** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-K**

 

| **x**                                                                                                                                                            | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
|                                                                                                                                                             |                                                                                                |
| **For the fiscal year ended December 31, 2007**                                                                                                             |
|                                                                                                                                                             |                                                                                                |
| **o**                                                                                                                                                            | **TRANSITION REPORT UNDER SECTION 13  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**   |
|                                                                                                                                                             |                                                                                                |
| **For the transition period from                        to** |

 

**Commission file number33-133725-01**

 

**US GOLD CANADIAN ACQUISITIONCORPORATION**

(Name of registrant as specified in itscharter)

 

| **Alberta, Canada**                                             | ** ** | **42-1701924**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
|                                                            |       |                                  |
| **165 South Union Blvd.,  Suite 565, Lakewood, CO**        | ** ** | **80228**                             |
| (Address of principal executive offices)                        |       | (Zip Code)                            |

 

(Registrant’s telephone number, including area code):**(303) 238-1438**

 

Securities registered pursuant to Section 12(b) of theAct:  **None**

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

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act.     Yes o  No x

 

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act.    o  Yes    x  No

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Exchange Act during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.    x  Yes    o  No

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-Kis not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,a non-accelerated filer, or a smaller reporting company.  See the definitions of “large acceleratedfiler,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 
| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer x                     |   | Smaller reporting company o |
|---------------------------|--------|---------------------|--------|---------------------------------------------|--------|-----------------------------|
|                      |   |                |   | (Do not check if smaller reporting company) |   |                        |

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2of the Act). o  Yes    x  No

 

**As of June 29, 2007 (thelast business day of the registrant’s second fiscal quarter), the aggregatemarket value of the registrant’s voting and non-voting common equity held bynon-affiliates was Cdn $123,128,000.  Asof March 27, 2008, the registrant had outstanding 1 share of common stockand 45,265,307 exchangeable shares, of which 32,885,307 were held byaffiliates.**

 

**DOCUMENTSINCORPORATED BY REFERENCE****:  None.**

 

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**TABLE OFCONTENTS**

 
| ** **        | ** **                                                                                        | **Page** |
|-------------------|---------------------------------------------------------------------------------------------------|----------|
|              |                                                                                              |     |
| **PART I**   |
|              |                                                                                              |     |
| ITEM 1            | BUSINESS                                                                                          | 1        |
| ITEM 1A           | RISK FACTORS                                                                                      | 4        |
| ITEM 1B           | UNRESOLVED STAFF  COMMENTS                                                                        | 10       |
| ITEM 2            | PROPERTIES                                                                                        | 10       |
| ITEM 3            | LEGAL PROCEEDINGS                                                                                 | 27       |
| ITEM 4            | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                              | 27       |
|              |                                                                                              |     |
| **PART II**  |
|              |                                                                                              |     |
| ITEM 5            | MARKET FOR  COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY  SECURITIES | 27       |
| ITEM 6            | SELECTED  FINANCIAL DATA                                                                          | 29       |
| ITEM 7            | MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS       | 29       |
| ITEM 7A           | QUANTITATIVE  AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                        | 34       |
| ITEM 8            | FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA                                                      | 35       |
| ITEM 9            | CHANGES IN AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE             | 54       |
| ITEM 9A           | CONTROLS AND  PROCEDURES                                                                          | 55       |
| ITEM 9B           | OTHER INFORMATION                                                                                 | 55       |
|              |                                                                                              |     |
| **PART III** |
|              |                                                                                              |     |
| ITEM 10           | DIRECTORS,  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                           | 56       |
| ITEM 11           | EXECUTIVE AND  DIRECTOR COMPENSATION                                                              | 57       |
| ITEM 12           | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF MANAGEMENT AND RELATED STOCKHOLDER  MATTERS   | 58       |
| ITEM 13           | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                        | 59       |
| ITEM 14           | PRINCIPAL  ACCOUNTING FEES AND SERVICES                                                           | 59       |
|              |                                                                                              |     |
| **PART IV**  |
|              |                                                                                              |     |
| ITEM 15           | EXHIBITS,  FINANCIAL STATEMENT SCHEDULES                                                          | 61       |
| SIGNATURES        | 63                                                                                                |
| EXHIBIT INDEX     | 64                                                                                                |

 

**ADDITIONALINFORMATION**

 

Descriptions of agreements or other documents inthis report are intended as summaries and are not necessarily complete.  Please refer to the agreements or otherdocuments filed or incorporated herein by reference as exhibits.  Please see the Exhibit Index at the endof this report for a complete list of those exhibits.

 

**SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS**

 

Please see the note under “**ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**,” for a description of special factors potentiallyaffecting forward-looking statements included in this report.

 

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**PART I**

 

**ITEM 1.                  BUSINESS**

 

**History and Organization**

 

US Gold CanadianAcquisition Corporation (“Canadian Exchange Co.,” “we,” “us,” or the “Company”)was organized under the laws of the Province of Alberta, Canada on April 18,2006 by its parent, US Gold Corporation (“US Gold”).  The Company was formed for the purpose offacilitating the proposed acquisition of certain Canadian companies which hadmineral exploration properties adjacent and in proximity to properties owned byUS Gold.  Those acquisitions werecompleted in 2007.  For a more detaileddescription of these acquisitions, *see* “**Developments During 2007****—****Acquisitions.**”

 

We are in the business of acquiring, exploring anddeveloping mineral properties in the United States, emphasizing the State of Nevadaand in Mexico.  We presently hold interests in numerous properties in the State ofNevada and one property in Utah, as well as properties in the Country ofMexico.  We are currently in theexploration stage and have never generated revenue from operations.  Our objective is to increasethe value of our shares through the exploration, development and extraction ofgold, silver and other valuable minerals. We generally conduct our business on a 100% basis, but may enter intoarrangements with other companies through joint venture or similar agreementsin an effort to achieve our objectives. We own our mineral interests and property and operate our businessthrough various subsidiary companies, each of which is owned entirely, directlyor indirectly, by us.  All references toCanadian Exchange Co. in this report include our subsidiaries as thecircumstances require.

 

Our principal executive offices are located at 165South Union, Suite 565, Lakewood, Colorado, 80228 and our telephone numberis (303) 238-1438.  We do not maintain awebsite separate from that of our parent, US Gold.  Our exchangeable shares were initially issuedto the public in March 2007 in connection with the tender offers for theshares of the Canadian exploration companies. Commencing April 16, 2007, our exchangeable shares were listed onthe Toronto Stock Exchange (TSX), under the symbol “UXE.”

 

As used in this report, opt represents ounces perton, gpt represents grams per tonne, ft. represents feet, m represents meters,km represents kilometer and sq. represents square.

 

**Developments During 2007**

 

InJune 2007, we completed three simultaneous acquisitions.  These acquisitions transformed CanadianExchange Co. into one of the Cortez Trend’s larger landholders, with interests in over 124 square miles.  We now control a total of 215 square miles inNevada.  We also acquired a largeprospective land position in Mexico with approximately 1,379 square miles ofmineral rights, including a former producing mine.  This mine is presently held on a care andmaintenance basis.

 

Following completion ofthese acquisitions, we and US Gold commenced an exploration programincorporating what we perceived to be high priority targets acquired from thethree Canadian companies.  We completed atotal of approximately 84,315 feet in exploration drilling during 2007, all inNevada.  In addition to drilling, wepursued geologic mapping, sampling, and geophysical surveys on the highpriority properties.

 

*Acquisitions*.  On June 28 and 29, 2007, we and US Goldcompleted the acquisition of all of the outstanding common shares of NevadaPacific Gold Ltd. (“Nevada Pacific”), Tone Resources Limited

 

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(“Tone”) and White KnightResources Ltd. (“White Knight”), which we refer to individually as an “AcquiredCompany” and collectively as the “Acquired Companies.”  The transactions completed on June 28and 29, 2007 represent the second stage of these acquisitions that wereoriginally commenced as tender offers in February 2007 (“Tender Offer”).  The first stage of the acquisitions wascompleted on March 28, 2007, at which time we acquired at least 80% of thecommon shares of each Acquired Company and took control of theiroperations.  The Acquired Companies wereacquired in exchange for the issuance of our exchangeable shares on thefollowing terms:

 

·         0.23 of an exchangeableshare for each outstanding common share of Nevada Pacific;

 

·         0.26 of an exchangeableshare for each outstanding common share of Tone, and

 

·         0.35 of an exchangeableshare for each outstanding common share of White Knight.

 

With these second stageacquisition transactions, the minority interests in the Acquired Companies notpreviously owned by us were acquired. Therefore, as of June 29, 2007, we and US Gold own 100% of theAcquired Companies.

 

In connection with theseacquisitions, we issued approximately 42,615,227 exchangeable shares for theAcquired Companies.  The exchangeableshares, by virtue of the redemption and exchange rights attached to them and theprovisions of certain voting and support agreements, provide the holders withthe economic and voting rights that are, as nearly as practicable, equivalentto those of a holder of shares of US Gold’s common stock.  The exchangeable shares are exchangeable forshares of common stock of US Gold on a one-for-one basis.  ThroughDecember 31, 2007, approximately 50% of the exchangeable shares originallyissued in connection with the acquisitions had been converted into anequivalent amount of US Gold’s common stock.

 

Nevada Pacific’s propertyportfolio in Nevada consists of explorationstage properties with over 80 square miles of mineral rights (expanded toapproximately 90 sq. miles by end of 2007), including portions of the Cortezand Carlin Trends and a single mineral property in Utah.  Its Mexican exploration portfolio coversapproximately 1,379 square miles of mineral rights in Mexico, including theMagistral Gold Mine in Sinaloa state, Mexico. The Magistral Mine, a former producing property, has not been inproduction since 2005 and as of March 8, 2008, is held on care andmaintenance basis.

 

White Knight has beenexploring for Carlin-type gold deposits in Nevada since 1993 and hasparticipated in option and joint venture agreements on its properties.  It holds interests in 19 properties in Nevadathat encompass approximately 115 square miles.

 

Tone controls interests ineight properties in Elko, Eureka, Lander andPershing counties in Nevada that encompass approximately 14.6 sq. miles.  The properties are subject to various royaltyinterests.  In addition, up to amaximum of two of the Tone mineral properties are subject to earn-in rights byTeck Cominco American Inc. (“Teck”), pursuant to a 2004 agreement.  Teck generally has the right to acquire a 50%joint venture interest in selected properties by spending approximately $2.84million on each property after Tone has first spent an aggregate of $.94million on each property or they may acquire up to a 70% joint venture interestupon other elections by Teck and performance of other obligations.  Tone has not reached the initial approximate$.94 million expenditure on any property subject to the Teck agreement and, asstated above, that agreement is limited to earn-in rights to a maximum of twoof the mineral properties.  *See* “**ITEM 2. PROPERTIES**”for a more detailed explanation of these properties.

 

*Exploration Overview*.  With the acquisitions completed, we now havea US land position of approximately 216 square miles.  Three top priority exploration areas havebeen identified subsequent to the acquisitions and are designated the Tonkin,Gold Bar and Limo Complexes.  The 2007exploration

 

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drilling program wasdeveloped to test targets in these areas of priority.  For 2007, company-wide exploration drillingtotaled 84,313 ft., all of which was in Nevada. During 2007, the Company incurred total exploration expenses ofapproximately $5.1 million, including drilling and assay costs, geophysical andgeophysical studies and costs of employees and consultants.  From our exploration program in 2007, we haveincreased our geologic knowledge of the high priority target areas, includingin some cases, reinterpretation of regional geology.  We have confirmed that we have favorablelower plate host rocks in some areas on our properties (which are a good hostrock for gold deposition), identified a number of mineralizing structures andadded information expected to result in expansion of known gold mineralization.

 

In 2008, we will evaluatethe 2007 results and will be aggressively exploring key projects inNevada.  In addition, we plan toundertake exploration, including drilling, at our Magistral Mine in Mexico andpossibly on our prospective Mexican mineral concessions outside the Magistralarea.

 

The 2007 explorationprogram, property holding and general and administrative costs, as well as thecosts of acquisitions, were generally funded by US Gold as well as cashacquired in the acquisitions.    *See***ITEM 7. MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**.

 

**Competitive Business Conditions**

 

We compete with manycompanies in the mining business, including large, established mining companieswith substantial capabilities, personnel and financial resources.  There is a limited supply of desirablemineral lands available for claim-staking, lease or acquisition in the UnitedStates, as well as in Mexico and other areas where we may conduct explorationactivities.  We may be at acompetitive disadvantage in acquiring mineral properties, since we compete withthese individuals and companies, many of which have greater financial resourcesand larger technical staffs.  From timeto time, specific properties or areas which would otherwise be attractive to usfor exploration or acquisition, are unavailable due to their previousacquisition by other companies or our lack of financial resources.

 

Competition in the industryis not limited to the acquisition of mineral properties, but also extends to thetechnical expertise to find, advance and operate such properties; the labor tooperate the properties; and the capital for the purpose of funding suchproperties.  Many competitors not onlyexplore for and mine precious metals, but conduct refining and marketingoperations on a world-wide basis.  Suchcompetition may result not only in our company being unable to acquiredesired properties, but also to recruit or retain qualified employees, toobtain equipment and personnel to assist in our exploration activities or toacquire the capital necessary to fund our operation and advance ourproperties.  Our inability to competewith other companies for these resources would have a material adverse effecton our results of operation and business.

 

**GeneralGovernment Regulations**

 

*United States*.  Mining in the States of Nevada and Utah aresubject to federal, state and local law. Three types of laws are of particular importance to our United Stateslocated mineral properties: those affecting land ownership and mining rights;those regulating mining operations; and those dealing with the environment.

 

The development, operation, closure and reclamationof mining projects in the United States requires numerous notifications,permits, authorizations and public agency decisions.  Compliance with environmental and relatedlaws and regulations requires us to obtain permits issued by regulatoryagencies and to file various reports and keep records of our operations.  Certain of these permits require

 

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periodicrenewal or review of their conditions and may be subject to a publicreview process during which opposition to our proposed operations may beencountered.  We are currently operatingunder various permits for activities connected to mineral exploration,reclamation and environmental considerations. Unless and until a mineral resource is proved, it is unlikely ouroperations will move beyond the exploration stage.  If in the future we decide to proceed beyondexploration, there will be numerous notifications, permit applications andother decisions to be addressed at that time. *See***ITEM 2, “PROPERTIES -Environmental and Governmental Regulations**,” for additionalinformation on government regulation affecting our business.

 

*Mexico*.  Exploration and development of minerals inMexico may be carried out through Mexican companies incorporated under Mexicanlaw by means of obtaining exploration and development (exploitation)concessions.  Exploration concessions are granted by the Mexican governmentfor a period of six years from the date of their recording in thePublic Registry of Mining and are notrenewable.  Holders of explorationconcessions may, prior to the expiration of such concessions, apply forone or more development concessions covering all or part of the area covered by an exploration concession.

 

Environmentallaw in Mexico provides for generalenvironmental policies, with specific requirements set forth underregulations of the Ministry of Environment, Natural Resources and Fishing,which regulate all environmental matters with the assistance of the NationalInstitute of Ecology and the Procuraduria Federal de Proteccion al Ambiente.

 

Theprimary laws and regulations governing environmental protection for mining inMexico are found in the General Law, theEcological Technical Standards and also in the air, water and hazardous wasteregulations, among others.  Inorder to comply with the environmental regulations, a concessionaire mustobtain a series of permits during the exploration stage.  Generally, these permits are issued on atimely basis after the completion of an application by a concessionholder.  We believe we are currently infull compliance with the General Law and its regulations in relation to our mineralproperty interests in Mexico.

 

**Employees**

 

Asof March 27, 2008, we had 24 employees, all located in Mexico.  US Gold supports the Company and all of itsother activities with its employees. None of our employees are covered by labor contracts and the Companybelieves we have good relations with our employees.  We also engage independent contractors inconnection with the exploration of our properties, such as drillers,geophysicists, geologists and other technical disciplines.

 

**ITEM 1A.****                                           ****RISKFACTORS**

 

Thisreport, including Management’s Discussion and Analysis of Financial Conditionand Results of Operations, contains forward-looking statements that may bematerially affected by several risk factors, including those summarized below:

 

***The feasibility of mining any of our properties has not beenestablished, meaning that we have******not completed exploration or otherwork necessary to determine if it is commercially******feasible to develop anyproperty. ***We arecurrently an exploration stage company. We have no proven or probable reserves on our properties.  A “reserve,” as defined by regulation of theSEC, is that part of a mineral deposit which could be economically and legallyextracted or produced at the time of the reserve determination.  A reserve requires a feasibility studydemonstrating with reasonable certainty that the deposit can be economicallyextracted and produced.  We have notcarried out any feasibility study with regard to all or

 

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a portion of ourproperties.  As a result, we currentlyhave no reserves and there are no assurances that we will be able to prove thatthere are reserves on our properties.

 

***We have incurred substantial losses since our inception in 2006 and maynever******be profitable.  ***Sinceour inception in 2006, we have not been profitable.  As of December 31, 2007, our accumulateddeficit was approximately $14.5 million. To become profitable, we must identify additional mineralization andestablish reserves at our mining properties, and then either develop ourproperties or locate and enter into agreements with third party operators.  It could be years before we receive anyrevenues from gold production, if ever. We may suffer significant additional losses in the future and may neverbe profitable.  We do not expect toreceive revenue from operations in the foreseeable future, if at all.  Even if we do achieve profitability, we maynot be able to sustain or increase profitability on a quarterly or annualbasis.

 

***We will require significant additional capital to continue ourexploration******activities and, if warranted, to develop mining operations. ***Substantial expenditures willbe required to determine if proven and probable reserves exist at any of ourproperties, to develop metallurgical processes to extract metal or develop themining and processing facilities and infrastructure at our existing or any ofour newly-acquired properties or mine sites. We will be required to expend significant amounts for geological andgeochemical analysis, assaying and, if warranted, feasibility studies withregard to the results of our exploration. We may not benefit from these investments if we are unable to identifycommercially exploitable mineralized material. If we are successful in identifying reserves, we will requiresignificant additional capital to construct a mill and other facilitiesnecessary to extract those reserves.  Ourability to obtain necessary funding, either directly or through US Gold, in turn,depends upon a number of factors, including the status of the national andworldwide economy and the price of gold. We or US Gold may not be successful in obtaining the required financingfor these or other purposes on terms that are favorable to us or at all, inwhich case, our ability to continue operating would be adversely affected.  Failure to obtain such additional financingcould result in delay or indefinite postponement of further exploration and thepossible partial or total loss of our potential interest in certain properties.

 

***We may have overpaid for the shares of the Acquired Companies. ***The price that we paid forthe Acquired Companies was based in part on the perceived benefits of thoseacquisitions.  However, there is noassurance that the acquisition of the Acquired Companies will result in any orall of the benefits that we envision.  Inthe event that one or more of the acquisitions does not prove to be beneficialto us, the market price of our shares may decline.

 

***Fluctuating gold prices could negatively impact our business plan. ***The potential forprofitability of our gold mining operations and the value of our miningproperties are directly related to the market price of gold.  The price of gold may also have a significantinfluence on the market price of our shares. If we obtain positive drill results and progress one of our propertiesto a point where a commercial production decision can be made, our decision toput a mine into production and to commit the funds necessary for that purposemust be made long before any revenue from production would be received.  A decrease in the price of gold at any timeduring future exploration and development may prevent our property from beingeconomically mined or result in the write-off of assets whose value is impairedas a result of lower gold prices.  Theprice of gold is affected by numerous factors beyond our control, includinginflation, fluctuation of the United States dollar and foreign currencies,global and regional demand, the purchase or sale of gold by central banks andthe political and economic conditions of major gold producing countriesthroughout the world.  During the lastfive years, the average annual market price of gold has ranged between$364 per ounce and $696 per ounce, as shown in the table below:

 

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**Average Annual Market Price of Gold (per oz.)**

 

| **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** | **2007** | ** ** |
|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| $        | 364        |     | $          | 406      |       | $        | 445        |     | $          | 604 |   | $ | 696 |   |
|          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

 

The volatility of mineralprices represents a substantial risk which no amount of planning or technicalexpertise can fully eliminate.  In theevent gold prices decline and remain low for prolonged periods of time, wemight be unable to develop our properties or produce any revenue.

