukon**





The
      Company purchased a 2/3 joint venture interest in the Marg property by making
      a
      cash payment of $250,000. Cameco Corporation was the owner of the remaining
      1/3
      interest.





During
      2004, the Company purchased Cameco’s stake in the Marg joint venture by making a
      cash payment of $80,000. On November 25, 2004, the Company entered into an
      option agreement with another party whereby that party can earn a 100% interest
      in the Marg Property by making total cash payments of $600,000 ($200,000
      received) and issuing 400,000 common shares (266,666 shares received) to the
      Company on or before December 8, 2007. During the year ended December 31, 2006,
      the property was written-down.





**(iv)**  **Ecstall
      Property, British Columbia**





The
      Company has a 100% interest in 23 Crown Granted Mineral claims (21 claims with
      mining rights and two claims with surface rights), subject to a 3% (reducible
      to
      2.5%) NSR royalty. As at December 31 2006, the carrying value of the property
      was $302,752.





**(v)**  **White
      Bull Property, British Columbia**





The
      Company holds a 100% interest in 24 mineral claim units. During the year ended
      December 31, 2006, the property was written-down to a nominal
      value.





**(e)**  **Realization
      of assets**





The
      investment in and expenditures on resource properties comprise a significant
      portion of the


Company’s
                assets. Realization of the Company’s investment in these assets is
                dependent upon the establishment of legal ownership, the attainment
                of
                successful production from the properties or from the proceeds of
                their
                disposal.





Resource
      exploration and development is highly speculative and involves inherent risks.
      While the rewards if an ore body is discovered can be substantial, few
      properties that are explored are ultimately developed into producing mines.





Environmental
      legislation is becoming increasingly stringent and costs and expenses of
      regulatory compliance are increasing. The impact of new and future environmental
      legislation on the Company’s operations may cause additional expenses and
      restrictions.





Although
      the Company has taken steps to verify the title to mineral properties in which
      it has an interest, in accordance with industry standards for the current stage
      of exploration of such properties, these procedures do not guarantee the
      Company’s title. Property title may be subject to unregistered prior agreements
      or transfers and title may be affected by undetected defects.











**5.**  **MINERAL
      PROPERTIES** (Continued)





**(f)**  **Environmental
      Expenditures**





The
      operations of the Company may in the future be affected from time to time to
      varying degrees by changes in environmental regulations, including those for
      future removal and site restoration costs. Both the likelihood of new
      regulations and their overall effect upon the Company vary greatly and are
      not
      predictable. The Company’s policy is to meet or, if possible, surpass standards
      set by relevant legislation, by application of technically proven and
      economically feasible measures.





Environmental
      expenditures that relate to ongoing environmental and reclamation programs
      are
      charged against earnings as incurred or capitalized and amortized depending
      on
      their future economic benefits. Estimated future removal and site restoration
      costs, when the ultimate liability is reasonably determinable, are charged
      against earnings over the estimated remaining life of the related business
      operation, net of expected recoveries





**6.**  **SHARE
      CAPITAL**





**(a)**  **Authorized:**




An
      unlimited number of common shares without par value


An
      unlimited number of preferred shares without par value





**(b)
                Issued****No.
                of Shares**
            
            **Amount**Balance
                as at December 31, 2004
            38,950,872
            
            40,795,561Issued
                for cashPrivate
                placement, net of issue costs (Note 6 (c)(i))
            6,500,000
            
            4,729,332Private
                placement, net of issue costs (Note 6 (c)(ii))
            500,000
            
            398,775Exercise
                of warrants
            8,538,195
            
            5,074,192Exercise
                of options
            940,000
            
            243,225Issued
                for other considerationExercise
                of options, stock-based compensation
            -
            
            45,026Balance
                as at December 31, 2005
            55,429,067
            
            51,286,111Issued
                for cashPrivate
                placement, net of issue costs (Note 6 (c)(iii))
            7,450,000
            
            8,730,587Exercise
                of warrants
            502,771
            
            459,795Exercise
                of options
            795,000
            
            286,125Issued
                for other considerationExercise
                of options, stock-based compensation
            -
            
            76,690Balance
                as at December 31, 2006
            64,176,838
            $
            60,839,308





**(c)**  **Private
      Placements**





**(i)**  On
      August
      3, 2005, the Company completed a brokered private placement for the issuance
      of
      6,500,000 common shares at a price of $0.80 per share for gross proceeds of
      $5,200,000. The agents received a 6.5% cash commission of $338,000 and 520,000
      agents’ warrants to acquire 520,000 shares of the Company at a price of $0.80
      per share until August 3, 2006. The Company incurred cash share issuance costs
      in the amount of $20,000 and issued agents’ warrants valued at $105,003 (refer
      to Note 6(e)) in connection with the private placement.