 

***Our continuing reclamation obligations at properties could require******significant additionalexpenditures. ***We areresponsible for the reclamation obligations related to disturbances located onall of our properties.  We or US Goldmaintain surety bonding as required for operations in the United States. Nosurety bonding is required for reclamation in Mexico.  There is a risk that any cash bond, even ifaugmented upon update of the reclamation obligations, could be inadequate tocover the costs of reclamation which could subject us to additional costs forthe actual reclamation obligations.  Thesatisfaction of bonding requirements and continuing reclamation obligationswill require a significant amount of capital. There is a risk that we will be unable to fund these additional bondingrequirements, and further, that the regulatory authorities may increasereclamation and bonding requirements to such a degree that it would not becommercially reasonable to continue exploration activities.

 

***Title to mineral properties can be uncertain  and we are at risk of loss of ownership******of one or more of ourproperties. ***Our abilityto explore and operate our properties depends on the validity of title to thatproperty.  The mineral properties makingup our United States properties consist of leases of unpatented mining claimsand unpatented mining claims.  Unpatentedmining claims provide only possessory title and their validity is often subjectto contest by third parties or the federal government, which makes the validityof unpatented mining claims uncertain and generally more risky.  These uncertainties relate to such things asthe sufficiency of mineral discovery, proper posting and marking of boundaries,assessment work and possible conflicts with other claims not determinable fromdescriptions of record.  Since asubstantial portion of all mineral exploration, development and mining in theUnited States now occurs on unpatented mining claims, this uncertainty isinherent in the mining industry.  We havenot obtained a title opinion on any of our properties, with the attendant riskthat title to some claims, particularly title to undeveloped property, may bedefective.  There may be valid challengesto the title to our property which, if successful, could impair developmentand/or operations.

 

We remain at risk that themining claims may be forfeited either to the United States or to rival privateclaimants due to failure to comply with statutory requirements as to locationand maintenance of the claims or challenges to whether a discovery of avaluable mineral exists on every claim.

 

***Pursuant to applicable rules ofthe SEC, our duty to file reports with that agency will be suspended followingthe filing of this report, meaning that it may be more difficult for investorsto obtain up-to-date information about our operations and financial condition. ***Due to the limited number ofour security holders of record at January 2, 2008, applicable rules ofthe SEC allow us to suspend filing reports for the remainder of this year andunless and until our security holders of record exceed 300 at the beginning ofany subsequent year.  Consequently, thisreport is the last report that we will file for this year and we may not filesimilar reports in the future.  For thisreason, the detailed information contained in this report, including thedescription of our business, properties, results of operation, financialcondition and audited financial information, may not be available to investorsin the future.  This will make it moredifficult for current security holders and prospective investors to obtain currentinformation about our company.

 

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***Our properties in Mexicoare subject to changes in political conditions and regulations in thatcountry. ***Our MagistralMine and the surrounding concessions are located in Mexico.  In the past, that country has been subject topolitical instability, changes and uncertainties which may cause changes toexisting government regulations affecting mineral exploration and miningactivities.  Civil or political unrestcould disrupt our operations at any time. Our exploration and mining activities may be adversely affected invarying degrees by changing government regulations relating to the miningindustry or shifts in political conditions that could increase the costsrelated to our activities or maintaining our properties.  Finally, Mexico’s status as a developingcountry may make it more difficult for us to obtain required financing for thisproperty.

 

***Our ongoing operations and past mining activities are subject******to environmental risks, which couldexpose us to significant liability and delay, suspension or******termination of our operations. ***All phases of the operationsof the Acquired Companies are subject to federal, state and local environmentalregulation.  These regulations mandate,among other things, the maintenance of air and water quality standards and landreclamation.  They also set forthlimitations on the generation, transportation, storage and disposal of solidand hazardous waste.  Environmentallegislation is evolving in a manner which will require stricter standards andenforcement, increased fines and penalties for non-compliance, more stringentenvironmental assessments of proposed projects and a heightened degree ofresponsibility for companies and their officers, directors and employees.  Future changes in environmental regulation,if any, may adversely affect our operations, make our operations prohibitivelyexpensive or prohibit them altogether. Environmental hazards may exist on the properties in which we may holdinterests in the future, including the properties of the Acquired Companies,that are unknown to us at the present and that have been caused by us, one ofthe Acquired Companies or previous owners or operators, or that may haveoccurred naturally.  Under applicablefederal and state environmental laws, prior property owners may be liable forremediating any damage that those owners may have caused.  Mining properties that the Acquired Companiesmay have transferred may cause us to be liable for remediating any damage thatthose companies may have caused.  Theliability could include response costs for removing or remediating the releaseand damage to natural resources, including ground water, as well as the paymentof fines and penalties.

 

***We cannot assure you that we will have an adequate supply of water tocomplete******desired exploration or development of our mining property. ***In accordance with the laws ofthe State of Nevada, US Gold has obtained permits to drill the water wells thatwe currently use to service the historic Tonkin property which may also be usedfor exploration activities on our properties. However, the amount of water that US Gold is entitled to use from thosewells must be determined by the appropriate regulatory authorities.  A final determination of these rights isdependent in part on US Gold’s ability to demonstrate a beneficial use for theamount of water that we intend to use. Unless US Gold is successful in developing a property to a point whereit can commence commercial production of gold or other precious metals, US Goldmay not be able to demonstrate such beneficial use.  Accordingly, there is no assurance that wewill have access to the amount of water needed to operate a mine at ourproperties.

 

***We depend on US Gold to provide us with personnel and the loss by USGold of any of its limited personnel******could adversely affect our business.***  Two persons, namely our Chairman andChief Executive Officer and our Vice President and Chief Financial Officer, arecritical to the anticipated success of our business.  Robert R. McEwen, our Chairman and ChiefExecutive Officer, is also the Chairman and Chief Executive Officer of US Goldand is responsible for strategic direction and the oversight of our business ofthat of US Gold.  William F. Pass, ourVice President and Chief Financial Officer, is responsible for our publicreporting and administrative functions. We rely heavily on these individuals for the conduct of our business.  Mr. Pass announced his intention ofretiring in the spring of 2008 and in March 2008, US Gold hired hisreplacement.  The loss of any of ourexisting officers would significantly and adversely affect our business.  In that event, we would be forced to identifyand retain an

 

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individual to replace thedeparted officer.  We or US Gold may notbe able to replace one or more of these individuals on terms acceptable tous.  We have no life insurance on thelife of any officer.

 

***The nature of mineral exploration and production activities involves ahigh degree of******risk and the possibility of uninsured losses that could materially andadversely******affectour operations. ***Explorationfor minerals is highly speculative and involves greater risk than many otherbusinesses.  Many exploration programs donot result in the discovery of mineralization and any mineralization discoveredmay not be of sufficient quantity or quality to be profitably mined.  Few properties that are explored areultimately advanced to the stage of producing mines.  Our current exploration efforts are, and anyfuture development or mining operations we may elect to conduct will be,subject to all of the operating hazards and risks normally incident toexploring for and developing mineral properties, such as, but not limited to:

 

·                            economicallyinsufficient mineralized material;

 

·                            fluctuations inproduction costs that may make mining uneconomical;

 

·                            labor disputes;

 

·                            unanticipatedvariations in grade and other geologic problems;

 

·                            environmentalhazards;

 

·                            waterconditions;

 

·                            difficultsurface or underground conditions;

 

·                        industrialaccidents;

 

·                        metallurgicaland other processing problems;

 

·                        mechanical andequipment performance problems;

 

·                        failure of pitwalls or dams;

 

·                        unusual orunexpected rock formations;

 

·                        personal injury,fire, flooding, cave-ins and landslides; and

 

·                        decrease inreserves due to a lower gold price.

 

Any of these risks canmaterially and adversely affect, among other things, the development ofproperties, production quantities and rates, costs and expenditures andproduction commencement dates.  Wecurrently have no insurance to guard against any of these risks.  If we determine that capitalized costsassociated with any of our mineral interests are not likely to be recovered, wewould incur a writedown of our investment in these interests.  All of these factors may result in losses inrelation to amounts spent which are not recoverable.

 

***We do not insure against all risks to which we may be subject in ourplanned******operations. ***Whilewe currently maintain, through US Gold, insurance to insure against generalcommercial liability claims, our insurance will not cover all of the potentialrisks associated with our operations. For example,

 

8

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we do not have insurance onthe mine assets associated with the Magistral property and we do not havebusiness interruption insurance.  We mayalso be unable to obtain insurance to cover other risks at economicallyfeasible premiums or at all.  Insurancecoverage may not continue to be available or may not be adequate to coverliabilities.  We might also becomesubject to liability for environmental, pollution or other hazards associatedwith mineral exploration and production which may not be insured against, whichmay exceed the limits of our insurance coverage or which we may elect not toinsure against because of premium costs or other reasons.  Losses from these events may cause us toincur significant costs that could materially adversely affect our financialcondition and our ability to fund activities on our property.  A significant loss could force us to reduceor terminate our operations.

 

***Our share price may be volatile and as a result you could lose all orpart of your******investment. ***Thevalue of your investment could decline due to the impact of any of thefollowing factors upon the market price of our shares:

 

·                            changes in theworldwide price for gold;

 

·                            disappointingresults from our exploration or development efforts;

 

·                            failure to meetour operating budget;

 

·                            decline indemand for our securities;

 

·                            downwardrevisions in securities analysts’ estimates or changes in general marketconditions;

 

·                            technologicalinnovations by competitors or in competing technologies;

 

·                            investorperception of our industry or our prospects; and

 

·                            generaleconomic trends.

 

In addition, securitiesmarkets generally have experienced extreme price and volume fluctuations andthe market prices of securities generally have been highly volatile.  These fluctuations are often unrelated tooperating performance of a company and may adversely affect the market price ofour shares.  As a result, investors maybe unable to resell their shares at a fair price.

 

***The holders ofexchangeable shares have limited voting rights, which could limit your abilityto influence the outcome of any shareholder vote***.  The holders of exchangeable shares are onlyentitled to elect one of our three directors. In addition, our executive officers as well as US Gold, beneficially ownapproximately 73% of our exchangeable shares as of March 21, 2008.    As a result, these individuals and entitieswill be able to significantly influence the outcome of any votes of the holdersof exchangeable shares for the foreseeable future.  US Gold is the owner of our one share ofoutstanding common stock, which gives it the rights to vote on all significanttransactions affecting the company, including votes concerning the election ofdirectors, amendments to our articles of incorporation or proposed mergers orother significant corporate transactions.

 

***We have never paid adividend on our shares and we do not anticipate paying any in the foreseeablefuture***.  We have notpaid a dividend on our shares to date and we may not be in a position to paydividends in the foreseeable future.  Ourability to pay dividends will depend on our ability to successfully develop oneor more properties and generate revenue from operations.  Further, our initial earnings, if any, willlikely be retained to finance our growth. Any future dividends will depend upon our

 

9

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earnings, our then-existingfinancial requirements and other factors, and will be at the discretion of ourBoard of Directors.

 

***Our operations are subjectto permitting requirements which could require us to delay, suspend orterminate our operations on our mining property***.  Our operations, including ongoing explorationdrilling program, require permits from the state and federal governments.  We may be unable to obtain these permits in atimely manner, on reasonable terms or at all. If we cannot obtain or maintain the necessary permits, or if there is adelay in receiving these permits, our timetable and business plan forexploration of our properties will be adversely affected.

 

***Legislation has beenproposed that would significantly affect the mining industry***.  Periodically, members of the US Congresshave introduced bills which would supplant or alter the provisions of theGeneral Mining Law of 1872, which governs the unpatented claims that we controlwith respect to our U.S. properties.  Onesuch amendment has become law and has imposed a moratorium on patenting ofmining claims, which reduced the security of title provided by unpatentedclaims such as those on our United States properties.  If additional legislation is enacted, itcould substantially increase the cost of holding unpatented mining claims byrequiring payment of royalties and could significantly impair our ability todevelop mineral resources on unpatented mining claims.  Such bills have proposed, among other things,to make permanent the patent moratorium, to impose a federal royalty onproduction from unpatented mining claims and to declare certain lands asunsuitable for mining.  Although it isimpossible to predict at this time what royalties may be imposed in the future,the imposition of such royalties could adversely affect the potential fordevelopment of such mining claims and the economics of existing operating mineson federal unpatented mining claims. Passage of such legislation could adversely affect our business.

 

**ITEM 1B.****                                           ****UNRESOLVEDSTAFF COMMENTS**

 

None.

 

**ITEM 2.****                                                    ****PROPERTIES**

 

**Introduction**

 

Weacquired various mineral properties with the acquisition of Nevada Pacific,White Knight and Tone (the “Acquisitions”) in transactions described above in “**Item 1. BUSINESS**.” With the Acquisitions, we have a Nevada land position equal toapproximately 217 square miles, of which approximately 124 square miles arelocated on the Cortez Trend.  We alsoacquired approximately 0.8 square miles in Utah and approximately 1,379 square miles of mineralrights in Mexico, including the Magistral Gold Mine located in the state ofSinaloa, Mexico.  The followingtable summarizes the US land position of our company as of December 31,2007, grouped by Acquired Company:

 

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| ** **                                   | ** ** | **All Nevada except as noted, and County** | ** ** | **Trend/Location** | ** ** | **Claims** | ** ** | **Approx Sq. miles** | ** ** |
|----------------------------------------------|------------|--------------------------------------------|------------|--------------------|------------|------------|------------|----------------------|------------|
| Nevada Pacific                               |       |                                       |       |               |       |       |       |                 |       |
| Bat Ridge (Utah)                             |       | Utah - Beaver                              |       | Beaver Lake        |       | 161        |       | .80                  |       |
| BMX                                          |       | Humbolt/Lander                             |       | Cortez             |       | 531        |       | 16.30                |       |
| Buffalo Canyon                               |       | Nye                                        |       | Walker Lane        |       | 33         |       | 1.50                 |       |
| Clover Valley                                |       | Elko                                       |       | Spruce Mtn.        |       | 54         |       | 1.68                 |       |
| Cornerstone                                  |       | Eureka                                     |       | Cortez             |       | 158        |       | 4.80                 |       |
| Keystone                                     |       | Cortez                                     |       | Cortez             |       | 371        |       | 11.60                |       |
| Limo                                         |       | White Pine                                 |       | Carlin             |       | 1,330      |       | 40.00                |       |
| South Carlin                                 |       | Elko                                       |       | Carlin             |       | 72         |       | 2.00                 |       |
| Timber Creek                                 |       | Humboldt                                   |       | Cortez             |       | 311        |       | 8.00                 |       |
| Valmy                                        |       | Humboldt                                   |       | Cortez             |       | 94         |       | 2.90                 |       |
| Subtotal of US properties for Nevada Pacific |       |                                       |       |               |       | 3,115      |       | 89.58                |       |
|                                         |       |                                       |       |               |       |       |       |                 |       |
| White Knight                                 |       |                                       |       |               |       |       |       |                 |       |
| Benmark                                      |       | Eureka                                     |       | Cortez             |       | 100        |       | 2.53                 |       |
| Celt                                         |       | Eureka                                     |       | Cortez             |       | 608        |       | 19.64                |       |
| Cottonwood                                   |       | Eureka                                     |       | Cortez             |       | 216        |       | 6.09                 |       |
| Fye Canyon                                   |       | Eureka                                     |       | Cortez             |       | 345        |       | 9.88                 |       |
| Gold Bar Horst                               |       | Eureka                                     |       | Cortez             |       | 183        |       | 5.71                 |       |
| Gold Pick  Fee Land                          |       | Eureka                                     |       | Cortez             |       | 27         |       | 0.94  0.30           |       |
| Goldstone                                    |       | Eureka                                     |       | Cortez             |       | 62         |       | 1.86                 |       |
| Hunter                                       |       | Eureka                                     |       | Cortez             |       | 48         |       | 1.74                 |       |
| Ian                                          |       | Eureka                                     |       | Cortez             |       | 56         |       | 1.72                 |       |
| Knolls                                       |       | Humboldt                                   |       | Getchell           |       | 180        |       | 5.68                 |       |
| McClusky Pass                                |       | Eureka                                     |       | Cortez             |       | 243        |       | 7.83                 |       |
| New Pass                                     |       | Churchill                                  |       | Austin-Lovelock    |       | 107        |       | 3.49                 |       |
| Pat Canyon                                   |       | Eureka                                     |       | Cortez             |       | 178        |       | 5.60                 |       |
| Patty                                        |       | Eureka                                     |       | Cortez             |       | 544        |       | 15.64                |       |
| Slaven Canyon  Fee Land                      |       | Lander                                     |       | Cortez             |       | 258        |       | 8.08  2.23           |       |
| South Cabin Creek                            |       | Eureka                                     |       | Cortez             |       | 84         |       | 2.71                 |       |
| Squaw Creek                                  |       | Elko                                       |       | Carlin             |       | 151        |       | 4.75                 |       |
| Tonkin Summit                                |       | Eureka                                     |       | Cortez             |       | 186        |       | 5.98                 |       |
| Vermouth                                     |       | Eureka                                     |       | Cortez             |       | 85         |       | 2.74                 |       |
| Subtotal for White Knight                    |       |                                       |       |               |       | 3,661      |       | 115.14               |       |
|                                         |       |                                       |       |               |       |       |       |                 |       |
| Tone                                         |       |                                       |       |               |       |       |       |                 |       |
| Big Antelope Springs                         |       | Lander                                     |       | Getchell           |       | 24         |       | .80                  |       |
| Fish Creek                                   |       | Lander                                     |       | Getchell           |       | 75         |       | 2.30                 |       |
| Gold Bar North                               |       | Eureka                                     |       | Eureka             |       | 19         |       | .60                  |       |
| Kent Springs                                 |       | Pershing                                   |       | Getchell           |       | 10         |       | .30                  |       |
| Kobeh                                        |       | Eureka                                     |       | Eureka             |       | 133        |       | 4.10                 |       |
| Red Ridge                                    |       | Elko                                       |       | Carlin             |       | 23         |       | 3.90                 |       |
| Roberts Creek                                |       | Eureka                                     |       | Eureka             |       | 54         |       | 1.70                 |       |
| South Keystone                               |       | Eureka                                     |       | Eureka             |       | 28         |       | .90                  |       |
| Subtotal for Tone                            |       |                                       |       |               |       | 366        |       | 14.60                |       |
|                                         |       |                                       |       |               |       |       |       |                 |       |
| Total US Properties                          |       |                                       |       |               |       | 7,142      |       | 216.67               |       |

 

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The following Nevada trendmap and property location map is presented to generally indicate the locationof the trends and US Gold historic Tonkin property and our properties (pleasenote that we have a very limited interest in the Tonkin Complex):

 

 

Forpurposes of organizing and describing our exploration efforts in the UnitedStates, we have grouped our properties into four complexes, the Tonkin Complex,the Gold Bar Complex, the Limo Complex and the Battle Mountain Complex.  Mineral properties outside these areas andwhere limited exploration work has been performed by us to date are grouped as“Other United States Properties.”

 

Inaddition to the above US properties, we acquired mineral concessions in Mexicofrom Nevada Pacific, including the Magistral Mine.  The MagistralMine was previously operated as an open pit mining operationhistorically producing approximately 70,000 ounces of gold through heap leachprocessing facilities and last operated in July 2005.  TheMagistral Mine is located in northwestern México, within

 

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Sinaloa state, Mocorito Municipality, México.  In addition to the Magistral Mine complex ofapproximately 38 sq. miles, we acquired exploration concessions consisting ofapproximately 1,341 sq. miles located in the Mexican states of Sinaloa, Nayaritand Durango.  In aggregate, we controlapproximately 1,379 sq. miles of mineral concessions in Mexico.

 

The following mapillustrates the general location of the Magistral Mine and surrounding mineralconcessions in Mexico:

 

 

**Tonkin Complex**

 

TheTonkin Complex includes US Gold’s historic Tonkin property, together withadditional properties and interests acquired by us from the AcquiredCompanies.  As shown in the graphic on page 15,the Tonkin Complex is divided functionally into five areas:  the Mine Corridor, Tonkin North, Patty,Keystone and Tweed.  Our interest in theTonkin Complex represents approximately 49 square miles.

 

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TheTonkin Complex is located on the Cortez Trend, approximately 48 miles by roadnorthwest from Eureka, Nevada, 85 miles by road southwest from Elko and 245miles by road east from Reno.  Thenearest commercial airport is located in Elko.

 

TheTonkin Complex includes US Gold’s historic mine site from operations in the1980’s with several small open pits, stockpile areas, plant and establishedinfrastructure, in which we have no interest. In 1988 and 1989, an integrated carbon-in-leach bacterial oxidationplant was built by US Gold.  The plantand associated infrastructure was decommissioned and put on care andmaintenance in June 1990, but apart from the SAG mill, which has beenremoved, it is complete and we believe it is in relatively good condition.  These assets of US Gold are available tosupport our properties and exploration activities.