**6.**  **SHARE
      CAPITAL** (Continued)





**(c)**  **Private
      Placements** (Continued)





**(ii)**  On
      August
      11, 2005, the Company completed a non-brokered private placement for the
      issuance of 500,000 common shares at a price of $0.80 per common share for
      gross
      proceeds of $400,000. The Company incurred share issue costs of $1,225 in
      connection with the private placement.





**(iii)**  On
      February 2, 2006, the Company completed a special warrant brokered private
      placement for the issuance of 7,450,000 common shares at a price of $1.35 per
      share for gross proceeds of $10,057,500. The agents received a 6.5% cash
      commission of $653,737 and 521,000 agents’ warrants to acquire 521,000 shares of
      the Company at a price of $1.55 per share until December 16, 2006. The Company
      incurred cash share issuance costs in the amount of $67,643 in connection with
      the private placement and recorded the fair value, as determined by the
      Black-Scholes Option Pricing Model, of the agents’ warrants at
      $605,532.





**(d)**
            **Stock
                Options**





Stock
      options to purchase common shares have been granted to directors, employees
      and
      consultants of the Company at exercise prices determined with reference to
      the
      market value on the date of the grant. Under the Company’s Stock Option Plan,
      approved by the shareholders on April 20, 2006, the Company may grant stock
      options for the purchase of up to 6,355,864 common shares. Vesting of stock
      options is made at the discretion of the Board of Directors at the time the
      options are granted. At December 31, 2006, the Company had stock options
      outstanding for the purchase of 2,140,000 common shares, with an average
      remaining contractual life of 1.39 years, of which 2,108,126 stock options
      were
      exercisable at December 31, 2006.





**Number
                of**
            
            **Weighted
                Average****Options**
            
            **Exercise
                Price**Outstanding
                at December 31, 2004
            2,085,000
            $
            0.31Exercised
            (940,000)
            
            0.26Cancelled/expired
            (50,000)
            
            0.59Granted
            1,050,000
            
            0.67Outstanding
                at December 31, 2005
            2,145,000
            
            0.52Exercised
            (795,000)
            
            0.36Cancelled/expired
            (125,000)
            
            2.01Granted
            915,000
            
            1.19Outstanding
                at December 31, 2006
            2,140,000
            $
            1.11





The
      following summarizes the stock options outstanding at December 31,
      2006





**Number
                of Shares**
            
            **Exercise
                Price**
            **Expiry
                Date**100,000
            
            0.500
            January
                9, 2007275,000
            
            0.325
            April
                20, 2007200,000
            
            0.590
            February
                8, 2008775,000
            
            0.700
            April
                18, 2008765,000
            
            2.010
            January
                31, 200925,000
            
            1.280
            July
                7, 20092,140,000











**6.**
            **SHARE
                CAPITAL**(Continued





**(e)**
            **Stock-Based
                Compensation**





During
      the year ended December 31, 2006, the Company granted stock options to
      directors, officers and employees to acquire up to an aggregate of 915,000
      common shares at exercise prices of $2.01 and $1.28 per share and the fair
      value
      of $1,018,572 has been recorded as an expense in these financial
      statements.





The
      fair
      value of stock options used to calculate compensation expense and the fair
      value
      of agents’ warrants is estimated using the Black-Scholes Option Pricing Model
      with the following weighted average assumptions at December 31,
      2006:





2006
            
            2005Risk-free
                interest rate
            2.43%
            
            2.58%Expected
                dividend yield
            -
            
            -Expected
                stock price volatility
            50%
                to 65%
            
            50%
                to 65%Expected
                option life in years
            1
                to 3
            
            1
                to 3





Option
      pricing models require the input of highly subjective assumptions, particularly
      as to the expected price volatility of the stock. Changes in these assumptions
      can materially affect the fair value estimate and therefore it is management’s
      view that the existing models do not necessarily provide a single reliable
      measure of the fair value of the Company’s stock option grants.





**(f)**  **Warrants**





At
      December 31, 2006, the Company has no outstanding warrants to purchase common
      shares.





Exercise
            Expiry
            Outstanding
            
            
            
            OutstandingPrice
            Date
            December
                31, 2005
            Issued
            Exercised
            Expired
            December
                31, 2006$
            0.800
            Aug
                03, 2006
            426,000
            -
            426,000
            -
            -$
            1.550
            Dec
                16, 2006
            521,500
            -
            76,771
            444,729
            -947,500
            -
            502,771
            444,729
            -





**(g)**  **Contributed
      Surplus**





**Amounts**Balance
                as at December 31, 2004
            $
            151,193Fair
                value of agents’ warrants
            
            605,533Stock
                based compensation expense
            
            148,866Exercise
                of stock options
            
            (45,026)Balance
                as at December 31,2005
            $
            860,566Stock-based
                compensation expense
            
            1,018,572Exercise
                of stock options
            
            (76,689)Balance
                as at December 31, 2006
            $
            1,802,449











**7.**  **SPECIAL
      WARRANTS**





The
      Company issued special warrants pursuant to a brokered private placement for
      the
      issuance of 7,450,000 common shares at a price of $1.35 per share for proceeds
      of $8,736,833 after broker’s commission and other share issue costs, including
      521,000 agents’ warrants exercisable at $1.55 for a one year period valued at
      $500,529 (refer to Note 6(e)). Each special warrant will convert to one common
      share upon qualification by a short form prospectus.