 

Explorationdrilling on our portion of the Tonkin Complex for 2007 totaled 42,226 ft. in 45drill holes.  Additional explorationefforts at the Complex by us included geologic mapping, sampling andgeophysical surveys.  Our objective forthe 2007 program at the Tonkin Complex was to identify feeders to knownmineralization in US Gold’s Mine Corridor and to expand that knownmineralization, as well as to test new targets elsewhere within our properties.

 

The following graphicdepicts the Tonkin Complex including the historic Tonkin property of US Gold notowned by the Company:

TheKeystone area of the Tonkin Complex includes both gold and base metal targetsand the 2007 program was focused on testing the base metal potential as well astypical Carlin-style gold systems. Potential for mineralization at Keystone occurs within lower plateNevada Group Limestone in close proximity to a granodiorite intrusive.  A historic surface sample at Keystonereturned values of

 

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silver/zinc/copper/leadwith an approximate metal value of $2,200 per ton 2007 prices.  Two Carlin style gold targets and the basemetal target were drilled in 2007 with twenty-three reverse circulation andcore holes.  Assay results from the goldtargets generally showed little gold but did exhibit strongly anomalouspathfinder elements.  Assay results fromthe base metal target contained only low grade silver/zinc/copper/leadmineralization.  Targets farther from theintrusive are now believed to hold the best potential for mineralization andadditional drilling is proposed for 2008.

 

TheTonkin Complex also includes the Patty Project in which we hold a non-operatingminority interest (30%) and where Barrick Gold U.S. Inc. (“Barrick”) is managerand holds a 60% interest.  The PattyProject is a large property (approximately 15.6 sq. miles) located in thenortheast portion of the Tonkin Complex. The 2007 exploration program expenditures totaled approximately$631,106, of which our portion was $189,317. The 2008 exploration program is budgeted for $222,350, of which ourshare is $66,705.  The 2008 programincludes detailed project review, review of historic drilling at the property,and target generation.  Barrick hasindicated that the potential exists to increase the 2008 program to includeexploration drilling as the program develops. From discussions with Barrick, we believe that certain of the goldmineralizing structures being evaluated at Patty could extend on to our otherproperties to the north and east of existing mineralization located in the MineCorridor.

 

The mineral interests of theCompany included in the Tonkin Complex are set forth in the following table:

 
| **Tonkin Complex Properties** | ** ** | **Properties  Acquired from** | ** ** | **Claims** | ** ** | **Approx  Sq. miles** | ** ** |
|-------------------------------|------------|-------------------------------|------------|------------|------------|-----------------------|------------|
|                          |       |                          |       |       |       |                  |       |
| Cornerstone                   |       | Nevada Pacific                |       | 158        |       | 4.80                  |       |
| Keystone                      |       | Nevada Pacific                |       | 371        |       | 11.60                 |       |
| Fye Canyon                    |       | White Knight                  |       | 345        |       | 9.88                  |       |
| Pat Canyon                    |       | White Knight                  |       | 178        |       | 5.60                  |       |
| Patty                         |       | White Knight                  |       | 544        |       | 15.64                 |       |
| South Keystone                |       | Tone                          |       | 28         |       | .90                   |       |
|                          |       | Total                         |       | 1,624      |       | 48.42                 |       |

 

TheCompany generally holds mineral interests in the Tonkin Complex throughunpatented mining claims, leases of unpatented mining claims and joint ventureand other agreements.  Unpatented miningclaims are held subject to paramount title in the United States.  In order to retain these claims, we must payannual maintenance fees to the Bureau of Land Management, or BLM, and countieswithin which the claims are located. Rates for these jurisdictions vary and may change over time.  Other obligations which must be met includeobtaining and maintaining necessary regulatory permits and lease and optionpayments to claim owners.

 

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*Cornerstone Property Lease*.  The Cornerstone property includes claims withinand adjacent to the historic US Gold Tonkin property.  ThroughNevada Pacific, we hold an undivided portion of the Cornerstone property (106claims) pursuant to a mining lease made effective as of May 25, 2004 (the “Lease”) which extends for a period of10 years and is renewable in 5-year increments to a maximum term notexceeding 99 years, subject to certain conditions.  The lessor has a sliding-scale gross production royalty of 3-4% of gross production inrespect to gold and silver, as well as other royalties on other valuablematerials.  The Lease requires annualminimum advance royaltypayments ofthe greater of $50,000 or the dollar equivalent of 130 ounces of gold.  In addition, the Lease requires annual work expenditures of $50,000.  We believe that current and pastexploration are sufficient to hold the lease and the Company has acarry-forward work commitment balance. The Company has a legal dispute with the Lessor concerning NevadaPacific’s rights of first refusal under the Lease, related to the 2007 sale ofa 70% interest in the lease and to the covered mineral claims.  If the Company is successful in this disputeit may have the opportunity to acquire a 70% undivided interest in the Leaseand the mineral claims subject thereto.

 

Toneproperties are generally subject to certain royalty and back in rights.  Please see the “**Other UnitedStates Properties**” section below for further information.

 

*Patty Property Joint Venture*.  The Patty Property is located in EurekaCounty, Nevada and consists of 544unpatented mining claims totaling approximately 15.64 sq. miles.  As noted above, the Company, through WhiteKnight, owns a 30% undivided interest in the Patty Property subject to ajoint venture with Barrick as 60% owner and operator.  Chapleau Resources Ltd. owns the remaining10% undivided interest.

 

**GoldBar Complex**

 

TheGold Bar Complex is located south of the Tonkin Complex on the continuation ofthe Cortez Trend and includes property acquired from White Knight andTone.  The Gold Bar Complex is in theRoberts Creek Mountains, in Eureka County, Nevada, approximately 30 air milesnorthwest of the town of Eureka.  TheComplex may be accessed by traveling approximately 26 miles west of Eureka onU.S. Highway 50, 17 miles north on county maintained and graded Three BarRoad.  Several unimproved dirt roads leadfrom there up into the project area.

 

16

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The following graphicdepicts the Gold Bar Complex:

 

 

Explorationdrilling on priority targets at the Gold Bar Complex in 2007 totaledapproximately 21,150 ft. (6,447 m) and included the Cottonwood and Macbethareas.  Geologic mapping and geochemicalsampling were also conducted on the property. While favorable host rocks were encountered in the 2007 drilling, nostrong gold mineralization was identified.

 

TheCottonwood area occurs along the western edge of the Roberts Mountains windowcovering a major northwest window bounding structure.  Numerous Carlin-type silicified breccias withareas of anomalous surface gold mineralization are present along the majorstructure and at intersections with structures of other orientations.

 

AtMacbeth, two parallel northeast-trending features have been identified thatparallel another feature with historic gold mineralization which was mined by athird party in the 1980s.  Theinformation gathered on stratigraphy and fault zones in 2007 will be useful indeveloping the 2008 exploration program. In addition, results of all drilling, mapping and sampling, bothhistoric and recent, are currently being modeled in a 3-D (three dimensional)geologic framework to assist in directing our future exploration.

 

Wehave also commenced an updated independent engineering estimate of remaininggold resources for the Gold Bar Complex which will reflect historic and updatedtechnical data, along with relevant gold price assumptions.  This estimate is scheduled to be completedduring the first half of 2008.

 

Geologically,known mineralization at the Gold Bar Complex is hosted by Devonian limestonesand limy siltstones and is located along the Battle Mountain-Eurekamineral belt.  Compilationof historic data is ongoing and has led to new interpretations in certainareas.  Geochemical data from soilsampling reveal linear features trending to the NE that parallel a geologicstructure near the historically mined Gold Pick and Gold Canyon open pits.  From the early 1980’sthrough approximately 1994, the Gold Bar

 

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districtproduced slightly less than 500,000 oz gold for independent third parties fromfive Carlin-type gold deposits (Gold Bar, Gold Stone, Gold Pick, Gold Ridge,and Gold Canyon.)

 

Mineralinterests included in the Gold Bar Complex are set forth in the followingtable:

 

 

| **Gold Bar Complex  Properties** | ** ** | **Properties  Acquired from** | ** ** | **Claims** | ** ** | **Approx   Sq. miles** | ** ** |
|----------------------------------|------------|-------------------------------|------------|------------|------------|------------------------|------------|
| Benmark                          |       | White Knight                  |       | 100        |       | 2.53                   |       |
| Celt                             |       | White Knight                  |       | 608        |       | 19.64                  |       |
| Cottonwood                       |       | White Knight                  |       | 216        |       | 6.09                   |       |
| Gold Bar Horst                   |       | White Knight                  |       | 183        |       | 5.71                   |       |
| Gold Pick                        |       | White Knight                  |       | 27         |       | .94                    |       |
| Goldstone                        |       | White Knight                  |       | 62         |       | 1.86                   |       |
| Hunter                           |       | White Knight                  |       | 48         |       | 1.74                   |       |
| McClusky Pass                    |       | White Knight                  |       | 243        |       | 7.83                   |       |
| South Cabin Creek                |       | White Knight                  |       | 84         |       | 2.71                   |       |
| Tonkin Summit                    |       | White Knight                  |       | 186        |       | 5.98                   |       |
| Gold Bar North                   |       | Tone                          |       | 19         |       | .60                    |       |
| Kobeh                            |       | Tone                          |       | 133        |       | 4.10                   |       |
| Roberts Creek                    |       | Tone                          |       | 54         |       | 1.70                   |       |
|                             |       | Total                         |       | 1,963      |       | 61.43                  |       |

 

Toneproperties are generally subject to certain royalty and back-in rights.  Please see the “**Other UnitedStates Properties**” section below for further information.

 

**Limo Property**

 

TheLimo Property was acquired with Nevada Pacific and is located in east-centralNevada, along the eastern portion of Butte Valley and along the western edge ofthe Cherry Creek Range.  The property iswithin White Pine County and about 40 miles northwest of Ely, the county seat.  It is located at the southern end of theCarlin Trend.

 

Theproject area lies between the historic Cherry Creek Mining District to thenortheast and the deeply buried Butte Valley copper-molybdenum porphyry depositto the southwest.  The northeast-trendingBlack Metals fault system stretches between the two areas, and controlsmineralization along its 15 mile length. Access is gained from US Highway 93 via the town of Cherry Creek andfrom US 50 via the Thirty Mile gravel road. Except for periods of heavy snowfall or excessive mud, the property isaccessible most of the year

 

Whenwe acquired it, the Limo Property was a large, 30 sq. mile property withhistoric production of approximately 93,000 ounces of gold.  With additional claim staking by us in 2007,the property position now totals approximately 41 sq. miles.  We consider this property to be highlyprospective.  Gold mineralization hasbeen identified in numerous places along the 15 mile length of the property.

 

18

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The following graphicdepicts the Limo Complex:

 

 

The2007 drilling at Limo focused on two areas, Resurrection Ridge and Ticup, andwas designed to accomplish three objectives: expand known mineralization and increase grade, test for continuitybetween the mineralized areas and obtain information for an initial estimate ofmineralized material, all of which were accomplished.

 

Weconsider the Limo Property to be a high priority and plan additionalexploration drilling and other work in 2008. Exploration drilling in 2007 totaled approximately 18,860 ft. in 36drill holes.  Thirteen core and 23reverse circulation holes were completed. In addition, surface soil geochemical sampling was completed on selectedareas and geologic mapping and surface rock chip sampling were alsoaccomplished.

 

Of the 2007 drilling, 31 holes were drilled onResurrection Ridge and 5 on the Ticup prospect. Historic holes drilled on the entire property total 847.  A large portion of the historic holes wereconcentrated on Resurrection Ridge and on the Golden Butte and North Butteresources areas.

 

The2007 work continues to expand the known mineralization and has begun to outlinewhat the Company believes is a potential higher grade zone at ResurrectionRidge.

 

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The best results onResurrection Ridge were:

 
| Hole L-23 |   | 0.161 opt gold over 50 ft. |   |
|-----------|--------|----------------------------|--------|
| Including |   | 0.235 opt gold over 15 ft. |   |
|      |   | 0.278 opt gold over 15 ft. |   |

 

Hole23 is located 325 ft. southwest of hole L-10 (containing 0.126 opt gold over 21ft) 500 ft. southwest of hole RR04-07 (containing 0.249 opt gold over 60 ft.)

 

Explorationin the North Butte zone, northwest of Resurrection Ridge, was designed tobetter define the grade distribution of the mineralization in order to developan initial resource estimate.  Drillingreturned long intercepts of lower grade mineralization.  The most significant results for this areawere:

 
| Hole L-29 |   | 0.018 opt gold over 185  ft. |   |
|-----------|--------|------------------------------|--------|
|      |   | 0.022 opt gold over 30 ft.   |   |
|      |   |                         |   |
| Hole L-18 |   | 0.024 opt gold over 20 ft.   |   |
|      |   | 0.022 opt gold over 90 ft.   |   |
| Including |   | 0.111 opt gold over 5 ft.    |   |

 

Explorationalso tested a possible connection between the mineralization at ResurrectionRidge and the mineralization at North Butte. Based on the drill results, we believe that these are two separatezones.

 

Ourexploration work suggests that the higher grade gold mineralization discoveredat Resurrection Ridge has the potential to exist along a trend six miles to thenortheast toward Ticup and three miles to the southwest, into an area known asCadillac Valley.  Results for the fiveholes drilled at Ticup in 2007 returned a best intercept of 0.020 opt gold over4 ft.  Despite being lower- grade, theseearly results help support our model, as the mineralization found at Ticup issimilar to that at North Butte.  With theincreased level of knowledge obtained from the 2007 exploration program, we arehopeful that our 2008 exploration program will expand the higher grademineralization to the northwest and southwest.

 

Metallurgicaltesting and geological modeling are also under way to determine the amount ofrecoverable gold in preparation for an initial resource estimate at Limo.  Past drilling has identified numerous areasof mineralization on the property, however much of the historic data is notcompliant with today’s reporting standards for mineralized resourcematerial.  We are currently analyzingwhere further drilling needs to be done in order to complete future resourceestimate updates.  An initial resourceestimate is scheduled to be completed during the first half of 2008.

 

Miningby third parties at the Golden Butte pit within the Limo Complex producedapproximately 91,000 ounces of gold from 1987-1989.  Subsequent exploration has resulted in thediscovery of the North Butte resource and a zone of higher grade structures atnearby Resurrection Ridge.  Goldoccurrences along the claim block have resulted in the discovery of severalresource areas.

 

Themineral interests controlled by us in the Limo property consist ofapproximately 1,330 contiguous claims. The land package extends about 15 miles and covers much of the westernside of the southern Cherry Creek Range.

 

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Mineral interests includedin the Limo property are set forth in the following table:

 
| **Limo Properties** | ** ** | **Properties  Acquired with** | ** ** | **Claims** | ** ** | **Approx   Sq. miles** | ** ** |
|---------------------|------------|-------------------------------|------------|------------|------------|------------------------|------------|
| Limo                |       | Nevada  Pacific               |       | 1,330      |       | 41.00                  |       |
|                |       | Total                         |       | 1,330      |       | 41.00                  |       |

 

TheLimo Property was previously subject to a joint venture between Nevada Pacificand Newmont Gold Company (“Newmont”), andin March 2003, Nevada Pacific acquired the interest of Newmont inreturn for a net smelter returns royalty granted to Newmont on a sliding scaleof 1.5% to 2.5% on all production from the property and from any claim acquiredby Nevada Pacific within one mile of the property, with an advance payment toNewmont of $1.0 million to be made at the commencement of commercial productionand credited against future royalty payments. Newmont has assigned this royalty interest to Franco-Nevada Corporation.

 

**BattleMountain Complex**

 

Inconjunction with the Acquisitions in 2007, we acquired various propertyinterests which have been grouped under the designation “Battle MountainComplex.”  The Battle Mountain Complex isgenerally located within Humboldt and LanderCounties in the valleys and on the flanks of the mountains surrounding BattleMountain on the Cortez Trend.  BattleMountain, Nevada, located off Interstate 80, is the closest town.

 

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The following graphicdepicts the Battle Mountain Complex:

** **

****

** **

In2007 we evaluated the Slaven and Hits properties with a total of 2,075 ft. ofdrilling in two holes drilled at Slaven and a single partial hole at Hits.  Additional exploration drilling may beplanned in 2008 for the Valmy and Hits projects, as well as other targets inthe Battle Mountain Complex.

 

Thegeneral exploration model for the Battle Mountain Complex is structurallycontrolled, Carlin-style mineralization, in structurally-controlled,intrusive-related, quartz-adularia-sericite, low-sulfidation deposits and/orskarn mineralization similar to the nearby Fortitude and Nike/Conversedeposits.

 

The mineral interestsincluded in the Battle Mountain Complex are set forth in the following table: 

 
| **Battle Mountain  Complex Properties** | ** ** | **Properties  Acquired from** | ** ** | **Claims** | ** ** | **Approx   Sq. miles** | ** ** |
|-----------------------------------------|------------|-------------------------------|------------|------------|------------|------------------------|------------|
| BMX                                     |       | Nevada  Pacific               |       | 531        |       | 16.30                  |       |
| Timber Creek (Hits)                     |       | Nevada  Pacific               |       | 311        |       | 8.00                   |       |
| Valmy                                   |       | Nevada  Pacific               |       | 94         |       | 2.90                   |       |
| Slaven Canyon                           |       | White  Knight                 |       | 258        |       | 10.30                  |       |
| Fish Creek                              |       | Tone                          |       | 75         |       | 2.30                   |       |
|                                    |       | Total                         |       | 1,269      |       | 39.80                  |       |

 

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Toneproperties are generally subject to certain royalty and back in rights.  Please see the “**Other UnitedStates Properties**” section below for further information.

 

**Other United StatesProperties**

 

Through the Acquisitionscompleted during 2007, we acquired a number of mineral properties in Nevada andUtah, some of which are subject to option agreements as discussed furtherbelow. With the focus by us on high priority targets as discussed above, littleexploration work was completed on other properties not subject to agreementswith third parties. Mineral interests included in Other Properties are setforth in the following table: 

 

| **Other United  States Properties** | ** ** | **Properties   Acquired with** | ** ** | **Claims** | ** ** | **Approx.   Sq. miles** | ** ** |
|-------------------------------------|------------|--------------------------------|------------|------------|------------|-------------------------|------------|
| Bat Ridge                           |       | Nevada Pacific                 |       | 161        |       | .80                     |       |
| Buffalo Canyon                      |       | Nevada Pacific                 |       | 33         |       | 1.50                    |       |
| Clover Valley                       |       | Nevada Pacific                 |       | 54         |       | 1.68                    |       |
| South Carlin                        |       | Nevada Pacific                 |       | 72         |       | 2.00                    |       |
| New Pass                            |       | White Knight                   |       | 107        |       | 3.49                    |       |
| Squaw Creek                         |       | White Knight                   |       | 151        |       | 4.75                    |       |
| The Knolls                          |       | White Knight                   |       | 180        |       | 5.81                    |       |
| Big Antelope Springs                |       | Tone                           |       | 24         |       | .80                     |       |
| Kent Springs                        |       | Tone                           |       | 10         |       | .30                     |       |
| Red Ridge                           |       | Tone                           |       | 23         |       | 3.90                    |       |
| Vermouth                            |       | White Knight                   |       | 85         |       | 2.74                    |       |
|                                |       | Total                          |       | 900        |       | 27.77                   |       |

 

The mineral properties included in the acquisitionof Tone are generally subject to 1% net smelter return royalty interest infavor of KM Exploration Ltd, a Nevada limited liability company, and certain ofthe properties are subject to back-in rights in favor of Teck Cominco AmericanIncorporated (“Teck”) pursuant to a 2004 Financing and Acquisition Agreement.  Teck generally has the right to acquire a 50%joint venture interest in certain properties by spending approximately $2.84million on each property after Tone has first spent an aggregate of $0.94million on each property or up to 70% joint venture interest upon otherelections by Teck and performance of other obligations.  Tone properties subject to the Teck agreementinclude Roberts Creek, Kobeh, Gold Bar North, South Keystone and Big AntelopeSprings.  Red Ridge, Fish Creek and KentSprings have been excluded under the Teck agreement.  However, Teck has certain first rights if theCompany determines to sell the Red Ridge property.  Through December 31, 2007, we had notreached the initial required expenditure on any property subject to the Teckagreement and, as stated above, that agreement is limited to earn-in rights toa maximum of two of the mineral properties

 

In2004, White Knight entered into an option agreement on the New Pass and SquawCreek properties with Consolidated Odyssey Exploration Inc. (“Odyssey”) whereby Odyssey may earn an initial 50% interestin each property.  Terms included cashpayments to White Knight of $500,000 and 500,000 of its common shares perproperty (which have been paid) as well as $2,000,000 in explorationexpenditures per property over a four-year period.  Odyssey may earn an additional 10% interestin each property by financing the completion of a feasibility study.  Subsequently, Odyssey assigned all its rightsunder the option agreement to BonaventureEnterprises Inc., a Canadian corporation (“Bonaventure.”) During the earn-inperiod, Bonaventure is responsible for all property holding costs.

 

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**Mexican Properties**

 

Weacquired property in Mexico, including the Magistral Mine, with the acquisitionof Nevada Pacific in 2007.  The MagistralMine, located in Sinaloa State, produced approximately 70,000 ounces of goldfrom 2002-2004 before it was shut down due to higher than anticipated operatingcosts and a lack of working capital when gold was approximately $400 perounce.  In late 2006, the Magistral minewas placed on care and maintenance basis.

 

The Magistral Mine consists of 38 sq. miles (61 sq. km)of mineral concessions located in the Sinaloa state, of northwestern Mexico in Mocorito Municipality.  Theproject is located approximately 100 kilometers by air northwest of the Sinaloastate capital city of Culiacán inthe western foothills of the Sierra Madre Occidental mountainrange.  The project area is locatedapproximately 22 kilometers northeast from the village of Mocorito,approximately 40 kilometers northeast from the town of Guamuchil, and approximately 150 kilometers southeast from the city ofLos Mochis.  It is a former producing open pit miningoperation, with heap leach processing facilities, that until July 2005,was operating at a production rate of 900,000 ore tonnes per year.  Past production has primarily come from theSan Rafael and Samaniego Hill deposits, with the San Rafael deposit beingcompletely mined out.  Potential future production could come from the three areasof mineralized material, Samaniego Hill, Sagrado Corazón, and Lupita, aswell as from extension of the La Prieta high grade zones encountered inhistoric mining.  There are additionalexploration targets in the area, some of which are planned to be tested in2008.

 

Inaddition to the Magistral Mine complex, we acquired exploration concessionsconsisting of approximately 1,341 sq. miles (2,158 sq. km) located in theMexican states of Sinaloa, Nayarit and Durango. In the aggregate, we control approximately 1,379 sq. miles (2,219 sq.km) of mineral concessions in Mexico.

 

We own our interest in the Magistral Mine through NevadaPacific’s ownership of Pangea ResourcesInc. which in turn holds 100 percent ownership of Minera Pangea S.A. deC.V. (“Minera Pangea”).  Minera Pangea holds seven mining concessions andhas option to an additional three concessions. The titles are granted under Mexican mining law and are issued bySecretaria de Economía, Coordinación General de Minera, Dirección General deMinas (Dirección de Minas).

 

Weintend to initiate our first exploration program at the Magistral Mine in early2008.  The focus of this program will beto explore for possible extensions of the La Prieta high-grade vein observed inhistoric mining and to identify other similar veins at the property.  Numerous vein structures have been identifiedon our concessions immediately surrounding the mine site.  Our total property position in the Magistralarea is approximately 615 sq. miles (990 sq. km), providing an excellentopportunity to discover additional vein-style mineralization  Holding costs associated with all of theMexican properties are approximately $1.6 million per year.

 

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The following map depictsthe location of the Magistral District and the surrounding concessions:

 

In 2005, Nevada Pacific commenced a limited explorationand drilling program focused on targets in the immediate area ofMagistral with drilling of 10 holes totaling997 m at Lupita, and seven holes totaling 778 m at Sagrado Corazón.  In addition, the geophysical programdemonstrated the high grade mineralization found at the La Prieta vein doeshave an anomalous response to Induced Polarization techniques.  Other areas included in the survey in closeproximity to La Prieta also show a similar anomalous response.  The 2008 planned exploration program willfollow up on this potential at La Prieta.

 

*Geology and Other Information*. Mineralization in the Magistral area consists of silicified structuralzones occurring within sheared, broken and propylitically altered volcanicrocks.  The Samaniego Hill structural trend consists of a complex set ofmajor and minor structural zones, with a general northwest strike and amoderate dip to the southwest.

 

Morerecent mining activities began when Pangea started exploring the project inearly 1995, initially for Mogul Mining NLand subsequently for Santa Cruz Gold Inc. From mid-1995 to early 1997, extensive drilling was conducted byPangea/Santa Cruz Gold on the San Rafael and Samaniego Hill deposit areas, aswell as locally extensive drilling on the Sagrado Corazón-Central-Lupitadeposit area.  In 1998, Santa Cruzconducted a limited amount of additional drilling for metallurgical samples,reverse circulation hole verification, in-fill purposes and condemnation ofpotential surface facility locations.  In1999, after a merger with Santa Cruz Gold, Queenstake conducted a further limited drilling program to 

 

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step-out/in-fill drill in the Samaniego Hill deposit andto obtain pit-slopegeotechnical samples from both the San Rafael and Samaniego Hill deposits.  Queenstake conducted a drillingcampaign from late 2001 to early 2002 in the La Prieta Zone of the SamaniegoHill deposit to delineate extensions of the high grade La Prieta zone along strike and down dip.

 

The Magistral mine includesdesirable assets and infrastructure associated with heap leach operations atthe mine site and is currently used as our base for exploration.  Infrastructure at Magistral includes officesand process buildings, as well as a heavy equipment maintenance shop andwarehouse.  A laboratory has the capacityfor fire assays along with atomic absorption and includes a standardmetallurgical testing facility. Telecommunications are provided by a microwave system that providesmodern telephone and internet service. The process plant includes a carbon circuit with a capacity of 12 tonsof activated carbon.  The gold recoverysystem includes a zinc precipitation circuit. The plant is powered by four 175 kw diesel generators.  The heavy fleet of used equipment includes 4CAT 777B haul trucks, 5 Eucid R-50 trucks, as well as various loaders,excavators, bulldozers and blasthole drills.

 

*Care and Maintenance**. *In October 2006,the mine was placed on care and maintenance. Mining equipment remains parked but is maintainedby a small maintenance staff.  Thepumping ofsolutions and operation ofother plant equipment will continue on an “as needed” basis to maintain safepond levels and to ensure the plant equipment can be returned to servicewhen and if a decision to restart the mine is made.  Staffing levels have been maintained to theminimum required for these efforts and also to support exploration in the mine area.  Themine serves as a base for exploration efforts. Care and maintenance costs associated with Magistral in 2007 totaledapproximately $1.1 million, with property and concession payments ofapproximately $0.3 million for total annual holding costs of Mexican assets of$1.4 million.

 

*MexicoMining Regulations*.  Exploration andexploitation of minerals in Mexico may be carried out through Mexican companiesincorporated under Mexican law by means of obtaining exploration andexploitation concessions.  Exploration concessions are granted by the Mexican governmentfor a period of six years from the date of their recording in thePublic Registry of Mining and are not renewable.

 

Holders of exploration concessions may, prior to theexpiration of such exploration concessions, apply for one or moreexploitation concessions covering all or part of the area covered by an exploration concession.  Failure to do so prior to expiration of theterm of the exploration concessionwillresult in termination of the concession. An exploitation concession has a term of 50 years, generally renewablefor a further 50 years upon applicationwithin five years of the expiration of such concession.  Both exploration and exploitationconcessions are subject to annual work requirements and payment of annualsurface taxes which are assessed and leviedon a semi-annual basis.  Such concessionsmay be transferred or assigned by their holders, but such transfers orassignments must be registered in order to be valid against third parties.

 

Theholder of a concession must pay semi-annual duties in January and July ofeach year.  Concessionaires for both exploration and exploitation must perform work,each year, that must begin within ninety days of the concession beinggranted.  Concessionaires must file each May proofof the work performed.  Non-compliancewith these requirements is cause for cancellation of the correspondingconcessions.

 

Mexicanmining law does not require payment of finder’s fees or royalties to thegovernment, except for a discovery premiumin connection with national mineral reserves, concessions and claims orallotments contracteddirectly fromthe Council of Mineral Resources.  Noneof the claims held by any subsidiaries of Nevada Pacific are under sucha discovery premium regime.

 

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There are no limitations on the total amount of surfacecovered by exploration or exploitation concessions or on the amountof land held by an individual or company. Excessive accumulation of land is regulated indirectly through theduties levied on the property and the production requirements as outlinedabove.

 

*MexicoEnvironmental Law**.*  TheEnvironmental Law in Mexico called the *GeneralLaw of Ecological Balance and Protection to the Environment*(“GeneralLaw”), provides for general environmental policies, with specific requirementsset forth in regulations called “Ecological Technical Standards.”Responsibility for enforcement of the General Law, the regulations and theEcological Technical Standards is with the Ministry of Environment, NaturalResources and Fishing, which regulate all environmental matters with theassistance of the National Institute of Ecology and the Procuraduria Federal deProteccion al Ambiente.

 

Theprimary laws and regulations governing environmental protection for mining inMexico are found in the General Law, theEcological Technical Standards and also in the air, water and hazardous wasteregulations, among others.  Inorder to comply with the environmental regulations, a concessionaire mustobtain a series of permits during the exploration stage.  Generally, these permits are issued on atimely basis after the completion of an application by a concession holder.  We believe the subsidiaries of Nevada Pacificare currently in full compliance with the General Law and its regulations inrelation to their mineral property interests.

 

Thecosts of projected reclamation of the Magistral mine and complex is currentlyestimated at approximately $2.7 million. The Company is in the process of reviewing the reclamation cost estimatewhich might result in an increase or decrease to this estimate.  Under Mexican regulations surety bonding ofprojected reclamation costs is not required. We carry an estimated liability for asset retirement obligation (similarto reclamation) in our financial statements.

 

**ITEM 3.****                                                    ****LEGALPROCEEDINGS**

 

Weare not currently subject to any legal proceedings, and to the best of ourknowledge, no such proceeding is threatened, the results of which would have amaterial impact on our properties, results of operation or financialcondition.  Nor, to the best of ourknowledge, are any of our officers or directors involved in any legalproceedings in which we are an adverse party.

 

**ITEM 4:****                                                   ****SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

Nomatters were submitted to a vote of our security holders during the fourthquarter of the fiscal year covered by this report.

 

**PART II**

 

**ITEM 5.****                                                    ****MARKETFOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES**

 

**MarketInformation**

 

Our exchangeableshares commenced trading on the Toronto Stock Exchange on April 16, 2007,under the symbol “UXE.”  There is nomarket in the United States for our common equity.

 

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The table belowsets forth the high and low sales prices of our exchangeable shares in Canadiandollars on a quarterly basis as reported by TSX from April 16, 2007 to December 31,2007:

 
| ** **                                | ** ** | **High** | ** ** | **Low** | ** ** |
|-------------------------------------------|------------|----------|------------|---------|------------|
| **Year Ended December 31, 2007**     |       |     |       |    |       |
| Second Quarter (commencing April 17) |       | $        | 7.80       |    | $          | 5.00 |   |
| Third Quarter                             |       | 7.26     |       | 5.01    |       |
| Fourth Quarter                            |       | 6.30     |       | 2.44    |       |
|                                           |            |          |            |         |            |  |  |

 

As of March 27,2008, there were approximately 150 record holders of our exchangeable shares.

 

**Transfer Agent**

 

Computershare Trust Company of Canada is the transferagent for our exchangeable shares.  Theprincipal office of Computershare is 600, 530 — 8th Avenue SW,Calgary, Alberta, Canada T2P 3S8 and its telephone number is (403) 267-6569.

 

**Dividend Policy**

 

We have never declared or paid dividends on any ofour stock.  Payment of future dividends,if any, will be at the discretion of our Board of Directors after taking intoaccount various factors, including the terms of any credit arrangements, ourfinancial condition, operating results, current and anticipated cash needs andplans for growth.  Our initial earnings,if any, will likely be retained to finance our growth.  At the present time, we are not party to anyagreement that would limit our ability to pay dividends.

 

**Securities Authorized for Issuance Under EquityCompensation Plans**

 

Set out below is information as of December 31,2007 with respect to compensation plans (including individual compensationarrangements) under which our equity securities are authorized for issuance.

 
| **Plan Category**                                          | ** ** | **Number of securities to be issued upon exercise of outstanding  options, warrants and rights (a)** | ** ** | **Weighted average exercise price per share of outstanding options,  warrants and rights (b)** | ** ** | **Number of securities remaining available for future issuance under  equity compensation plans (excluding securities reflected in column (a)) (c)** | ** ** |
|------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation plans approved by security holders     |       | 0                                                                                                    |       | —                                                                                         |       | 0                                                                                                                                                    |       |
| Equity compensation plans not approved by security holders |       | 0                                                                                                    |       | —                                                                                         |       | 0                                                                                                                                                    |       |
| TOTAL                                                      |       | 0                                                                                                    |       |                                                                                           |       | 0                                                                                                                                                    |       |

 

Inconnection with the acquisition of the Acquired Companies, we assumed stockoptions covering 812,918 shares of our common stock.  Following the exercise of 170,125 optionsduring 2007, a total of 642,793 options remain exercisable at December 31,2007.  However, upon exercise of any ofthese options, the holder will receive shares of US Gold common stock.

 

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| **ITEM 6.** | ** ** | **SELECTED FINANCIAL DATA** |
|-------------|------------|-----------------------------|

 

| ** **                                      | ** ** | **Year Ended December 31,**              | ** ** |
|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                      | ** ** | **2007**                                      | ** ** | **2006** | ** ** |
| ** **                                      | ** ** | **(US$ in thousands except share data)** | ** ** |
| **Operating data**                              | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Net loss from operations                        |       | $                                             | (8,602     | ) | $ | (6,834 | ) |
| Other income                                    |       | 596                                           |       | — |   |
| Net loss                                        |       | (7,684                                        | )          | (6,834 | ) |
| Basic and diluted loss per share                |       | $                                             | (0.25      | ) | N/A |   |
| Weighted average shares                         |       | 31,307,805                                    |       |   |   |
|                                            |       |                                          |       |   |   |
| **Balance sheet data**                          | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Cash and cash equivalents                       |       | $                                             | 898        |   | $ | 0 |   |
| Property, plant and equipment, net              |       | 3,934                                         |       | — |   |
| Mineral property interests                      |       | 253,689                                       |       | — |   |
| Goodwill                                        |       | 107,017                                       |       | — |   |
| Other assets                                    |       | 3,665                                         |       | — |   |
| Total assets                                    |       | $                                             | 369,203    |   | $ | 0 |   |
|                                            |       |                                          |       |   |   |
| Current liabilities                             |       | $                                             | 148        |   | $ | — |   |
| Long-term obligations                           |       | 12,418                                        |       | 6,834 |   |
| Deferred income tax liability                   |       | 88,187                                        |       | — |   |
| Other long-term liabilities                     |       | 176                                           |       | — |   |
| Shareholders’ equity (deficit)             |       | 268,274                                       |       | (6,834 | ) |
| Total liabilities and shareholders’ equity |       | $                                             | 369,203    |   | $ | — |   |

 
| **ITEM 7.** | ** ** | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|------------|-------------------------------------------------------------------------------------------------|

 

**Introduction**

 

The following discussion describes our plan ofoperation for the foreseeable future.  Italso analyzes our financial condition at December 31, 2007 and compares itto our financial condition at December 31, 2006.  The discussion also summarizes and comparesthe results of our operations for the years ended December 31, 2007 and2006.

 

We were organized in 2006 to facilitate theacquisition of the three Canadian companies engaged in the exploration for goldand other metals with operations adjacent to or in proximity to US Gold’shistoric Tonkin property, located in the State of Nevada.  These acquisitions were completed in 2007 andincluded Nevada Pacific, Tone and White Knight. As a result, we commenced operations in March 2007.  We now hold an interest in numerousproperties in the State of Nevada and one property in Utah, as well propertiesin the Country of Mexico.  In theaggregate, we hold an interest in approximately 218 square miles in the UnitedStates and approximately 1,379 square miles in Mexico.  We are currently in the exploration stage andhave never generated revenue from operations. We conduct all of our business through our operating subsidiaries.

 

In connection with theseacquisitions, we issued approximately 42,615,227 exchangeable shares for theAcquired Companies.  The transactionscompleted on June 28 and 29, 2007, represented the second stage ofacquisitions that were originally commenced as tender offers in February 2007.  With these second stage acquisitiontransactions completed in June 2007, the minority interests in theAcquired 

 

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Companies not previouslyowned by us were acquired.  Therefore, weand US Gold own 100% of the Acquired Companies as of June 30, 2007.

 

Ourexploration program for 2007 incorporated what we perceived to be high prioritytargets acquired with the acquisitions of the Acquired Companies.  We completed a total of approximately 84,315feet in exploration drilling during 2007, all in Nevada.  In addition to drilling, we pursued geologicmapping, sampling and geophysical surveys on the high priority properties.  Total cost of exploration efforts in 2007were approximately $5.1 million.

 

**Plan ofOperation**

 

Ourplan of operation for 2008 is to continue with a focused exploration andevaluation program at certain of our United States properties and to initiateexploration efforts in Mexico.  Followingacquisition of the Acquired Companies, we undertook a strategic evaluation ofour Mexican assets, including the Magistral Mine and additional concessionswhich were acquired from Nevada Pacific. Following the evaluation, we have determined to conduct furtherexploration on those properties.

 

Werely upon US Gold for our capital needs along with the possible exercise ofwarrants since we are not generating revenue. We believe US Gold has adequate cash to fund our ongoing operationsthrough 2008 and for most of 2009.  USGold may seek additional capital funding during 2008 or beyond depending uponmarket conditions and other circumstances. We and US Gold may also consider strategic alternatives which couldinclude, but are not limited to, acquisition or disposition of assets, debtfinancing or other corporate transactions.

 

**Liquidity and Capital Resources**

 

As of December 31, 2007, we hadworking capital of $2,178,656, comprised of current assets of $2,327,135 andcurrent liabilities of $148,479.  Thisrepresents an increase of $2,178,655 from the working capital of $1 at year-endDecember 31, 2006.  During 2006, USGold made all required expenditures on our behalf, totaling $6,833,845.  This balance is reflected as an intercompanyobligation at December 31, 2006. During both 2007 and 2006, US Gold provided us certain administrativeand management support without charging us for those services.  For 2007, costs and services provided byUS Gold and related to our properties were charged to us.

 

We used $8,253,551 of cash in ouroperations for the year ended December 31, 2007 compared to $0 in2006.  Cash paid to suppliers andemployees was $8,350,550 for the 2007 period, primarily reflecting explorationexpenses, general and administrative costs and property holding costs.   Cash provided by investing activities forthe year ended December 31, 2007 was $286,931, primarily reflecting$6,039,551 of cash acquired with the acquisitions offset by acquisition costsof $5,314,004.

 

Cash provided by financing activities for2007 increased to $8,217,142, including $3,195,648 of cash advances by US Goldand the exercise of stock options and warrants of $5,021,488.  The effect of exchange rate change on cashand cash equivalents was $647,815 for the 2007 period with no comparable amountin 2006.

 

Ourimmediate capital requirements include exploration and holding costs at ourvarious mineral properties.  We believeUS Gold has adequate resources for those purposes through 2008 and most of2009.  However, if we are successful inidentifying material amounts of additional mineralization, additional capitalmay be required to conduct feasibility studies and, if warranted, placing oneor more of our properties into production. We expect that any such capital requirements will be satisfied fromoutside sources in the form of either debt or equity financing.

 

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**TabularDisclosure of Contractual Obligations**

 

*Schedule of Contractual Obligations*.  The following table summarizes ourobligations and commitments as of December 31, 2007 to make futurepayments under certain contracts, aggregated by category of contractualobligation, for specified time periods:

 
| ** **                    | ** ** | ** ** | ** ** | **Payments due by period** | ** ** |
|-------------------------------|------------|------------|------------|----------------------------|------------|
| **Contractual Obligations**   | ** ** | **Total**  | ** ** | **Less than 1 year**       | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **More than 5 years** | ** ** |
| Operating Lease Obligations   |       | $          | 4,350      |                       | $          | 4,350 |   | $ | — |   | $ | — |   | $ | — |   |
| Asset Retirement  Obligations |       | 2,388,476  |       | —                     |       | 242,948 |   | — |   | 2,145,528 |   |
| Total                         |       | $          | 2,392,826  |                       | $          | 4,350 |   | $ | 242,948 |   | $ | — |   | $ | 2,145,528 |   |

 

**Results of Operations**

 

***Year Ended December 31, 2007compared to 2006***

 

*General*.  For the year ended December 31,2007, we recorded a loss before minority interests of $8,072,440 or $(0.26) pershare, compared to a net loss of $6,833,845 for 2006.  Our only activity in 2006 was preparing forthe acquisitions.