**8.**  **SUPPLEMENTARY
      CASH FLOW DISCLOSURES**





Supplementary
      disclosure of non-cash financing activities:





2006
            
            2005
            
            2004Significant
                non-cash operating, investing andfinancing
                activities:Operating
                activitiesAmortization
                recorded in deferred property costs
            $
            -
            $
            9,679
            $
            21,193Investing
                activitiesMarketable
                securities received for option payments
            $
            128,000
            $
            271,666
            $
            201,000Marketable
                securities received for sale of property
            
            -
            
            -
            
            2,271,000Reclassification
                of building & equipment costs fromdeferred
                costs
            
            827,087
            
            -
            
            -Reclassification
                of reclamation bonds to temporaryinvestments
            
            464,389
            
            -
            
            -$
            1,419,476
            $
            271,666
            $
            2,472,000Financing
                activitiesShares
                issued for property
            $
            -
            $
            -
            $
            15,900Fair
                value of agents’ warrants issued
            
            -
            
            605,533
            
            -$
            -
            $
            605,533
            $
            15,900Other
                cash flow informationInterest
                received
            $
            543,053
            $
            386,406
            $
            119,315








**9**.
            **RELATED
                PARTY TRANSACTIONS**





There
      were no related party transactions in 2006, 2005 or 2004.











**10.**  **COMMITMENT**





The
      Company has a lease commitment for its office premises which expires June 30,
      2010. The cost of the entire premises is shared amongst several companies in
      proportion to the area occupied. The Company’s proportionate share of annual
      rental payments under this arrangement is approximately $64,000.





**11.**
            **INCOME
                TAXES**





At
      December 31, 2006 the Company has non-capital losses carried forward for
      Canadian income tax purposes totaling approximately Cdn$4.8 million, expiring
      in
      various periods from 2006 to 2015, and resource and other tax pools available
      to
      reduce Canadian taxable income that aggregate approximately $15.8 million at
      December 31, 2005 (2004 - $13.6 million). The Company also has net operating
      loss carry forwards and resource deductions totaling approximately $12.4 million
      for U.S. income tax purposes which are currently being substantiated, and if
      not
      utilised to reduce U.S. taxable income in future periods, will expire in various
      periods through 2025.







The
      reconciliation of income tax provision computed at statutory rates to the
      reported income tax provision is as follows:





**2006**
            
            **2005**34.12%
            
            34.12%Income
                tax expense benefit computed at statutory rates
            $
            (253,344)
            $
            (467,003)Temporary
                differences recognized
            
            (134,555)
            
            (127,396)Non-deductible
                differences
            
            55,997
            
            176,749Unrecognized
                tax losses
            
            331,902
            
            417,650Income
                tax benefit per financial statements
            $
            -
            $
            -







The
      significant components of the Company’s future income tax assets as at December
      31, 2006 and 2005 are as follows:





**2006**
            
            **2005**Future
                income tax assets
              Losses
                carried forward, Canada
            $
            2,091,912
            $
            1,656,408Losses
                carried forward, United States
            
            5,189,352
            
            3,725,881Mineral
                properties
            
            5,219,864
            
            5,214,939Equipment
            
            60,829
            
            57,952Share
                issuance costs
            
            677,047
            
            443,457Valuation
                allowance
            
            13,239,004
              
              (13,239,004)
            
            11,098,637
              
              (11,098,637)Future
                income taxes, net
            $
            -
            $
            -











**12.**
            **DIFFERENCES
                BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
                PRINCIPLES (GAAP)**




**Resource
      Property Costs**





Under
      Canadian GAAP, mineral exploration expenditures may be deferred on prospective
      properties until such time as it is determined that further exploration is
      not
      warranted, at which time the property costs are written-off. Under U.S. GAAP,
      all exploration expenditures must be expensed until an independent feasibility
      study has determined that the property is capable of economic commercial
      production. The following items (a) to (d) provide a summary of the impact
      on
      the Company’s balance sheets and statements of operations and deficit that would
      result from the application of US accounting principles to resource property
      costs:


2006
            
            2005
            
            2004**(a)****Assets**Resource
                PropertiesResource
                properties following Canadian GAAP
            $
            18,503,743
            $
            16,652,809
            $
            5,134,894Less
                deferred exploration costs
            
            (18,491,096)
            
            (16,652,809)
            
            (5,134,894)Resource
                properties following U.S. GAAP
            $
            12,647
            $
            -
            $
            -**(b)****Operations**Net
                loss following Canadian GAAP
            $
            (727,509)
            $
            (1,203,836)
            $
            (4,522,611)Property
                costs
                expensed under U.S. GAAP - net
            
            (1,778,645)
            
            (11,833,724)
            
            (2,910,049)Deferred
                property costs written-off underCanadian
                GAAP
            
            122,357
            
            315,809
            
            1,881,155Net
                proceeds received on sale of property
            
            -
            
            -
            
            3,971,000Loss
                on
                property sold under Canadian GAAP
            
            -
            
            -
            
            1,659,561Net
                income (loss) under U.S. GAAP
            $
            (2,383,797)
            $
            (12,721,751)
            $
            79,056**(c)****Deficit**Closing
                deficit under Canadian GAAP
            $
            (29,606,123)
            $
            (28,863,614)
            $
            (27,659,778)Adjustment
                to
                deficit for exploration expenditures
            
            (18,491,096)
            
            (16,652,809)
            
            (5,134,894)of
                prior years written-off under U.S. GAAPClosing
                deficit under U.S. GAAP
            $
            (48,097,219)
            $
            (45,516,423)
            $
            (32,794,672)**(d)****Earnings
                (loss) per share under U.S. GAAP**Earnings
                (loss) per share
            $
            (0.04)
            $
            (0.28)
            $
            0.01











**12.**
            **DIFFERENCES
                BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
                PRINCIPLES (GAAP)**(Continued)





**(e)**   **Stockholders’
      Equity**





**(i)**  **Accumulated
      Other Comprehensive Income**





Under
      SFAS 130, the Company is now required to record certain gains and losses as
      a
      component of Stockholder’s Equity, with the current changes in the component
      balances comprising the balance sheet figure disclosed in a separate statement
      or in a financial statement note. The only item in the Company’s financial
      statements impacting Comprehensive Income is the unrealized gains on the
      Company’s marketable securities.





The
      following provides the continuity of Accumulated Other Comprehensive Income
      or
      Loss under US GAAP:





Accumulated
                Other Comprehensive Income - December 31, 2004
            $
            937,152Other
                Comprehensive Income - 2005
            
            78,875Realized
                Proceeds included in previous years’ Comprehensive Income
            
            (937,152)Accumulated
                Other Comprehensive Income - December 31, 2005
            
            78,875Other
                Comprehensive Income - 2006
            
            -Realized
                Proceeds included in previous years’ Comprehensive Income
            
            (78,875)Accumulated
                Other Comprehensive Income - December 31, 2006
            $
            -





( **ii)**  **Marketable
      securities and temporary investments**





Under
      Canadian GAAP, no write-down to market value is required if an investment is
      considered by management to be held for the long-term, unless there has been
      an
      other-than-temporary decline in the value of that investment. Under US SFAS
      115,
      the investments held by the Company are considered to be “available for sale
      securities” and are required to be reported at fair value, with any unrealized
      holding gains and losses included in current Other Comprehensive Income, a
      component of Stockholders’ Equity.





The
      following provides a reconciliation to US GAAP of a pro-forma application of
      SFAS 115 to these financial statements:





2006
            
            2005Aggregate
                temporary investments and marketablesecurities
                under Canadian GAAP
            $
            10,441,252
            $
            6,116,875Other
                Comprehensive Income under U.S. GAAP - 2004
            
            918,502
            
            918,502Other
                Comprehensive Income under U.S. GAAP - 2005
            
            78,875
            
            78,875Other
                Comprehensive Income under U.S. GAAP - 2006
            
            -
            
            -Realized
                proceeds included in previous years’
              Comprehensive
                Income under U.S. GAAP
            
            (997,377)
            
            (918,502)Aggregate
                temporary investments and marketablesecurities
                under US GAAP
            $
            10,441,252
            $
            6,195,750














**13.**  **SUBSEQUENT
      EVENTS**




In
      addition to items disclosed elsewhere in these notes, the following occurred
      during the period subsequent to December 31, 2006:





**(a)**
            On
                January 11, 2007, the Company granted stock options to employees
                for the
                purchase of up to 963,800 common shares at a price of $1.36 per share
                to
                January 11, 2010.





**(b)**
            Subsequent
                to December 31, 2006, the Company issued 200,000 common shares for
                proceeds of $82,500 pursuant to the exercise of stock
                options.