 

*Costs and Expenses**.*  General and administrative expense for theyear ended December 31, 2007 increased $626,491 compared to 2006, since wehad no general and administrative expenses in 2006.  As noted above, during 2006 and 2007, US Goldsupported the management processes of the Company without charging the Companyfor such services.

 

Acquisition costs for the 2007 perioduntil the date the acquisitions were considered probable, approximately January 31,2007, were $419,823 while during 2006, $6,833,845 was recorded.  Property holding costs for the 2007 periodrelated to the properties of the Acquired Companies after the acquisition dateof March 28, 2007 were $2,099,630 while in 2006, we held no properties.

 

Exploration costs in the 2007 period were$5,102,495, reflecting an active drilling program at certain Nevada properties,with no comparable costs in 2006. Accretion of asset retirement obligation for 2007, primarily reflectingthe Magistral mine properties, was $100,586. Depreciation costs in the 2007 period were $252,494, again primarilyreflecting depreciation of the Magistral mine assets subsequent to the March 28,2007 date of acquisition.

 

*Other Income (Expense)**.*  Interest expense for 2007 was $107,289primarily reflecting non-cash accruals. During 2007, we recorded a foreign currency gain of $621,625 mainly dueto the weakening U.S. dollar against the Canadian dollar and its effect on ournet monetary assets that are denominated in Canadian dollars.

 

**Critical Accounting Policies**

 

We believe the following critical accounting policiesare used in the preparation of our consolidated financial statements.

 

*Mineral Property Interests, Exploration andDevelopment Costs***:**  Mineral property interestsinclude acquired mineral, development and exploration stage properties.  The amount capitalized related to a mineralproperty interest represents its fair value at the time it was acquired, eitheras an individual 

 

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assetpurchase or as a part of a business combination.  The value of such assets is primarily drivenby the nature and amount of mineralized material believed to be contained insuch properties.  Exploration costs are expensed as incurred.  Development costs are capitalized when provenand probable reserves exist and the property is a commercially minableproperty.  Mine development costsincurred either to develop new ore deposits, expand the capacity of operatingmines or to develop mine areas substantially in advance of current production arecapitalized.  Costs incurred to maintaincurrent production or to maintain assets on a standby basis are charged tooperations.  Costs of abandoned projectsare charged to operations upon abandonment. The Company periodically evaluates whether events or changes incircumstances indicate that the carrying value of mineral property interestsand related property, plant and equipment may not be recoverable.  Recoverability and impairment is measured bycomparing net book value to estimated fair value.

 

*AssetRetirement Obligation*:  TheCompany implemented SFAS No. 143, “Accounting for Asset RetirementObligations,” effective January 1,2003. SFAS No. 143 requires the fair value of a liability for an assetretirement obligation to be recognized in the period that it is incurred if areasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of thecarrying amount of the long-lived asset. Ongoing environmental andreclamation expenditures are credited to the asset retirement obligation asincurred to the extent they relate to asset retirement obligation and toexpense to the extent they do not so apply.

 

*Goodwill*:  The Company has identified two reportingunits, United States and Mexico, and assigned goodwill to these reporting unitsas appropriate.  The Companyevaluates, on at least an annual basis, the carrying amount of goodwill bycomparing the estimated fair value of its reporting units to their carryingamounts.  If the carrying value of areporting unit exceeds its estimated fair value, the Company compares theimplied fair value of the reporting unit’s goodwill to its carrying amount andany excess of the carrying value over the fair value is charged toearnings.  The Company’s fair valueestimates are based on numerous assumptions and it is possible that actual fairvalue will be significantly different than the estimates, as actual futurequantities of recoverable minerals, gold and other commodity prices, productionlevels and operating costs of production and capital are each subject to significantrisks and uncertainties.

 

*Business Combinations**:*  The Company evaluates acquisitions todetermine if the transaction should be accounted for as a business combinationor an asset acquisition based upon the criteria set forth in Emerging Issues TaskForce (“EITF”) Issue No. 98-3, “Determining Whether a Non-MonetaryTransaction Involves Receipt of Productive Assets or of a Business.” Thedetermination of whether a transaction results in a business combinationinvolves some judgment and in the event our determination was inappropriate,our accounting for such transaction could be significantly different.

 

**Recent Pronouncements**

 

InSeptember 2006, the Financial Accounting Standards Board (“FASB”) issuedSFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework formeasuring fair value and expands disclosures about fair valuemeasurements.  This statement addresseshow to calculate fair value measurements required or permitted under otheraccounting pronouncements.  SFAS No. 157is effective for fiscal years beginning after November 15, 2007.  We are currently evaluating the impact ofadoption of SFAS No. 157 on our financial statements.

 

InSeptember 2006, the FASB issued Statement of Financial Accounting StandardsNo. 158, “Employers’ Accounting for Defined Benefit Pension and OtherPostretirement Plans, an amendment of FASB Statements No. 87, 106, and132(R)”.  SFAS No. 158 requirescompanies to recognize a net liability or asset and an offsetting adjustment toaccumulated other comprehensive income to report the 

 

32

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fundedstatus of defined benefit pension and other postretirement benefit plans.  SFAS No. 158 requires prospectiveapplication, recognition and disclosure requirements effective for a company’sfiscal year ending December 31, 2007. Additionally, SFAS No. 158 requires companies to measure planassets and obligations at their year-end balance sheet date.  This requirement is effective for a company’sfiscal year ending December 31, 2009. We are currently evaluating the impact of the adoption of SFAS No. 158and do not expect that it will have a material impact on our financialstatements.

 

In December 2007, theFASB issued FASB Statement No. 141(R), “Business Combinations,” whichamends SFAS No. 141, and provides revised guidance for recognizing andmeasuring identifiable assets and goodwill acquired, liabilities assumed andany noncontrolling interest in the acquiree. It also provides disclosure requirementsto enable users of the financial statements to evaluate the nature andfinancial effects of the business combination. SFAS No. 141(R) iseffective for the Company’s fiscal year beginning January 1, 2009 and isto be applied prospectively.  The Companyis currently evaluating the potential impact of adopting this statement on theCompany’s consolidated financial position, results of operations or cash flows.

 

In December 2007, theFASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidatedfinancial Statements- an amendment of ARB No. 51” which establishesaccounting and reporting standards pertaining to ownership interests insubsidiaries held by parties other than the parent, the amount of net incomeattributable to the parent and the noncontrolling interest, changes in theparent’s ownership interest and the valuation of any retained noncontrollingequity investment when a subsidiary is deconsolidated.  SFAS No. 160 also establishes disclosurerequirements that clearly identify and distinguish between the interests of theparent and the interests of the noncontrolling owners.  SFAS No. 160 is effective for theCompany’s fiscal year beginning January 1, 2009.  The Company is currently evaluating thepotential impact of adopting this statement on the Company’s consolidatedfinancial position, results of operations or cash flows.

 

**Forward-Looking Statements**

 

Thisreport contains forward-looking statements within the meaning of the UnitedStates Private Securities Litigation Reform Act of 1995 concerning our abilityto develop and produce gold or other precious metals from any of  our properties, future business plans andstrategies, future revenue and the receipt of working capital and other statementsthat are not historical in nature.  Inthis report, forward-looking statements are often identified by the words “anticipate,”“plan,” “believe,” “expect,” “estimate” and the like.  These forward-looking statements reflect ourcurrent beliefs, expectations and opinions with respect to future events, andinvolve future risks and uncertainties which could cause actual results todiffer materially from those expressed or implied.

 

In addition to the specific factors identified underRisk factors above, other uncertainties that could affect the accuracy offorward-looking statements include:

 

·                  decisions of foreign countries and bankswithin those countries;

 

·                  technological changes in the mining industry;

 

·                  our costs;

 

·                  changes in our business strategy;

 

·                  interpretation of drill hole results and thegeology, grade and continuity of mineralization;

 

33

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·                  the uncertainty of reserve estimates andtiming of development expenditures; and

 

·                  commodity price fluctuations

 

This list, together with the factors identifiedunder Risk factors, is not exhaustive of the factors that may affect any of thecompany’s forward-looking statements. You should read this report completely and with the understanding thatour actual future results may be materially different from what we expect.  These forward-looking statements representour beliefs, expectations and opinions only as of the date of this report.  We do not intend to update theseforward-looking statements except as required by law.  We qualify all of our forward-lookingstatements by these cautionary statements.

 

Prospectiveinvestors are urged not to put undue reliance on forward-looking statements.

 

**ITEM 7A.       QUANTITATIVEAND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

 

Our exposure to marketrisks includes, but is not limited to, the following risks: changes in foreigncurrency exchange rates, changes in interest rates, equity price risks andcommodity price fluctuations.  We do notuse derivative financial instruments as part of an overall strategy to managemarket risk.

 

**ForeignCurrency Risk**

 

Whilewe transact most of our business in US dollars, some expenses, purchases oflabor, operating supplies and capital assets are denominated in Canadiandollars or Mexican pesos.  As a result,currency exchange fluctuations may impact the costs incurred in our operations.  The appreciation of non-US dollar currenciesagainst the US dollar increases costs and the cost of capital assets in USdollar terms at our properties located outside the US, which can adverselyimpact our operating results and cash flows. Conversely, a depreciation of non-US dollar currencies usually decreasesproduction costs and capital asset purchases in US dollar terms.

 

Thevalue of cash and cash equivalent investments denominated in foreign currenciesalso fluctuates with changes in currency exchange rates.  Appreciation of non-US dollar currenciesresults in a foreign currency gain on such investments and a decrease in non-USdollar currencies results in a loss.  Wehave not utilized market risk sensitive instruments to manage our exposure toforeign currency exchange rates but may in the future actively manage ourexposure to foreign currency exchange rate risk.  We also hold portions of our cash reserves innon-US dollar currencies.

 

**Interest Rate Risk**

 

We have no debtoutstanding nor do we have any investment in debt instruments other than highlyliquid short-term investments. Accordingly, we consider our interest rate risk exposure to beinsignificant at this time.

 

**EquityPrice Risk**

 

Wehave a limited amount of exchangeable shares in the public float of thatstock.  Movements in the price of ourexchangeable shares have been volatile in the past and may also be volatile inthe future.  As a result, there is a riskthat we may not be able to sell new equity at an acceptable price should wedetermine a need for equity funding.

 

34

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**Commodity Price Risk**

 

Wecurrently do not have any production at any of our units and expect to beengaged in exploration activities for the foreseeable future.  However, if we commence production and sales,changes in the price of gold could significantly affect our results ofoperations and cash flows in the future.

 

**ITEM 8.          FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA**

 

Index to FinancialStatements:

 
| Reports of Independent Registered Public Accounting  Firms                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                           |
| Consolidated Statements of Operations and Comprehensive  Loss for the years ended December 31, 2007 and 2006              |
|                                                                                                                           |
| Consolidated Balance Sheets as of December 31, 2007  and 2006                                                             |
|                                                                                                                           |
| Consolidated Statements of Changes in Shareholders’  Equity (Deficit) for the years ended December 31, 2007 and 2006 |
|                                                                                                                           |
| Consolidated Statements of Cash Flows for the years  ended December 31, 2007 and 2006                                     |
|                                                                                                                           |
| Notes to Consolidated Financial Statements                                                                                     |

 

35

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**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

TheBoard of Directors and Shareholders

USGold Canadian Acquisition Corporation:

 

Wehave audited the accompanying consolidatedbalance sheet of US Gold Canadian Acquisition Corporation and subsidiaries (theCompany) as of December 31, 2007, and the related consolidated statement of operations and comprehensive loss,changes in shareholders’ equity and cash flows for the year ended December 31,2007. These consolidatedfinancial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audit.

 

Weconducted our audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation.  We believe that our audit provides areasonable basis for our opinion.

 

Inour opinion, the consolidatedfinancial statements referred to above present fairly, in all materialrespects, the financial position of US Gold Canadian Acquisition Corporationand subsidiaries as of December 31, 2007, and the results of itsoperations and its cash flows for the year ended December 31, 2007, inconformity with U.S. generally accepted accounting principles.

 

KPMG LLP

 

Denver,Colorado

March 28,2008

 

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

Boardof Directors and ShareholdersUS Gold CorporationLakewood, Colorado

 

We have audited the accompanying consolidatedbalance sheet of US Gold Canadian Acquisition Corporation as of December 31,2006, and the related consolidated statements of operations, changes inshareholders’ equity and cash flows for the year ended December 31,2006.  These consolidated financialstatements are the responsibility of the Company’s management.  Our responsibility is to express an opinionon these consolidated financial statements based upon our audits.

 

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

 

Inour opinion, the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of US Gold CanadianAcquisition Corporation as of December 31, 2006, and the results of itsoperations and its cash flows for the year ended December 31, 2006, inconformity with accounting principles generally accepted in the United Statesof America.

 
| /s/ Stark Winter Schenkein & Co., LLP |   |
|------------------------------------------------|--------|
| May 17, 2007                              |   |
| Denver, Colorado                               |   |

 

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**US GOLD CANADIAN ACQUISITIONCORPORATION**

**CONSOLIDATED  STATEMENTS OF OPERATIONS AND COMPREHENSIVELOSS**

**forthe years ended December 31,**

**(InU.S. Dollars)**

 
| ** **                                        | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|---------------------------------------------------|------------|------------|------------|------------|------------|
| REVENUE:                                          |       |       |       |       |       |
| Revenue                                           |       | $          | —     |       | $          | — |   |
| Total revenue                                     |       | —     |       | —     |       |
|                                              |       |       |       |       |       |
| COSTS AND EXPENSES:                               |       |       |       |       |       |
| General and administrative                        |       | 626,491    |       | —     |       |
| Acquisition costs                                 |       | 419,823    |       | 6,833,845  |       |
| Property holding costs                            |       | 2,099,630  |       | —     |       |
| Exploration costs                                 |       | 5,102,495  |       | —     |       |
| Accretion of asset  retirement obligation         |       | 100,586    |       | —     |       |
| Depreciation                                      |       | 252,494    |       | —     |       |
| Loss on sale of other  asset                      |       | 15,490     |       | —     |       |
| Total costs and expenses                          |       | 8,617,009  |       | 6,833,845  |       |
|                                              |       |       |       |       |       |
| Operating (loss)                                  |       | (8,617,009 | )          | (6,833,845 | )          |
|                                              |       |       |       |       |       |
| OTHER INCOME (EXPENSES):                          |       |       |       |       |       |
| Interest income                                   |       | 96,999     |       | —     |       |
| Interest expense                                  |       | (107,289   | )          | —     |       |
| Foreign currency gain                             |       | 621,625    |       | —     |       |
| Total other income                                |       | 611,335    |       | —     |       |
|                                              |       |       |       |       |       |
| Loss before income taxes                          |       | (8,005,674 | )          | (6,833,845 | )          |
| Provision for income taxes                        |       | (66,766    | )          | —     |       |
| Loss before minority interests                    |       | (8,072,440 | )          | (6,833,845 | )          |
|                                              |       |       |       |       |       |
| Minority interests share  of loss                 |       | 388,020    |       | —     |       |
| Net loss                                          |       | (7,684,420 | )          | (6,833,845 | )          |
| OTHER COMPREHENSIVE LOSS:                         |       |       |       |       |       |
| Unrealized loss on  available-for-sale securities |       | (18,508    | )          | —     |       |
| Comprehensive loss                                |       | $          | (7,702,928 | )          | $          | (6,833,845 | ) |
| Basic and diluted per  share data:                |       |       |       |       |       |
| Net loss - basic and diluted                      |       | $          | (0.25      | )          | N/A        |   |
|                                              |       |       |       |       |       |
| Weighted average shares -  basic and diluted      |       | 31,307,805 |       |       |       |

 

The accompanying notesare an integral part of these consolidated financial statements.

 

38

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**US GOLD CANADIAN ACQUISITIONCORPORATION**

**CONSOLIDATEDBALANCE SHEETS**

**(InU.S. Dollars)**

**For  years ended December 31,**

 
| ** **                                                                                                                                                                                 | ** ** | **2007**    | ** **  | **2006**   | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|-------------|------------|------------|
| ASSETS                                                                                                                                                                                     |       |        |        |       |       |
| Current assets:                                                                                                                                                                            |       |        |        |       |       |
| Cash and cash equivalents                                                                                                                                                                  |       | $           | 898,338     |       | $          | 1 |   |
| Other current assets                                                                                                                                                                       |       | 1,428,797   |        | —     |       |
| Total current assets                                                                                                                                                                       |       | 2,327,135   |        | 1          |       |
|                                                                                                                                                                                       |       |        |        |       |       |
| Property and equipment, net                                                                                                                                                                |       | 3,934,418   |        | —     |       |
| Capitalized asset - asset retirement cost                                                                                                                                                  |       | 1,721,932   |        | —     |       |
| Mineral property interests                                                                                                                                                                 |       | 253,689,374 |        | —     |       |
| Restrictive time deposits for reclamation bonding                                                                                                                                          |       | 224,289     |        | —     |       |
| Goodwill                                                                                                                                                                                   |       | 107,017,283 |        | —     |       |
| Other assets                                                                                                                                                                               |       | 288,652     |        | —     |       |
| TOTAL ASSETS                                                                                                                                                                               |       | $           | 369,203,083 |       | $          | 1 |   |
|                                                                                                                                                                                       |       |        |        |       |       |
| LIABILITIES & SHAREHOLDERS’ EQUITY (DEFICIT)                                                                                                                                 |       |        |        |       |       |
| Current liabilities:                                                                                                                                                                       |       |        |        |       |       |
| Accounts payable and accrued liabilities                                                                                                                                                   |       | $           | 148,479     |       | $          | — |   |
| Total current liabilities                                                                                                                                                                  |       | 148,479     |        | —     |       |
|                                                                                                                                                                                       |       |        |        |       |       |
| Intercompany - US Gold                                                                                                                                                                     |       | 10,029,493  |        | 6,833,845  |       |
| Asset retirement obligation                                                                                                                                                                |       | 2,388,476   |        | —     |       |
| Deferred income tax liability                                                                                                                                                              |       | 88,186,800  |        | —     |       |
| Other liabilities                                                                                                                                                                          |       | 175,686     |        | —     |       |
| Total liabilities                                                                                                                                                                          |       | 100,928,934 |        | 6,833,845  |       |
|                                                                                                                                                                                       |       |        |        |       |       |
| Shareholders’ equity (deficit):                                                                                                                                                       |       |        |        |       |       |
| Common stock, no par value, unlimited shares authorized, 1 share  issued and outstanding as of December 31, 2007 and 2006                                                             |       | 7           |        | 1          |       |
| Exchangeable stock, no par value, unlimited shares authorized,  45,075,507 shares issued and outstanding December 31, 2007, none issued  and outstanding as of December 31, 2006 |       | 275,443,357 |        | —     |       |
| Warrants for purchase of stock                                                                                                                                                             |       | 7,367,558   |        |       |       |
| Accumulated deficit                                                                                                                                                                        |       | (14,518,265 | )           | (6,833,845 | )          |
| Accumulated other comprehensive loss                                                                                                                                                       |       | (18,508     | )           | —     |       |
| Total shareholders’ equity (deficit)                                                                                                                                                  |       | 268,274,149 |        | (6,833,844 | )          |
|                                                                                                                                                                                       |       |        |        |       |       |
| TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY (DEFICIT)                                                                                                                           |       | $           | 369,203,083 |       | $          | 1 |   |

 

The accompanying notesare an integral part of these consolidated financial statements.