**ATNA
      RESOURCES LTD.**


**MANAGEMENT'S
      DISCUSSION AND ANALYSIS**        **FORM
      51-102F**


**For
      the Year Ended December 31, 2006**







**Description
      of Business**




Atna
      Resources Ltd. (Atna or the Company) is engaged in the exploration and
      development of gold properties primarily in the United States. The Company
      also
      has properties in Canada and Chile. The Company is a reporting issuer in British
      Columbia, Alberta, Ontario and Nova Scotia and is a foreign issuer in the United
      States and files a Form 20-F with the U.S. Securities and Exchange Commission.
      The Company’s shares trade on the TSX Exchange under the symbol “ATN”. The
      following discussion and analysis of the financial position and results of
      operations for the Company speaks only as to March 16, 2007 (the “Report Date”)
      and should be read in conjunction with the interim consolidated financial
      statements and the notes thereto for the year ended December 31, 2006, which
      have been prepared in accordance with Canadian generally accepting accounting
      principles.





Additional
      information relating to the Company, including audited financial statements
      and
      the notes thereto for the years ended December 31, 2006 and 2005, can be viewed
      on SEDAR at www.sedar.com .





**Outlook**





The
      Company is looking forward to a successful year with plans to pursue exploration
      of a number of its properties and continue evaluating merger and acquisition
      opportunities in order to accelerate the growth of the Company. The Company
      is
      well funded and is planning to drill the Beowawe (approximately 6,000 feet)
      and
      Jarbidge properties (approximately 8,000 feet) during the year. Joint venture
      partners are expected to pursue the exploration and drilling of a number of
      Company’s properties in Nevada, Canada, and Chile. The Company will continue to
      foster communication and collaboration with PMC to advance the Pinson property
      towards production. If PMC fails to spend US$30 million before April 6, 2009
      (i.e. within the next 25 months), operatorship of the project will revert back
      to the Company and a 70% Atna: 30% PMC joint venture will automatically be
      formed.





**Exploration
      Activities**





**Highlights**





·
            Drilling
                at Jarbidge intersects epithermal quartz adularia veins and intense
                argillic alteration.


·
            Pinson
                Mining Company (Barrick) has 25 months remaining to spend $30 million
                at
                Pinson.


·
            Wolverine
                optimized feasibility study reported by Yukon
                Zinc.


·
            Option
                to Joint Venture agreement completed with Meridian at
                Clover.


·
            Atna
                to resume work at Beowawe.





**Jarbidge
      Property, Nevada**





Drill
      permits were granted late in the season, resulting in the completion of only
      a
      small portion of the planned program before terminating due to winter weather.
      A
      total of 2,260 feet in five holes were completed out of a planned 10,500 foot
      program. The drilling intersected numerous silicified structures and veins
      but
      returned no significant gold values. Pervasive, intense argillic alteration
      intersected in the Longhike area suggests potential for precious metals to
      occur
      several hundred feet below.





The
      first
      five drill holes ranged in depth from 190 feet to 625 feet. Three target areas
      were tested with one drill setup at each target. All drill holes intersected
      classic epithermal textured veins within strong fault structures showing
      potential for the system to host new high grade gold and silver mineralization
      similar to that historically mined in the district. Permits are in place to
      complete drilling at previously laid out targets and to follow-up on the
      structures intersected during the fourth quarter.





Detailed
      structural mapping and vein sampling continued at Jarbidge during the final
      quarter with encouraging results. The work outlined new drill targets and
      yielded significant geochemical results which will require follow-up drilling
      in
      the spring of 2007. Two hundred and sixty five rock chip samples from various
      areas on the property were collected during the season. Forty two samples were
      highly anomalous, with assays equal to or greater than 0.03 oz/t gold (1 g/t
      Au), including twelve samples greater than 0.25 oz/ton gold (8.6 g/t Au), and
      eight samples greater than 0.5 oz/ton gold (17.1 g/t Au). Several of the
      existing target areas were extended along strike of the veins and new
      prospective targets were identified.





**Pinson
      Property, Nevada**





Pinson
      Mining Company (PMC), an affiliate of Barrick Gold Corporation, carried out
      no
      work on the property during the past year. Atna presently has a 70% interest
      in
      the property. PMC must spend US$30.0 million before April 2009 (25 months from
      the time of writing) if it is to earn back 40%, thereby increasing its project
      interest from 30% to 70%. The Pinson deposit is a structurally controlled
“Carlin-type” gold system with over 980,000 ounces of past production from open
      pits. Measured and indicated resources discovered and defined by Atna’s work
      total 1.69 million tons grading 0.42 oz/ton gold (containing 712,600 ounces
      gold). Additionally, the Pinson deposit has inferred resources estimated at
      3.1
      million tons grading 0.34 oz/ton gold (1.05 million ounces gold).





**Beowawe**





On
      February 16, 2007, the Company terminated its September 21, 2005 agreement
      with
      Apolo Gold and Energy Inc. as a result of a default of its obligations under
      the
      agreement. Through the execution of a Quitclaim and Release, Apolo has
      relinquished any and all rights to the property in favour of the Company. The
      property is underlain by volcanic stratigraphy of the Northern Nevada Rift
      which
      hosts the adjacent Mule Canyon mine, an epithermal deposit from which Newmont
      mined approximately 1 million ounces of gold and north of the Fire Creek deposit
      (Klondex Mines, 1 million ounce gold resource, news release September 5, 2006).
      Atna is planning a drill program to test a number of targets characterized
      by
      anomalous gold, epithermal quartz veining, sinters, and high level argillic
      alteration.





**Clover**





A
      definitive agreement was signed with Meridian Gold Inc in November 2006.
      Meridian is obligated under the agreement to spend a minimum of $300,000 this
      year on exploration and development of the property. The Clover prospect is
      a
      low-sulphidation, vein-hosted, epithermal gold prospect located in Nevada’s
      Midas mining district within the prospective Northern Nevada Rift. Clover’s
      geologic setting is similar to Newmont’s Ken Snyder (Midas) mine (1999 published
      reserves of 2.8 M tons averaging 1.01 oz/ton Au, 11.6 oz/ton Ag). Clover has
      several targets that require follow-up work including a geophysical anomaly
      in
      the Jake Creek structural corridor near the occurrence of high-grade (0.90
      oz/ton Au) gold bearing float and high-grade gold intersections from previous
      drilling (0.74 oz/ton Au over 31.8 ft., 0.23 oz/ton Au over 25 ft., and 0.29
      oz/ton Au over 10 ft.).





**Wolverine**





Yukon
      Zinc released results of an optimized feasibility study on the Wolverine
      project, in which Atna retains a 10 percent royalty (at current prices) on
      precious metals production. Highlights of the study from a Yukon Zinc news
      release dated January 22, 2007 include:


·
            Annual
                production in the first 3 years of 4,933,200 ounces of silver and
                20,200
                ounces of gold contained in zinc, copper and lead
                concentrates.


·
            Reserves
                provide for 9.5 years of operations; infill drilling could extend
                mine
                life to 12.5 years.


·
            Type
                A water license expected in late summer
                2007.


·
            Full
                production is planned for first quarter 2009, subject to the timely
                securing of financing.





**Selected
      Annual Information**





Selected
      annual information from the audited financial statements for the years ended
      December 31, 2006, 2005 and 2004 is summarized in the table
      below.








**Year
                End**
            **2006($)**
            **2005($)**
            **2004
                ($)**Total
                revenues
            Nil
            Nil
            NilGeneral
                and administrative expenses
            2,642,354
            1,537,754
            1,097,019Loss
                for the year
            727,509
            1,203,836
            4,522,611Basic
                and diluted loss per share
            0.01
            0.03
            0.15Working
                capital
            13,927,357
            14,998,365
            8,079,661Total
                assets
            33,832,542
            33,746,201
            14,258,164Total
                long-term liabilities
            Nil
            Nil
            NilTotal
                shareholders’ equity
            33,050,634
            32,019,896
            13,286,976Cash
                dividends per share
            Nil
            Nil
            NilNumber
                of shares issued and outstanding
            64,176,838
            55,429,067
            38,950,872





**Results
      of Operations**





During
      the year, the Company incurred exploration expenditures of $3,659,090 (2005
      -
      $12,126,554; 2004 - $3,073,956). The costs were attributed to exploration
      expenditures of $2,578,256 with cost recoveries of ($999,640) on the Pinson
      property; exploration expenditures of $753,537 on the Jarbidge property;
      exploration expenditures of $131,462 with cost recoveries of ($351,635) on
      the
      Beowawe property; exploration expenditures of $28,047with cost recoveries of
      ($67,866) on the Clover property; exploration expenditures of $167,792,
      acquisition costs of $12,647, cost recoveries of ($10,487) and receipt of option
      payments of ($256,171) on other properties located in the USA, Canada and Chile;
      and an aggregate of $122,357 for the write-down of the Sno property, Nevada,
      White Bull property, BC, and the Ty, Tree and Marg properties,
      Yukon.





During
      the year, the Company incurred an operating loss of $727,509 (2005 - $1,203,836;
      2004 - $4,522,611) resulting in a basic and diluted loss per share of $0.01
      (2005 - $0.03; 2004 - $0.15). The operating loss was comprised of general and
      administrative expenses of $2,642,354 (2005 - $1,537,754; 2004 - $1,097,019).
      The increase in general and administrative expenses was primarily attributed
      to
      the following items: (i) an increase in stock based compensation (a non-cash
      item) to $1,018,572 (2005 - $146,866; 2004 - $94,770) as a result of the number
      of stock options vested during the year; (ii) an increase in wages and benefits
      to $435,490 (2005 - $232,593; 2004 - $202,546) as a result of hiring an
      additional full-time employee, an increase in salaries, the granting of bonuses
      to management and employees and a change in the allocations in reporting
      salaries and wages from the previous period; (iii) an increase in exploration
      and business development to $249,904 (2005 - $84,503; 2004 - $208,268) as a
      result of the Company’s ongoing investigation of merger and acquisition
      opportunities; (iv) an increase in amortization (a non-cash item) to $119,534
      (2005 - $26,343; 2004 - $7,929) the majority of which was for the amortization
      of the building on the Pinson property; and (v) an increase in insurance costs
      to $49,741 (2005 - $18,109; 2004 - 1,956) as a result of increasing the limits
      of liability on directors’ and officers’ liability and an increase in the cost
      of general liability insurance.