 

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**US GOLDCORPORATION**

**CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY (DEFICIT)**

**FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006**

 
| ** **                                                      | ** ** | **Capital Stock** | ** ** | ** **  | ** **  | **Accumulated  Other  Comprehensive** | ** ** | **Accumulated** | ** ** | ** **  | ** ** |
|-----------------------------------------------------------------|------------|-------------------|------------|-------------|-------------|---------------------------------------|------------|-----------------|------------|-------------|------------|
| ** **                                                      | ** ** | **Shares**        | ** ** | **Amount**  | ** **  | **Warrants**                          | ** ** | **Loss**        | ** ** | **Deficit** | ** ** | **Total** | ** ** |
| Common stock  issued to US Gold                                 |       | 1                 |       | 1           |        | —                                |       | —          |       | —      |       | 1 |   |
| Net loss                                                        |       | —            |       | —      |        | —                                |       |            |       | (6,833,845  | )          | (6,833,845 | ) |
| Balance, December  31, 2006                                     |       | 1                 |       | 1           |        | —                                |       | —          |       | (6,833,845  | )          | (6,833,844 | ) |
| Common stock  issued to US Gold to replace class A common share |       | —            |       | 6           |        | —                                |       | —          |       | —      |       | 6 |   |
| Issuance of  Exchangeable Shares                                |       | 42,615,227        |       | 253,516,057 |        | —                                |       | —          |       | —      |       | 253,516,057 |   |
| Assumption of  stock options                                    |       | —            |       | 6,682,122   |        | —                                |       | —          |       | —      |       | 6,682,122 |   |
| Assumption of  warrants                                         |       | —            |       | —      |        | 17,520,252                            |       | —          |       | —      |       | 17,520,252 |   |
| Exercise of  options                                            |       | 353,603           |       | 1,137,966   |        | —                                |       | —          |       | —      |       | 1,137,966 |   |
| Exercise of  warrants                                           |       | 2,106,677         |       | 14,107,212  |        | (10,152,694                           | )          | —          |       | —      |       | 3,954,518 |   |
| Unrealized loss  on marketable equity securities                |       | —            |       | —      |        | —                                |       | (18,508         | )          | —      |       | (18,508 | ) |
| Net loss                                                        |       | —            |       | —      |        | —                                |       | —          |       | (7,684,420  | )          | (7,684,420 | ) |
| Balance, December  31,2007                                      |       | 45,075,508        |       | $           | 275,443,364 |                                  | 7,367,558  |            | $          | (18,508     | )          | $ | (14,518,265 | ) | $ | 268,274,149 |   |
|                                                                 |            |                   |            |             |             |                                       |            |                 |            |             |            |  |  |  |  |  |  |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

40

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**US GOLD CANADIAN ACQUISITIONCORPORATION**

**CONSOLIDATED STATEMENT OF CASH FLOWS**

**For the year ended December 31,**

**(In U.S. Dollars)**

 
| ** **                                                        | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|-------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash  flows from operating activities:                            |       |       |       |       |       |
| Cash paid to suppliers and employees                              |       | $          | (8,350,550 | )          | $          | — |   |
| Interest received                                                 |       | 96,999     |       | —     |       |
| Cash used in operating activities                                 |       | (8,253,551 | )          | —     |       |
|                                                              |       |       |       |       |       |
| Cash  flows from investing activities:                            |       |       |       |       |       |
| Capital expenditures                                              |       | (10,136    | )          | —     |       |
| Increase to restricted investments                                |       | (428,480   | )          | —     |       |
| Cash from acquisitions                                            |       | 6,039,551  |       | —     |       |
| Acquisition costs paid for mineral property  interests            |       | (5,314,004 | )          | —     |       |
| Cash provided by investing activities                             |       | 286,931    |       | —     |       |
|                                                              |       |       |       |       |       |
| Cash  flows from financing activities:                            |       |       |       |       |       |
| Advances from US Gold                                             |       | 3,195,648  |       | —     |       |
| Exercise of stock options and warrants                            |       | 5,021,488  |       | —     |       |
| Common stock purchased by US Gold                                 |       | 6          |       | 1          |       |
| Cash provided by financing activities                             |       | 8,217,142  |       | 1          |       |
| Effect  of exchange rate change on cash                           |       | 647,815    |       | —     |       |
| Increase  in cash and cash equivalents                            |       | 898,337    |       | 1          |       |
| Cash  and cash equivalents, beginning of period                   |       | 1          |       | —     |       |
| Cash  and cash equivalents, end of period                         |       | $          | 898,338    |       | 1          |   |
|                                                              |       |       |       |       |       |
| Reconciliation  of net loss to cash used in operating activities: |       |       |       |       |       |
|                                                              |       |       |       |       |       |
| Net  loss                                                         |       | $          | (7,684,420 | )          | (6,833,845 | ) |
| Adjustments  to reconcile net loss from operating activities:     |       |       |       |       |       |
| Deferred compensation expense                                     |       | 301,006    |       | —     |       |
| Loss on disposal of asset                                         |       | 15,490     |       | —     |       |
| Accretion of asset retirement obligation                          |       | 100,586    |       | —     |       |
| Minority interest                                                 |       | (388,020   | )          | —     |       |
| Depreciation                                                      |       | 252,494    |       | —     |       |
| Changes  in non-cash working capital items:                       |       |       |       |       |       |
| Decrease in other assets related to operations                    |       | 724,388    |       | —     |       |
| Increase(decrease) in liabilities related to  operations          |       | (1,575,075 | )          | 6,833,845  |       |
| Cash  used in operating activities                                |       | $          | (8,253,551 | )          | —     |   |
|                                                                   |            |            |            |            |            |  |  |

 

The accompanying notesare an integral part of these consolidated financial statements.

 

 

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**US GOLD CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****December 31, 2007**

 

**1.             Summary of Significant AccountingPolicies**

 

**Basis ofPresentation**:   US Gold Canadian AcquisitionCorporation (“we” or the “Company”) is a subsidiary of US Gold Corporation (“USGold”).  The consolidated financialstatements are reported in United States dollars. We were organized under thelaws of the Province of Alberta, Canada on April 18, 2006 to facilitatethe acquisition of the Acquired Companies as discussed in Note 2 and to engagein exploration of the acquired properties.

 

Werely upon US Gold for our capital needs along with the possible exercise ofwarrants since we are not generating revenue. We believe US Gold has adequate cash to fund our ongoing operationsthrough 2008 and for most of 2009.  USGold may seek additional capital funding during 2008 or beyond depending uponmarket conditions and other circumstances. We and US Gold may also consider strategic alternatives which couldinclude, but are not limited to, acquisition or disposition of assets, debtfinancing or other corporate transactions.

 

**Basis of Consolidation**:  The consolidated financial statementsinclude the accounts of the Company including three exploration companiesacquired effective March 28, 2007 and June 28 and 29, 2007, as morefully disclosed in Note 2.  Significantinter-company accounts and transactions have been eliminated.

 

**Statements of CashFlows**:  The Company considers cash in banks, depositsin transit and highly liquid debt instruments purchased with originalmaturities of three months or less to be cash and cash equivalents.

 

**Concentrations**:  The Company maintainscash in accounts which may, at times, exceed federally insured limits.  At December 31, 2007, the Company hasbank account balances of approximately $0.8 million in excess of the federallyinsured limits.

 

**Property andEquipment:**  Office furniture, equipment and vehicles arecarried at cost net of accumulated depreciation.  Normal maintenance and repairs are charged tooperations while expenditures for major maintenance and improvements arecapitalized.  Gains or losses ondisposition are recognized in operations.

 

**Property Holding Costs**:  Holding costs to maintaina property on a care and maintenance basis are expensed in the period they areincurred unless proven and probable reserves exist and the property is acommercially mineable property.  Thesecosts include security and maintenance expenses, lease and claim fees andpayments, and environmental monitoring and reporting costs.

 

**Mineral Property Interests****, Exploration and Development Costs:**  Mineralproperty interests include acquired mineral development and exploration stageproperties.  The amount capitalizedrelated to a mineral property interest represents its fair value at the time itwas acquired, either as an individual asset purchase or as a part of a businesscombination.  The value of such assets isprimarily driven by the nature and amount of mineralized material believed tobe contained in such properties.  Exploration costs are expensed as incurred and development costsare capitalized if proven and probable reserves exist and the property is acommercially minable property.  Minedevelopment costs incurred either to develop new ore deposits, expand thecapacity of operating mines or to develop mine areas substantially in advanceof current production are capitalized. Costs incurred to maintain current production or to maintain assets on 

 

 

42

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a standby basis are charged tooperations.  Costs of abandoned projectsare charged to operations upon abandonment. The Company periodically evaluates whether events or changes in circumstancesindicate that the carrying value of mineral property interests and relatedproperty, plant and equipment may not be recoverable.  Recoverability and impairment is measured bycomparing net book value to estimated fair value.

 

**Depreciation:**  Depreciation is computedusing straight-line methods.  Officefurniture, equipment and light vehicles are being depreciated over theestimated economic lives ranging from 3 to 5 years.  Trailers, heavy vehicles and other siteequipment are being depreciated over estimated economic lives from 5 to 15years.  Buildings are being depreciatedover an estimated economic life of 20 years.

 

**Goodwill:**  The Companyhas identified two reporting units, United States and Mexico, and assignedgoodwill to these reporting units as appropriate.  The Company evaluates, on at least an annualbasis, the carrying amount of goodwill by comparing the estimated fair value ofits reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds its estimated fairvalue, the Company compares the implied fair value of the reporting unit’sgoodwill to its carrying amount, and any excess of the carrying value over thefair value is charged to operations.  TheCompany’s fair value estimates are based on numerous assumptions and it ispossible that actual fair value will be significantly different than theestimates, as actual future quantities of recoverable minerals, gold and othercommodity prices, production levels and operating costs of production andcapital are each subject to significant risks and uncertainties.

 

**PropertyRetirement Obligation**:  The Company implemented SFAS 143, “Accountingfor Asset Retirement Obligations,” effectiveJanuary 1, 2003.  SFAS 143requires the fair value of a liability for an asset retirement obligation to berecognized in the period that it is incurred if a reasonable estimate of fairvalue can be made.  The associated assetretirement costs are capitalized as part of the carrying amount of thelong-lived asset.  Ongoing environmental and reclamation expenditures are credited tothe asset retirement obligation as incurred to the extent they relate to assetretirement obligation, and to expense to the extent they do not so apply.

 

**Foreign Currency:**The functional currency forthe Company’s operations is the U.S. dollar. All monetary assets and liabilities where the functional currency is notthe U.S. dollar are translated at current exchange rates at each balance sheetdate and the resulting adjustments are included in a separate line item under other income (expense).  Revenues and expenses in foreign currenciesare translated at the weighted-average exchange rates for the period.

 

**Comprehensive Loss:**In addition to net loss*,*comprehensiveloss**includes all changesin equity during a period, such as cumulative unrecognized changes in fairvalue of marketable securities available-for-sale or other investments.

 

**Per Share Amounts**:SFAS 128, “Earnings Per Share,” provides for the calculation of “Basic”and “Diluted” earnings per share.  Basicearnings per share includes no dilution and is computed by dividing incomeavailable to common shareholders by the weighted average number of common andexchangeable shares outstanding during the period.  Diluted earnings per share reflect the potentialdilution of securities that could share in the earnings of the Company and arecomputed in accordance with the treasury stock method based on the averagenumber of common shares and dilutive common share equivalents outstanding.  Subscription receipts,brokers options, warrants and stock options are not considered in thecomputation of diluted earnings per share as their inclusion would beantidilutive for the periods presented.

 

**Income Taxes:** The Company accounts for income taxes under SFAS 109, “Accountingfor Income Taxes” using the liability method, recognizing certaintemporary differences between the financial 

 

 

43

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reportingbasis of the Company’s liabilities and assets and the related income tax basisfor such liabilities and assets.  Thismethod generates either a net deferred income tax liability or asset for theCompany, as measured by the statutory tax rates in effect.  The Company derives its deferred income taxcharge or benefit by recording the change in either the net deferred income taxliability or asset balance for the year. The Company records a valuation allowance against any portion of thosedeferred income tax assets when it believes, based on the weight of availableevidence, it is more likely than not that some portion or all of the deferredincome tax asset will not be realized.

 

On July 13, 2006, the FASB issuedinterpretation No. 48, “Accounting for Uncertainty in Income Taxes — AnInterpretation of FASB Statement No. 109” (“FIN 48”).  FIN 48 clarifies the accounting foruncertainty in income taxes recognized in an entity’s financial statements inaccordance with FASB Statement No. 109, “Accounting for Income Taxes” andprescribes a recognition threshold and measurement attributes for financialstatement disclosure of tax positions taken or expected to be taken on a taxreturn.  Under FIN 48, the impact of anuncertain income tax position on the income tax return must be recognized atthe largest amount that is more-likely-than-not to be sustained upon audit bythe relevant taxing authority.  Anuncertain income tax position will not be recognized if it has less than a 50%likelihood of being sustained.  Additionally,FIN 48 provides guidance on de-recognition, classification, interest andpenalties, accounting in interim periods, disclosure and transition.  The Company adopted the provisions of FIN 48on January 1, 2007, which did not have any impact on the consolidatedfinancial statements.

 

**Costs of Acquisition:**  Costs related toacquisitions are included in the cost of acquisition when the acquisitions aredeemed probable.  Costs incurred prior tothe date the acquisitions are deemed probable are expensed as incurred.

 

**Use of Estimates:**  The Company’sconsolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America.  The preparation of the Company’s consolidatedfinancial statements requires the Company to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and the relateddisclosure of contingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of revenues and expenses duringthe reporting period.  The more significantareas requiring the use of management estimates and assumptions relate toenvironmental, reclamation and closure obligations; estimates of fair value forreporting units and asset impairments (including impairments of goodwill);valuation allowances for deferred tax assets; reserves for contingencies andlitigation; and estimates with respect to assumptions regarding stock basedcompensation expense.  The Company basesits estimates on historical experience and on various other assumptions thatare believed to be reasonable under the circumstances.  Actual results may differ significantly fromthese estimates.

 

**Segment Integration:**** **The company has one reportablesegment.

 

**Fair Value ofFinancial Instruments**:  SFAS 107, “Disclosures About Fair Value ofFinancial Instruments,” requires disclosure of fair value information aboutfinancial instruments.  Fair valueestimates discussed herein are based upon certain market assumptions andpertinent information available to management as of December 31, 2007.

 

The carrying values of financialinstruments approximate their fair values. These financial instruments include cash, cash equivalents, interestreceivable, accounts payable and installment purchase contracts.  Fair values were assumed to approximate carryingvalues for these financial instruments since they are short term in nature andtheir carrying amounts approximate fair value or they are receivable or payableon demand.  The carrying value of theCompany’s long-term purchase contracts approximates fair values of similar debtinstruments.

 

 

44

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**2.             BusinessAcquisitions**

 

On June 28 and 29,2007, the Company and its parent, US Gold, completed the acquisition of all of the outstanding commonshares of Nevada Pacific Gold Ltd. (“Nevada Pacific”), Tone Resources Limited (“Tone”)and White Knight Resources Ltd. (“White Knight”), individually an “AcquiredCompany” and collectively the “Acquired Companies”.  The transactions completed on June 28and 29, 2007 represented the second stage of these acquisitions that wereoriginally commenced as tender offers in February 2007 (“Tender Offer”).  The first stage of the acquisitions wascompleted on March 28, 2007, at which time the Company acquired at least80% of the common shares of each Acquired Company and took control of theiroperations.  The Acquired Companies wereacquired in exchange for the issuance of exchangeable shares of the Company onthe following terms:

 

·         0.23 of anexchangeable share for each outstanding common share of Nevada Pacific;

 

·         0.26 of anexchangeable share for each outstanding common share of Tone, and

 

·         0.35 of anexchangeable share for each outstanding common share of White Knight.

 

Withthese second stage acquisition transactions, the minority interests in theAcquired Companies not previously owned by the Company were acquired.  Therefore, effective as of June 29,2007, the Company and US Gold own 100% of the Acquired Companies.

 

TheCompany believes the acquisition of the Acquired Companies was beneficialbecause each of them was exploring in the Cortez Trend in Nevada and owned andoperated exploration properties that are adjacent to or near US Gold’s Tonkinproperty, and because the acquisitions resulted in the Company and US Goldhaving a larger land position within the Cortez Trend along with addedtechnical expertise with retained key employees of the Acquired Companies.

 

Relatedto the acquisition transactions, the Company issued a total of 42,615,227exchangeable shares.  The total issuancewas comprised of 16,318,544 exchangeable shares for Nevada Pacific, 5,472,867exchangeable shares for Tone and 20,823,816 exchangeable shares for White Knight.

 

Theexchangeable shares are exchangeable for US Gold’s common stock on aone-for-one basis.  Optionholders andwarrantholders of the Acquired Companies have received replacement options orwarrants entitling the holders to receive, upon exercise, shares of US Gold’scommon stock in the case of options, and exchangeable shares of the Company forwarrants, each reflecting the same share exchange ratio as that of the TenderOffer transactions with appropriate adjustment of the exercise price per share.

 

Theestimated fair value of the options and warrants issued to the owners of theAcquired Companies exercisable for the Company’s or US Gold’s shares have beenincluded as part of the purchase price consideration at their fair values basedon the Black-Scholes pricing model as illustrated below.  Shares of the Company reserved for warrantswere 2,921,000 for Nevada and 704,600 for Tone respectively.  Shares of the Company reserved for optionswere 859,050 for Nevada and 249,466 for Tone and 656,250 for White Knight.  The fair values assigned were as follows:

 

| ** **     | ** ** | **Warrants** | ** ** | **Options** | ** ** |
|----------------|------------|--------------|------------|-------------|------------|
| Nevada Pacific |       | $            | 13,817,306 |        | $          | 3,232,354 |   |
| Tone           |       | 3,702,946    |       | 1,172,580   |       |
| White Knight   |       | —       |       | 2,277,188   |       |
|           |       | $            | 17,520,252 |        | $          | 6,682,122 |   |

 

 

45

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The principal assumptionsused in applying the Black-Scholes option pricing model were as follows: 

 

| ** **                                                       | ** ** | **2007**    | ** ** |
|------------------------------------------------------------------|------------|-------------|------------|
| Risk-free interest rate                                          |       | 4.7  - 5.1% |       |
| Dividend yield                                                   |       | 0           |       |
| Volatility factor of the expected market price of   common stock |       | 116  - 125% |       |
| Weighted-average expected  life of option                        |       | 6.5  years  |       |

 

The acquisitions have beenaccounted for as purchase transactions, with the Company being identified asthe acquirer and each of Nevada Pacific, Tone and White Knight as theacquirees.  The measurement of thepurchase consideration was based on the market prices of US Gold’s common stock2 days before and 2 days after the announcement date of March 5, 2006,which was $5.90 per share.  The totalpurchase price, including transaction costs and the fair values of the optionsand warrants, amounted to $283,032,463.

 

 

46

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Theallocation of the purchase price is summarized in the following table.

 
| ** **                                                                             | ** ** | **White Knight** | ** **  | **Nevada Pacific** | ** ** | **Tone**    | ** ** | **Total**   | ** ** |
|----------------------------------------------------------------------------------------|------------|------------------|-------------|--------------------|------------|-------------|------------|-------------|------------|
| Purchase price:                                                                        |       |             |        |               |       |        |       |        |       |
| Exchangeable shares of US Gold Canadian Acquisition Corporation  issued on acquisition |       | $                | 123,678,079 |               | $          | 96,681,424  |       | $           | 33,156,582 |   | $ | 253,516,085 |   |
| Stock options to be exchanged for options of US Gold Corporation                       |       | 2,277,188        |        | 3,232,354          |       | 1,172,580   |       | 6,682,122   |       |
| Share purchase warrants to be exchanged for warrants of US Gold  Corporation           |       | —           |        | 13,817,306         |       | 3,702,946   |       | 17,520,252  |       |
| Acquisition costs                                                                      |       | 2,421,406        |        | 2,159,063          |       | 733,535     |       | 5,314,004   |       |
|                                                                                   |       | $                | 128,376,673 |               | $          | 115,890,147 |       | $           | 38,765,643 |   | $ | 283,032,463 |   |
|                                                                                   |       |             |        |               |       |        |       |        |       |
| Net assets acquired:                                                                   |       |             |        |               |       |        |       |        |       |
| Cash and cash equivalents                                                              |       | $                | 5,370,031   |               | $          | 208,390     |       | $           | 1,037,971  |   | $ | 6,616,392 |   |
| Other current assets                                                                   |       | 176,486          |        | 508,960            |       | 16,066      |       | 701,512     |       |
| Joint Venture receivable                                                               |       | 732,912          |        | —             |       | —      |       | 732,912     |       |
| Long - term receivable                                                                 |       | 482,008          |        | —             |       | —      |       | 482,008     |       |
| Deferred compensation charges                                                          |       | —           |        | 283,976            |       | 17,030      |       | 301,006     |       |
| Property, plant and equipment, net                                                     |       | 87,266           |        | 4,105,000          |       | —      |       | 4,192,266   |       |
| Acquired mineral property interests                                                    |       | 123,906,563      |        | 112,885,692        |       | 16,897,119  |       | 253,689,374 |       |
| Asset retirement obligation assets                                                     |       | —           |        | 1,721,932          |       | —      |       | 1,721,932   |       |
| Asset reclamation bonds                                                                |       | 221,855          |        | 87,683             |       | 30,145      |       | 339,683     |       |
| Accounts payable and accrued liabilities                                               |       | (217,495         | )           | (1,856,432         | )          | (138,127    | )          | (2,212,054  | )          |
| Other non-current liabilities                                                          |       | —           |        | (75,161            | )          | —      |       | (75,161     | )          |
| Retirement obligation                                                                  |       | (143,760         | )           | (2,144,130         | )          | —      |       | (2,287,890  | )          |
| Deferred income tax liability                                                          |       | (42,120,653      | )           | (40,379,783        | )          | (5,686,364  | )          | (88,186,800 | )          |
|                                                                                   |       |             |        |               |       |        |       |        |       |
| Net identifiable assets                                                                |       | 88,495,213       |        | 75,346,127         |       | 12,173,840  |       | 176,015,180 |       |
| Residual purchase price  allocated to goodwill                                         |       | 39,881,460       |        | 40,544,020         |       | 26,591,803  |       | 107,017,283 |       |
|                                                                                   |       | $                | 128,376,673 |               | $          | 115,890,147 |       | $           | 38,765,643 |   | $ | 283,032,463 |   |

 

Thepurchase consideration for the mining assets and property, plant and equipmentexceeded the carrying value of the underlying assets for tax purposes byapproximately $256,297,776.  This amounthas been applied to increase the carrying value of the mineral properties andproperty and equipment for accounting purposes. However, this did not increase the carrying value of the underlyingassets for tax purposes and resulted in a temporary difference betweenaccounting and tax value.  The resultingestimated future income tax liability associated with this temporary differenceof approximately $88,186,800 increased goodwill.