During
      the year, the Company incurred other expenses and income comprised primarily
      of
      the following: (i) an increase in the gain on sales of marketable securities
      to
      $1,684,206 (2005 - $411,877; 2004 - $45,858) as
      a
      result of the gain on sale of Yukon Zinc Corp., Pacifica Resources Corp. and
      Silver Quest Resources shares; (ii) an increase in mineral property transactions
      to $253,168 (2005 - Nil; 2004 - Nil) as the result of shifting proceeds received
      for the Marg property to the income statement, which resulted in a net decrease
      in resource property write-downs of $122,357 (2005 - $315,809; 2004 -
      $1,881,155); and (iii) an increase of $185,000 (2005 - Nil; 2004 - 300,000)
      relating to the sharing of revenue from the sale of the Wolverine
      project.





During
      the year, investment
      and miscellaneous income increased to $543,053 (2005 - $386,406; 2004 -
      $119,315) as a result of having a greater amount of funds on deposit and through
      the investment of a certain portion of the funds in longer term financial
      instruments.





**Summary
      of Quarterly Results and Fourth Quarter Review**





Results
      for the eight most recent quarters ending with the last quarter for the three
      months ending on December 31, 2006 are summarized in the table
      below.




**Three
                months ended**
            **Dec-06**
            **Sep-06**
            **Jun-06**
            **Mar-06**Revenue
            Nil
            Nil
            Nil
            NilGeneral
                and administrative expenses
            459,688
            467,766
            675,376
            1,039,524Loss
                (gain) for the period
            530,090
            107,832
            679,989
            (590,402)Basic
                and diluted loss per share
            0.01
            0.01
            0.01
            0.01Total
                assets
            33,832,542
            33,871,048
            33,870,586
            34,736,899Exploration
                expenditures
            615,394
            370,458
            1,286,831
            1,180,399**Three
                months ended**
            **Dec-05**
            **Sep-05**
            **Jun-05**
            **Mar-05**Revenue
            Nil
            Nil
            Nil
            NilGeneral
                and administrative expenses
            523,513
            361,123
            653,118
            309,217Loss
                (gain) for the period
            597,066
            229,749
            348,585
            (14,218)Basic
                and diluted loss per share
            0.03
            0.01
            0.01
            0.01Total
                assets
            33,746,201
            22,098,941
            15,087,814
            13,906,562Exploration
                expenditures
            4,473,231
            4,837,487
            2,621,483
            922,558





During
      the fourth quarter of 2006, the Company reported a loss of $727,509, which
      included the write-downs of mineral properties in the net amount of $122,357.
      During the fourth quarter of 2006, the Company incurred $615,394 in exploration
      expenditures, primarily on the Jarbidge project.




**Liquidity
      and Capital Resources**





At
      December 31, 2006, the Company had cash, cash equivalents and investments
      totaling $13,517,024 (2005 - $15,824,879; 2004 - $6,597,455) and working capital
      of $13,927,357 (2005 - $14,998,365; 2004 - $8,079,661). The Company considers
      its existing working capital to be sufficient to fund property maintenance,
      administrative overhead and exploration expenditures for at least the next
      twelve months.





The
      Company has a shared lease commitment for its office premises which expires
      June
      30, 2010. The Company’s proportionate share of annual rental payments under this
      arrangement is approximately $64,000. Aside from the rental lease commitment,
      the company has no off-balance sheet arrangements or long-term obligations.
      The
      majority of the Company’s expenditures on its properties are of a discretionary
      nature with the majority of expenditures falling under the responsibility of
      joint venture partners.





The
      Company has financed its operations and capital expenditures through the sale
      of
      its equity securities and from the proceeds of the sale of marketable
      securities. The Company expects to obtain financing in the future primarily
      through equity financing. There can be no assurance that the Company will
      succeed in obtaining additional financing, now or in the future. However,
      the Company has been successful to date in arranging financing and management
      is
      of the opinion that it will continue to do so.





**Related
      Party Transactions**





During
      the year, the Company had no related party transactions.








**Financing
      and Investing Activities**





During
      the year, the Company completed a special warrant private placement financing
      in
      the amount of $8,730,587 (2005 - $5,128,107; 2004 - $3,648,758) by converting
      7,450,000 special warrants to 7,450,000 common shares at a price of $1.35 per
      special warrant; received aggregate proceeds of $459,795 (2005 - $5,074,192;
      2004 - $458,460) from the exercise of share purchase warrants; and received
      aggregate proceeds of $286,125 (2005 - $243,225; 2004 - $109,500) from the
      exercise of stock options.





**Financial
      Instruments**





The
      fair
      value of the Company’s cash, accounts receivable and accounts payable is
      estimated to approximate their carrying values. It is management’s opinion that
      the Company is not exposed to significant interest, currency, or credit risk
      arising from these financial statements.





**Outstanding
      Share Data**





**No.
                of Shares**
            **Exercise
                Price**
            **Expiry
                Date**Issued
                & Outstanding shares at December 31, 2006
            64,176,838
            n/a
            n/aIssued
                after December 31, 2006
            200,000
            n/a
            n/aEmployees
                Stock Options
            2,903,800
            $0.325
                - $2.01
            Jun
                16/06 - Jan 11/10Warrants
            -
            n/a
            n/aFully
                diluted at March 16, 2007
            67,280,638
            n/a
            n/a




**Disclosure
      and Internal Controls and Procedures**





Management
      is responsible for establishing and maintaining disclosure controls and
      procedures for the Company. Based on an evaluation of the Company’s disclosure
      controls and procedures as of the end of the period covered by this MD&A,
      management believes such controls and procedures are effective in providing
      reasonable assurance that material items requiring disclosure are identified
      and
      reported in a timely manner.





Management
      is also responsible for the design of internal controls over financial reporting
      to provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements. There has been no change in the
      Company’s internal control over financial reporting that occurred during the
      Company’s most recent interim period that has materially affected, or is
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.





**Corporate
      Governance**





Management
      of the Company is responsible for the preparation and presentation of the annual
      financial statements and notes thereto, MD&A and other information contained
      in this annual report. Additionally, it is Management’s responsibility to ensure
      the Company complies with the laws and regulations applicable to its
      activities.





The
      Company’s management is held accountable to the Board of Directors
      (“Directors”), each member of which is elected annually on a three-year rotation
      by the shareholders of the Company. The Directors are responsible for reviewing
      and approving the annual audited financial statements and MD&A.
      Responsibility for the review and approval of the Company’s quarterly unaudited
      interim financial statements and MD&A is delegated by the Directors to the
      Audit Committee, which is comprised of four directors, all of whom are
      independent of management. Additionally, the Audit Committee pre-approves audit
      and non-audit services provided by the Company’s auditors.





The
      auditors are appointed annually by the shareholders to conduct an audit of
      the
      financial statements in accordance with generally accepted auditing standards.
      The external auditors have complete access to the Audit Committee to discuss
      the
      audit, financial reporting and related matters resulting from the annual audit
      as well as assist the members of the Audit Committee in discharging their
      corporate governance responsibilities.





**Forward-Looking
      Statements**





This
      Interim Management Discussion and Analysis (“MD&A”) is an update of the
      Company’s MD&A for the year ended December 31, 2006. Certain statements
      contained in the following MD&A constitute forward-looking statements. Such
      forward-looking statements are subject to known and unknown risks, uncertainties
      and other factors that may cause actual results to differ materially form those
      implied by the forward-looking statements. Readers are cautioned not to place
      undue reliance on these forward looking statements, which speak only as of
      March
      16, 2007 (the “Report Date”), and readers are advised to consider such
      forward-looking statements in light of the risks set out below.




**Risks
      and Uncertainties**




The
      Company’s principal activity is mineral exploration and development. Companies
      in this industry are subject to many and varied kinds of risks, including but
      not limited to, environmental, commodity prices, political and
      economic.





The
      junior resource market, where the Company raises its funds, is volatile and
      there is no guarantee that the Company will be able to raise funds as it
      requires them. However, the Company has been successful to date in arranging
      financing and management is of the opinion that it will continue to do
      so.





Although
      the Company has taken steps to verify title to mineral properties in which
      it
      has an interest, there is no guarantee that the property will not be subject
      to
      title disputes or undetected defects.





The
      Company is subject to the laws and regulations relating to environmental matters
      in all jurisdictions in which it operates, including provisions relating to
      reclamation, discharge of hazardous material and other matters. The Company
      conducts its exploration activities in compliance with applicable environmental
      protection legislation and is not aware of any existing environmental problems
      related to its properties that may cause material liability to the
      Company.





**Subsequent
      Events**





Subsequent
      to December 31, 2006:





**(a)**  On
      January 11, 2007, the Company granted stock options to employees for the
      purchase of up to 963,800 common shares at a price of $1.36 per share expiring
      January 11, 2010.





**(b)**  Subsequent
      to December 31, 2006, the Company issued 200,000 common shares for proceeds
      of
      $82,500 pursuant to the exercise of 200,000 stock options.