 

For the purposes of theCompany’s financial statements, the purchase consideration has been allocatedto the fair value of assets acquired and liabilities assumed, based on anindependent valuation report and management’s best estimates and taking intoaccount all available information at the time these consolidated financialstatements were prepared.

 

*Unaudited Pro FormaResults**:*  SFAS 141 “Business Combinations” requiresupplemental information on a pro forma basis to disclose the results ofoperations for the interim periods as though the business combination had beencompleted as of the beginning of the periods being reported on.  The following 

 

 

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table sets forth on a proforma basis, the results of operations for the Company, had the acquisition ofthe Acquired Companies been completed on January 1, 2007:

 
| **For the year ended   December 31, 2007** | ** ** | **US Gold Canadian  Acquisition Corp.** | ** ** | **White Knight** | ** ** | **Nevada Pacific** | ** ** | **Tone** | ** ** | **Combined** | ** ** |
|-------------------------------------------------|------------|-----------------------------------------|------------|------------------|------------|--------------------|------------|----------|------------|--------------|------------|
|                                            |       |                                    |       |             |       |               |       |     |       |         |       |
| Revenue                                         |       | $                                       | —     |             | $          | —             |       | $        | —     |         | $          | — |   | $ | — |   |
| Net loss                                        |       | $                                       | (7,684,420 | )                | $          | (4,354,156         | )          | $        | (2,435,298 | )            | $          | (185,120 | ) | $ | (14,658,994 | ) |
| Loss per share                                  |       |                                    |       |             |       |               |       |     |       | $            | (0.47      | ) |

 

**3.             Mineral Properties and AssetRetirement Obligations**

 

Thefollowing is a general description of the mineral property of the AcquiredCompanies:

 

NevadaPacific holds an exploratory property portfolio covering approximately890 square miles of mineral rights in Mexico, including the Magistral GoldMine, as well as eleven properties in Nevada and one in Utah. The Nevadaproperty portfolio covers approximately 85 square miles, including landpackages in two significant gold producing regions: Cortez and the CarlinTrend.

 

WhiteKnight controls land holdings in Nevada, with most of the properties located onthe Cortez Trend. Its portfolio includes 19 properties totaling over 115 squaremiles with 15 of the properties located on the Cortez Trend.  Three of the White Knight properties arejoint ventured to various companies subject to earn-in agreements.  Barrick Gold Corporation has earned a 60%controlling interest in the Patty (Indian Ranch) Project, with White Knightretaining approximately 30% and Chapleau Resources Ltd. retaining 10%. In thetwo remaining joint ventures, White Knight holds 100% ownership subject toearn-in rights of the other participant.

 

Tonecontrols substantially all the mineral interests in seven properties totalingapproximately 7 square miles and located in Elko, Eureka, Lander and Pershingcounties in Nevada.  Tone’s mineralproperties were acquired by Tone from KM Exploration Ltd., a private companywith a former common director, or were staked by that former Tone director. Theproperties are subject to a royalty of 1% of net smelter returns, except theRed Ridge property, and certain of the properties are also subject to a royaltyof 4% of net smelter returns.  Inaddition, up to a maximum of two of the Tone mineral properties are subject toearn-in rights by Teck Cominco American Inc. (“Teck”) pursuant to a 2004agreement.  Teck, generally, has theright to acquire a 50% joint venture interest in selected properties byspending approximately $2.84 million on each after Tone has first spent anaggregate of $.94 million on each property, or up to 70% joint venture interestupon other elections by Teck and performance of other obligations.  Tone has not reached the initial approximate$.94 million expenditure on any property subject to the Teck agreement and, asstated above, that agreement is limited to earn-in rights to a maximum of twoof the mineral properties.

 

TheCompany is responsible for reclamation of certain past and future disturbancesat its properties.  In connection withthe acquisitions of the Acquired Companies, the Company assumed andconsolidated the respective asset retirement obligations of those companies, asreflected in the table below, as well as related restrictive deposits to securethose obligations. The Company maintains required bonding for all of itsproperties and at December 31, 2007 has cash bonding in place of $224,289.

 

TheCompany performed a preliminary review of the Nevada Pacific’s projectedreclamation costs associated with the Magistral Mine and as a result of thatreview has recorded an initial cost estimate in the allocation of the purchaseprice of $2,700,000.  The following is areconciliation of the aggregate of projected asset retirement obligation forfinancial reporting for the year ended December 31, 2007:

 

 

48

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| Asset retirement  obligation - December 31, 2006 |   | $         | —    |   |
|-------------------------------------------------------|--------|-----------|-----------|--------|
| Accretion of liability                                |   | 100,586   |      |
| Asset retirement  obligation acquired                 |   | 2,287,890 |      |
| Asset retirement  obligation - December 31, 2007 |   | $         | 2,388,476 |   |

 

Itis anticipated that the capitalized asset retirement costs will be charged toexpense based on the units of production method commencing with gold productionat the Company’s properties, if any. There was no amortization recorded adjustment during 2007 to thecapitalized asset retirement cost since properties were not in operation.  Actual asset retirement and reclamation,generally, will be commenced upon completion of operations at the property.

 

**4.             Property and Equipment**

 

At December 31, 2007, property andequipment consisted of the following:

 

| ** **                      | ** ** | **2007**  | ** ** |
|---------------------------------|------------|-----------|------------|
| Trucks and trailers             |       | $         | 163,737    |   |
| Office furniture and  equipment |       | 36,075    |       |
| Building                        |       | 808,100   |       |
| Mining equipment                |       | 3,179,000 |       |
| subtotal                        |       | $         | 4,186,912  |   |
| Less: accumulated  depreciation |       | (252,494  | )          |
| Total                           |       | $         | 3,934,418  |   |

 

Depreciation expense for 2007 was$252,494.

 

**5.             Goodwill**

 

Forthe purpose of allocating the goodwill arising from the Acquisitions describedin Note 2, the Company has identified two reporting units, namely, theexploration operation located in Nevada (“U.S. Properties”) and explorationoperation located in Mexico (“Mexico Properties”).  The Company has assigned the goodwill amountin full to the United States reporting unit. The goodwill represents the buyer-specific synergies and transition tosignificant land holder.

 

Theannual testing for impairment resulted in no impairment charge during 2007.

 

**6.              IncomeTaxes**

 

InMarch 2007, the Company had an ownership change, as the term is defined underthe Internal Revenue Code (“IRC”) Section 382 (g).  As a result, the tax net operating losscarryforwards are subject to annual limitations under IRC Section 382,following the date of such ownership change. Except as noted below, the Company will receive delayed future benefitsfrom net operating loss carryforwards existing as of the date of the ownershipchange.  At December 31, 2006 and atDecember 31, 2007, the Company estimates that tax loss carryforwards to be$6,800,000 and $30,300,000, respectively expiring in 2026 and 2027.

 

The Company’s income tax expense consistedof:

 

 

49

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| ** **                  | ** ** | **2007** | ** ** | **2006** | ** ** |
|-----------------------------|------------|----------|------------|----------|------------|
|                        |       |     |       |     |       |
| Current taxes payable       |       |     |       |     |       |
| Federal                     |       | $        | —     |     | $          | — |   |
| State                       |       | —   |       | —   |       |
| Foreign                     |       | 66,766   |       | —   |       |
| Total current tax provision |       | $        | 66,766     |     | $          | — |   |

 

Tax effects of temporary differences that give rise to significantportions of the deferred tax assets and deferred tax liabilities at Deccember31, 2007 and 2006 respectively, are presented below:

 
| ** **                                        | ** ** | **2007**    | ** **  | **2006**   | ** ** |
|---------------------------------------------------|------------|-------------|-------------|------------|------------|
| Deferred tax assets:                              |       |        |        |       |       |
| Alternative minimum tax (AMT) credit carryforward |       | $           | —      |       | $          | — |   |
| Reclamation obligation                            |       | —      |        | —     |       |
| Net operating (loss) carryforward                 |       | 10,077,000  |        | 2,339,000  |       |
| Other temporary differences                       |       | 237,000     |        | —     |       |
| Mineral property                                  |       | 550,000     |        | —     |       |
| Total gross deferred tax assets                   |       | 10,864,000  |        | 2,339,000  |       |
| Less: valuation allowance                         |       | (10,864,000 | )           | (2,339,000 | )          |
| Net deferred tax assets                           |       | $           | —      |       | $          | — |   |
| Deferred tax liabilities:                         |       |        |        |       |       |
| Acquisition related deferred tax liability        |       | (88,186,800 | )           | —     |       |
| Total Deferred tax liabilities                    |       | $           | (88,186,800 | )          | $          | — |   |
| Total net deferred tax asset/(liability)          |       | $           | (88,186,800 | )          | $          | — |   |

 

TheCompany believes that it is unlikely that the net deferred tax asset will berealized.  Therefore a valuationallowance has been provided for net deferred tax assets.  The change in valuation allowance ofapproximately $8,525,000 primarily reflects an increase of net operating (loss)carryforwards and the recording of deferred tax assets acquired in the currenttax year.  The acquisition relateddeferred tax liability consists of $86,394,800, $511,000, and $1,281,000 formineral properties, fixed assets and a liability for unrecognized tax benefits,respectively.

 

 

50

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A reconciliation of the tax provision for2007, 2006 and 2005 at statutory rates is comprised of the followingcomponents:

 

| Federal statutory rate tax  provision on book loss |   | $         | (2,595,000 | )         | $      | (2,339,000 | )      |
|----------------------------------------------------|--------|-----------|------------|-----------|--------|------------|--------|
| State statutory rate tax  provision on book loss   |   | —    |       | —    |   |
| Foreign statutory rate tax  provision on book loss |   | 122,000   |       | —    |   |
|                                               |   |      |       |      |   |
| Book to tax adjustments:                           |   |      |       |      |   |
| Exploration costs  amortized over 10 years         |   | —    |       | —    |   |
| Target acquisition costs  not deductible           |   | —    |       | —    |   |
| Reclamation expenditures  deductible               |   | —    |       | —    |   |
| Stock option expense not  deductible (net)         |   | —    |       | —    |   |
| Derivative liability  expense not deductible       |   | —    |       | —    |   |
| Other                                              |   | (26,000   | )          | —    |   |
| Tax rate changes                                   |   | (162,000  | )          | —    |   |
| Accretion expense not  deductible                  |   | —    |       | —    |   |
| Valuation allowance                                |   | 2,727,766 |       | 2,339,000 |   |
| Tax Provision                                      |   | $         | 66,766     |      | $      | —     |   |

 

As of January 1, 2007, the Company did nothave any unrecognized tax benefits.  Theadoption of FIN 48 did not result in any cumulative effect adjustment to the January 1,2007 balance of the Company’s accumulated deficit.  As a result of the acquisition of theAcquired Companies, the Company recognized a $517,000 liability plus $764,000of accrued interest and penalties which relate to the Mexican properties andwas accounted for as a part of the purchase price allocation.

 

Upon adoption of FIN 48, the Company did not accruefor interest and penalties as there were no unrecognized tax benefits.  For the year ended December 31, 2007,the Company accrued total interest related to income tax liability of $104,000.  The Company recognized interest and penaltiesrelated to income tax liabilities as a component of interest expense.

 

Included in the balance of unrecognized taxbenefits at December 31, 2007 are $517,000 of tax benefits that, ifrecognized, would not affect the effective tax rate as it was originallyrecorded as an adjustment to the purchase price allocation.  In the year ending December 31, 2007,there was no increase in the balance of unrecognized tax benefits of$517,000.  Under current conditions andexpectations, management does not foresee any significant changes inunrecognized tax benefits that would have a material impact on the Company’sfinancial statements.

 

The Company has determined the classification ofthe unrecognized tax benefits on the balance sheet and recorded suchunrecognized tax benefits as non-current liabilities according to therequirement of FIN 48.  The basis forthis assessment is that the unrecognized tax benefits do not become statutebarred within the next twelve months.  Inaddition, the taxation authorities have not instituted any audits of theunrecognized tax benefits.  As a result,the Company does not anticipate payment of the liability or settlement of theunrecognized tax benefits within one year of the balance sheet date.

 

The Company or its subsidiaries file income taxreturns in Canada, the United States and Mexico.  These tax returns are subject to examinationby local taxation authorities provided the tax years remain open to 

 

 

51

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audit under the relevant statute oflimitations.  The following summarizesthe open tax years by major jurisdiction:

 

United States: 2003 to 2007

Canada: 2000 to 2007

Mexico: 2002 to 2007

 

In the course of theCompany’s due diligence of the Mexican properties acquired with Nevada Pacific,the Company identified a potential total tax liability of $ 1,281,000 withrespect to certain open tax positions of which approximately $764,000 relatedto potential interest and penalties.  TheCompany recognized the $1,281,000 tax liabilities as part of the Company’spurchase price allocation.

 

A reconciliation of the beginning and ending amountof unrecognized tax benefits is as follows:

 
| ** **                                      | ** ** | **LIABILITY FOR** | ** ** |
|-------------------------------------------------|------------|-------------------|------------|
| ** **                                      | ** ** | **UNRECOGNIZED**  | ** ** |
| ** **                                      | ** ** | **TAX BENEFITS**  | ** ** |
| Balance at January 1,  2007                |       | $                 | —     |   |
| Additions for Tax  Positions of Current Period  |       | —            |       |
| Reductions for Tax  Positions of Current Period |       | —            |       |
| Additions for Tax  Positions of Prior Years     |       | 1,281,000         |       |
| Reductions for Tax  Positions of Prior Years    |       | —            |       |
| Reduction for Lapse of  Statute of Limitations  |       | —            |       |
| Balance at  December 31, 2007              |       | $                 | 1,281,000  |   |

 

**7.****                                     ****Shareholders’ Equity**

 

As explained further in Note2, effective March 28, 2007, the Company took up and paid for the sharestendered by the shareholders of the Acquired Companies and issued 38,027,674exchangeable shares for a majority of each of the Acquired Companies.  Effective June 28, 2007, the Company andUS Gold completed plans of arrangement with Nevada Pacific and Tone, and on June 29,2007, completed a compulsory acquisition of White Knight (collectively the “SecondPhase Acquisition Transactions”) under which the Company acquired the remainingshares of each of the Acquired Companies. Related to the Second Phase Acquisition Transactions, the Company issued4,587,553 additional exchangeable shares, resulting in the issuance of anaggregate 42,615,227 exchangeable shares for the acquisition of 100% of theissued and outstanding shares of the Acquired Companies.

 

Theexchangeable shares, by virtue of the redemption and exchange rights attachedto them and the provisions of certain voting and support agreements, providethe holders with the economic and voting rights that are, as nearly aspracticable, equivalent to those of a holder of shares of common stock of USGold.   The voting rights associated with the exchangeable shares are exercisedby a trustee as the owner of the one outstanding share of US Gold’s Series ASpecial Voting Preferred Stock (“Special Voting Share”) pursuant to theprovisions of a Voting and Exchange Trust Agreement.  The Special Voting Share entitles the holderthereof to an aggregate number of votes equal to the number of exchangeableshares of

 

 

52

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theCompany issued and outstanding from time to time and which are not owned by USGold or any subsidiary.  Except asotherwise provided by law, the holder of the Special Voting Share and theholders of US Gold’s common stock vote together as one class on all matterssubmitted to a vote of shareholders.  Theholder of the Special Voting Share has no special voting rights and its consentshall not be required, except to the extent it is entitled to vote with theholders of shares of US Gold common stock, for taking any corporateaction.  Through December 31, 2007,approximately 22,325,817 exchangeable shares had been converted into anequivalent amount of common stock of US Gold.

 

With the Second PhaseAcquisition Transactions (*see* Note 2), USGold assumed remaining stock options covering approximately 812,918 shares ofits common stock at exercise prices ranging from approximately $1.92 to $6.70per share and expiring through January 25, 2017, and additional stockoptions of the Acquired Companies were exercised between the first and SecondPhase transactions equivalent to 353,603 exchangeable shares.  During 2007, assumed stock options wereexercised for 170,125 shares of US Gold common stock.  At December 31, 2007, remaining stockoptions assumed by US Gold are outstanding covering approximately 642,793,shares of US Gold.

 

With the Second PhaseAcquisition Transactions, the Company assumed warrant agreements providing forthe purchase of approximately 3,625,600 exchangeable shares of its exchangeableshares at exercise prices ranging from approximately $0.96 to $3.48 per shareand expiring through May 11, 2008. During 2007, assumed warrants for 2,106,679 exchangeable shares wereexercised for aggregate $3,954,518 representing an average exercise price of approximately$1.88 per share.  At December 31,2007, there remain outstanding assumed warrants for the purchase ofapproximately 1,472,921 exchangeable shares at exercise prices ranging fromapproximately $0.96 to $3.48 per share, and expiring through May 11, 2008.

 

**8.****            ****Lossper share**

 

The computations for basic loss per common share areas follows:

 

| ** **                                           | ** ** | **2007**   | ** ** |
|------------------------------------------------------|------------|------------|------------|
|                                                 |       |       |       |
| Net loss for the year                      |       | $          | (7,684,420 | ) |
| Weighted average number of common shares outstanding |       | 31,307,805 |       |
| Loss per common share                                |       | $          | (0.25      | ) |

 

Lossper common share for 2006 has not been presented as the Company had not issuedany exchangeable shares in connection with the acquisitions as of December 31,2006.

 

**9.             RelatedParty Transactions**

 

Inconnection with the acquisition of the Acquired Companies as discussed in Notes2 and 7, Mr. McEwen tendered all of his shares in the Acquired Companiesand received 6,868,350 exchangeable shares on the same basis as the othershareholders of the Acquired Companies. The exchangeable shares are convertible into shares of US Gold’s commonstock on a one for one basis, the same ratio as the exchangeable shares issuedto the other former security holders of the Acquired Companies.  In connection with the second stage of theacquisition of the Acquired Companies, the Company assumed the obligationsunder warrant agreements of those companies. Warrants of White Knight and Nevada Pacific held by Mr. McEwen wereassumed by the Company on the same basis as warrants owned by otherholders.  During 2007, Mr. McEwenexercised warrants to purchase aggregate 2,052,079 exchangeable shares forapproximately $3.9 million, reflecting a weighted average exercise price of 

 

53

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approximately$1.90 per share.  As of December 31,2007, Mr. McEwen holds warrants to purchase approximately 1,472,921exchangeable shares at exercise prices ranging from approximately $0.96 to$2.17 per share and expiring through May 11, 2008.

 

InNovember 2007, US Gold entered into a contract with Diagnos Inc. (“Diagnos”),a Canadian corporation, for generation of recommended exploration targets inNorth Central Nevada (including properties of the Company) based uponartificial intelligence analysis of certain geologic and other property data(the “2007 Diagnos Contract”).  US Goldand the Company consider the recommendations made by Diagnos to be additionaltools in evaluating exploration targets on its Nevada properties and toidentify other areas of potential interest. The initial results from Diagnos are anticipated to be available to USGold and the Company during late first quarter 2008 and will be evaluated inplanning the exploration program for that year. Mr. McEwen owned an approximate 2.5% equity interest in Diagnos atthe time the Company entered into the 2007 Diagnos Contract.  Under the 2007 DiagnosContract, Diagnos is to be paid a service fee of approximately $195,000 ofwhich $75,000 was paid by December 31, 2007.  In addition, Diagnos would receive a successbonus of 100,000 shares of common stock of the Company for every new economicdiscovery based upon targets recommended by Diagnos (economic discovery definedas the positive feasibility study of the property).  If the Company acquires claims outside theboundary of its existing property area, then Diagnos would receive anadditional success bonus in the form of a 2% net smelter return (“NSR”) royaltyon such claims.  The Company would havethe option to buy back one-half (1% of the 2%) NSR royalty at any time forapproximately $1 million.  If the Companyshould acquire properties on which it would be obligated to pay this royaltythat are already burdened by a royalty or that are subject to joint-venturewith other companies, the bonus on economic discovery would be 500,000 sharesof the Company’s common stock rather than a NRS royalty in favor of Diagnos.

 

Eachof the above agreements were approved or ratified by the independent members ofUS Gold’s Board of Directors.

 

**10.****      ****Unaudited Supplementary QuarterlyInformation**

 

The following tablesummarizes unaudited supplementary quarterly information for the years ended December 31,2007 with none applicable for 2006:

 

 
| ** **                                              | ** ** | **2007**               | ** ** |
|---------------------------------------------------------|------------|------------------------|------------|
| ** **                                              | ** ** | **Three Months Ended** | ** ** |
| ** **                                              | ** ** | **March 31**      | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
|                                                    |       |                   |       |   |   |   |   |   |   |
| Revenues                                                |       | $                      | —     |   | $ | — |   | $ | — |   | $ | — |   |
| Net income (loss)                                       |       | $                      | (451,234   | ) | $ | (2,615,867 | ) | $ | (2,350,272 | ) | $ | (2,267,047 | ) |
| Net income (loss) per  share - basic and diluted        |       | $                      | (0.66      | ) | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.05 | ) |
| Weighted average shares outstanding - basic and diluted |       | 680,278                |       | 38,191,862 |   | 42,968,830 |   | 43,588,788 |   |

 

**ITEM 9.****                                                    ****CHANGESIN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

OnApril 25, 2007, our Board of Directors engaged KPMG, LLP as ourindependent registered public accounting firm for the year ending December 31,2007 and simultaneously dismissed Stark Winter Schenkein & Co., LLP (“SWS”),the former independent registered public accounting firm.

 

Theaudit reports of our financial statements for the year ended December 31,2006 did not contain any adverse opinion, disclaimer of opinion, modificationor qualification as to uncertainty, audit 

 

54

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scopeor accounting principles.  During ourfiscal year ended December 31, 2006 and through April 25, 2007, therewere no disagreements with SWS, whether or not resolved, on any matter ofaccounting principal or practice, financial statement disclosure, auditingscope or procedure which, if not resolved to the satisfaction of SWS, wouldhave caused SWS to make reference to the subject matter of such disagreement inconnection with its report on our financial statements for such periods.

 

**ITEM 9A.****                                           ****CONTROLSAND PROCEDURES**

 

Duringthe fiscal period covered by this report, our management, with theparticipation of the Chief Executive Officer and Chief Financial Officer of theCompany, carried out an evaluation of the effectiveness of the design andoperation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”)).  Based on such evaluation, ourChief Executive Officer and Chief Financial Officer have concluded that, as ofthe end of the period covered by this report, our disclosure controls andprocedures are effective to ensure that information required to be disclosed byus in reports that we file or submit under the Exchange Act is recorded,processed, summarized and reported within the required time periods and aredesigned to ensure that information required to be disclosed in our reports isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and Chief Financial Officer, as appropriate to allow timely decisionsregarding required disclosure.

 

Therehas been no change in our internal control over financial reporting during themost recent fiscal quarter that has materially affected, or that is reasonablylikely to materially affect our internal control over financial reporting.

 

Management’sreport on internal control over financial reporting and the attestation reporton management’s assessment are included in Item 8 of this annual report on Form 10-K.

 

**ITEM 9B.****                                           ****OTHERINFORMATION**

 

None.

 

55

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**PART III**

 

**ITEM 10.****                                             ****DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

 

Thefollowing table sets forth certain information relating to those persons whoserved as our executive officers and directors as of March 21, 2008:

 
| **Name**         | ** ** | **Age** | ** ** | **Positions With  the Company**                                  | ** ** | **Board Position  Held Since** |
|------------------|------------|---------|------------|------------------------------------------------------------------|------------|--------------------------------|
| Robert R. McEwen |       | 58      |       | Chairman of the Board  of Directors and Chief Executive Officer  |       | 2006                           |
| William F. Pass  |       | 61      |       | Vice President, Chief  Financial Officer, Secretary and Director |       | 2006                           |

 

Eachof our directors is serving a term which expires at the next annual meeting ofshareholders and until his successor is elected and qualified or until heresigns or is removed. Our officers serve at the will of our Board ofDirectors. There are no family relationships among our officers or directors.

 

Thefollowing information summarizes the business experience of each of ourofficers and directors for at least the last five years:

 

***Robert R. McEwen***.  Mr. McEwen became the Chairman of ourBoard of Directors and our Chief Executive Officer on April 18, 2006,shortly after our organization.  He becamethe Chairman of the Board of Directors and Chief executive officer of US Goldon August 18, 2005 and continues to serve in that capacity.  Mr. McEwen is also the chairman andchief executive officer of Lexam Explorations, Inc., a public companyengaged in the exploration and development of oil and gas properties, aposition he has held since 1994.  Thecommon stock of Lexam is listed on the TSX Venture Exchange.  Mr. McEwen resigned as the chairman ofGoldcorp Inc. (formerly Goldcorp Investments) in October 2005. He was alsothe chief executive officer of that company from June 1986 until February 2005.  Goldcorp is a corporation organized under thelaws of the Province of Ontario, Canada, engaged in the business of exploringfor and producing gold and other precious metals.  The securities of Goldcorp are traded on theToronto and New York Stock Exchanges.

 

***William F. Pass***.  Mr. Pass became our Vice-President,Chief Financial Officer and Secretary on April 18, 2006.  Mr. Pass is also the Vice President, ChiefFinancial Officer and Corporate Secretary of US Gold, a position he has heldsince 1996.  Mr. Pass intends toretire from all positions with us and US Gold effective March 31, 2008.

 

**ComplianceWith Section 16(a)**

 

Noclass of our securities has been registered under the Securities Exchange Actof 1934, as amended, and we are therefore not subject to the reportingrequirements of Section 16(a).

 

**Code ofEthics**

 

Wehave not adopted a written code of ethics. However, each of our executive officers is subject to a code of ethicsadopted by our parent, US Gold, and we believe our executive officers conductthemselves honestly and ethically with respect to our business affairs inkeeping with that code.

 

56

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**Committees of Our Board ofDirectors**

 

OurBoard of Directors does not maintain any standing committees.  The entire Board of Directors participates indeliberations concerning executive compensation.  There are no “compensation committeeinterlocks” or other relationships required to be disclosed with regard tomembers of our Board of Directors who participate in deliberations concerningexecutive officer compensation.

 

**Changesin Procedures by which Security Holders May Recommend Nominees to theBoard**

 

Anysecurity holder who wishes to recommend a prospective director nominee shoulddo so in writing by sending a letter to our Board of Directors.  The letter should be signed, dated andinclude the name and address of the security holder making the recommendation,information to enable the Board to verify that the security holder was theholder of record or beneficial owner of our securities as of the date of theletter, and the name, address and resumé of the potential nominee.  Specific minimum qualifications for directorsand director nominees which the Board believes must be met in order to be soconsidered include, but are not limited to, management experience, exemplarypersonal integrity and reputation, sound judgment, and sufficient time todevote to the discharge of his or her duties. There have been no changes to the procedures by which a security holdermay recommend a nominee to the Board during our most recently ended fiscalyear.

 

**AuditCommittee**

 

Weare not a listed issuer as defined in Rule 10A-3 of the regulationspromulgated under the Securities Exchange Act of 1934, as amended.  Presently, we have no standing auditcommittee or designated audit committee financial expert since no member of ourBoard of Directors is “independent” as defined in the rules of any stockexchange.  Our entire Board of Directorsserves the function of an audit committee.

 

**ITEM 11.****                                             ****EXECUTIVEAND DIRECTOR COMPENSATION**

 

Thefollowing table summarizes the total compensation for the two fiscal yearsended December 31, 2007 of any person who served as our principalexecutive officer during the last fiscal year, any person who served as ourprincipal financial officer during the last fiscal year, and the only otherperson who served as an executive officer of our company during 2007 (the “NamedExecutive Officers”).  Our company didnot award cash bonuses, stock awards, stock options or non-equity incentiveplan compensation to any Named Executive Officer during the past two fiscalyears, thus these items are omitted from the table below:

 

57

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**Summary Compensation Table**

 
| **Name and  Principal Position**                  | ** ** | **Year** | ** ** | **Salary** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|----------|------------|------------|------------|-----------------------------|------------|-----------|------------|
|                                              |       |     |       |       |       |                        |       |      |       |
| Robert R. McEwen,                                 |       | 2007     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |
| Chairman of the Board and Chief Executive Officer |       | 2006     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |
|                                              |       |     |       |       |       |                        |       |      |       |
| Ann Carpenter,                                    |       | 2007     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |
| President and Chief Operating Officer(1)          |       | 2006     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |
|                                              |       |     |       |       |       |                        |       |      |       |   |   |   |
| William F. Pass,                                  |       | 2007     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |
| Vice President and Chief Financial Officer (1)    |       | 2006     |       | $          | 0          |                        | $          | 0         |       | $ | 0 |   |

 

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(1)                      Ms. Carpenterresigned effective November 30, 2007

 

**Grantsof Plan-Based Awards**

 

Wedid not grant any award to a Named Executive Officer under a non-equity orequity incentive plan during the 2007 fiscal year, and no such award is outstandingas of December 31, 2007.

 

**NarrativeDiscussion of Summary Compensation and Grants of Plan-Based Awards**

 

Sincewe are a non-operating subsidiary of US Gold Corporation, none of our executiveofficers are compensated in their capacities as such.  Any compensation is paid by our parent, USGold.

 

**Outstanding Equity Awardsas Fiscal Year End**

 

Asof December 31, 2007, we had no outstanding stock options, stock that hadnot vested or equity incentive plan awards for any of our Named ExecutiveOfficers.

 

**OptionsExercised and Stock Vested**

 

Duringthe year ended December 31, 2007, none of our Named Executive Officersexercised any stock options, SARs or similar instruments and no stock vested toany such individual.

 

**Terminationor Change in Control Arrangements**

 

Wehave no agreements or other arrangements, verbal or written, which provide forthe payment to any Named Executive Officer in connection with any termination,resignation, severance, retirement or change in control.

 

**ITEM12.****                                             ****SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF MANAGEMENT AND RELATED STOCKHOLDERMATTERS**

 

Asof March 21, 2008, there are a total of one (1) share of our commonstock and 45,455,107 exchangeable shares outstanding, our only classes ofvoting securities currently outstanding. Our common stock is the only class of stock outstanding that is entitledto unlimited voting rights.  The one (1) outstandingshare of common stock is owned by US Gold. The holders of the exchangeable shares are entitled to limited votingrights, including the right to elect one of our three directors.

 

Thefollowing table describes the ownership of our exchangeable shares by: (i) eachof our officers and directors; (ii) all of our officers and directors as agroup; and (iii) each shareholder known to us to own beneficially morethan 5% of the class.  Unless otherwisestated, the address of each of the individuals is our address, 165 South Union,Suite 565, Lakewood, Colorado 80228. All ownership is direct, unless otherwise stated.

 

58

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| ** **                               | ** ** | **Shares Beneficially  Owned** | ** ** |
|------------------------------------------|------------|--------------------------------|------------|
| **Name and Address of Beneficial Owner** | ** ** | **Number**                     | ** ** | **Percentage (%)** | ** ** |
| Robert R. McEwen (1)                     |       | 6,868,350                      |       | 15 | % |
| William F. Pass (1)                      |       | 0                              |       | 0 |   |
| US Gold Corporation                      |       | 15,016,901                     |       | 33 | % |
| US Gold Alberta ULC                      |       | 8,710,097                      |       | 19 | % |

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(1)                      Officerand/or Director.

 

**Changesin Control**

 

Weknow of no arrangements, including any pledge by any person of our securities,the operation of which may result in a change in control.

 

**ITEM 13.****                                             ****CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.**

 

**Procedures and Policies**

 

Weconsider “related party transactions” to be transactions between our companyand (i) a director, officer, director nominee or beneficial owner ofgreater than five percent (5%) of our stock; (ii) the spouse, parents,children, siblings or in-laws of any person named in (i); or (iii) anentity in which one of our directors or officers is also a director or officeror has a financial interest.  Since we donot have any “independent directors,” we do not maintain a formal policyregarding review of related party transactions. Any possible related party transaction would be reviewed on a case bycase basis.

 

**TransactionsWith Robert R. McEwen**

 

Asa shareholder of each of the three Acquired Companies, Mr. McEwenparticipated in the exchange offers on the same terms and conditions as othershareholders of those entities.  Mr. McEwentendered all of his shares of each of the Acquired Companies and received ourexchangeable shares on the same basis as the other shareholders of those entities.  Mr. McEwen received a total of 6,868,350exchangeable shares in exchange for his interest in the AcquiredCompanies.  Mr. McEwen is ourchairman and chief executive officer.

 

**ITEM 14.               PRINCIPALACCOUNTING FEES AND SERVICES**

** **

The following table setsforth fees paid to our independent registered accounting firms, KPMG LLP for2007 and Stark Winter Schenkein & Co., LLP for 2006, for the last twofiscal years:

 
| ** **         | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------|------------|----------|------------|----------|------------|
| Audit Fees         |       | $        | 25,000     |     | $          | 4,690 |   |
| Audit Related Fees |       | 0        |       | 18,706   |       |
| Tax Fees           |       | 0        |       | 0        |       |
| All Other Fees     |       | 228,354  |       | 0        |       |
| Total Fees         |       | $        | 253,345    |     | $          | 23,396 |   |

 

Itis the policy of the Audit Committee of US Gold to engage the independentaccountants selected to conduct our financial audit and to review our quarterlyfilings with the SEC and to confirm, prior to such engagement, that suchindependent accountants are independent. Also in keeping with its 

 

59

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policy,all services of the independent accountants reflected above were pre-approvedby the Audit Committee of US Gold.

 

60

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**PART IV**

 

**ITEM 15.               EXHIBITS,FINANCIAL STATEMENT SCHEDULES**

 

Thefollowing exhibits are filed with or incorporated by referenced in this report:

 

2.1                                                         Plan of Arrangement among US Gold Corporation, US Gold CanadianAcquisition Corporation and Nevada Pacific Gold, Ltd. dated May 17, 2007(incorporated by reference from the Report on Form 8-K dated June 28,2007, Exhibit 2.1, File No. 333-133725-01)

 

2.2                                                         Plan of Arrangement Agreement between US Gold, US Gold CanadianAcquisition Corporation and Tone Resources Limited dated May 17, 2007(incorporated by reference from the Report on Form 8-K dated June 28,2007, Exhibit 2.2, File No. 333-133725-01)

 

3.1                                                         Articles of Incorporation of US Gold Canadian AcquisitionCorporation (incorporated by reference to Form S-4 filed October 30,2006, Exhibit 3.8, File No. 333-133725-01)

 

3.2                                                         Articles of Amendment to the Articles of Incorporation of US GoldCanadian Acquisition Corporation (incorporated by reference to Form S-4filed October 30, 2006, Exhibit 3.9, File No. 333-133725-01)

 

3.10                                                   Bylaws of US Gold Canadian Acquisition Corporation (incorporatedby reference to Form S-4 filed October 30, 2006, Exhibit 3.10,File No. 333-133725-01)

 

4.1                                                         Rights, Privileges, Restrictions and Conditions Attaching to theexchangeable shares of US Gold Canadian Acquisition Corporation (incorporatedby reference from Report on Form 10-Q of US Gold Corporation for thequarterly period ended March 31, 2007, Exhibit 10.1, File No. 001-33190)

 

4.2                                                         Support Agreement between US Gold Corporation, US Gold Alberta ULCand, US Gold Canadian Acquisition Corporation dated March 22, 2007(incorporated by reference from Report on Form 10-Q of US Gold Corporationfor the quarterly period ended March 31, 2007, Exhibit 10.3 , File No. 001-33190)

 

9.1                                                         Voting andExchange Trust Agreement among US Gold Corporation, US Gold Alberta ULC, USGold Canadian Acquisition Corporation and Computershare Trust Company of Canadadated March 22, 2007 (incorporated by reference from Report on Form 10-Qof US Gold Corporation for the quarterly period ended March 31, 2007, Exhibit 10.2,File No. 001-33190)

 

10.1                                                   ServicesContract between US Gold Corporation and Diagnos Inc. dated November 23,2007 (incorporated by reference from Report on Form 10-K of US GoldCorporation for the year ended December 31, 2007, Exhibit 10.26, FileNo. 001-33190.)

 

10.2                                                   Mineral Leasebetween Nevada Pacific Gold (US) and Bertha C. Johnson, Trustee of The Lyle F.Campbell Trust under an Agreement of Trust dated August 5, 1986 andamended on May 21, 1987, August 19, 1987, April 19, 1991, and May 19,1998, and Julian E. Simpson and Jean C. Simpson (incorporated by reference fromReport on Form 10-K of US Gold Corporation for the year ended December 31,2007, Exhibit 10.27, File No. 001-33190.)

 

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11                                                            Not applicable

 

12                                                            Not applicable

 

13                                                            Not applicable

 

14                                                            Not applicable

 

16                                                            Not applicable

 

18                                                            Not applicable

 

*21                                                     List ofSubsidiaries

 

22                                                            Not Applicable

 

23                                                            Not applicable

 

24                                                            Not Applicable

 

*31.1                                            Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 for Robert R. McEwen

 

*31.2                                            Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 for William F. Pass

 

*32                                                     Certification pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 for Robert R. McEwen and William F. Pass

 

99                                                            Not Applicable

----

*Filedwith this report

 

62

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**SIGNATURES**

 

In accordance with Section 13 or 15(d) ofthe Exchange Act, the Company caused this Report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|                       | US GOLD CANADIAN ACQUISITION CORPORATION |
|----------------------------|------------------------------------------|
|                       |                                     |   |
|                       |                                     |   |
|                       | By:                                      | /s/ Robert R. McEwen |
| Dated: March 27, 2008 |                                     | Robert R. McEwen, Chairman of the Board of   Directors and Chief Executive Officer |

 

In accordance with the Exchange Act, this Report hasbeen signed below by the following persons on behalf of the Company and in thecapacities and on the dates indicated.

 
| /s/ Robert R. McEwen |   | Chairman of the Board of Directors and Chief Executive |   | March 27, 2008 |
|----------------------|--------|--------------------------------------------------------|--------|---------------------|
| Robert R. McEwen     |   | Officer (Principal  Executive Officer)                 |   |                |
|                 |   |                                                   |   |                |
| /s/ William F. Pass  |   | Vice President, Chief Financial Officer (Principal     |   | March 27, 2008 |
| William F. Pass      |   | Financial and Accounting  Officer) and Director        |   |                |

 

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**EXHIBIT INDEX**

 

2.1                                                         Plan of Arrangement among US Gold Corporation, US Gold CanadianAcquisition Corporation and Nevada Pacific Gold, Ltd. dated May 17, 2007 (incorporatedby reference from the Report on Form 8-K dated June 28, 2007, Exhibit 2.1,File No. 333-133725-01)

 

2.2                                                         Plan of Arrangement Agreement between US Gold, US Gold CanadianAcquisition Corporation and Tone Resources Limited dated May 17, 2007 (incorporatedby reference from the Report on Form 8-K dated June 28, 2007, Exhibit 2.2,File No. 333-133725-01)

 

3.1                                                         Articles of Incorporation of US Gold Canadian AcquisitionCorporation (incorporated by reference to Form S-4 filed October 30,2006, Exhibit 3.8, File No. 333-133725-01)

 

3.2                                                         Articles of Amendment to the Articles of Incorporation of US GoldCanadian Acquisition Corporation (incorporated by reference to Form S-4filed October 30, 2006, Exhibit 3.9, File No. 333-133725-01)

 

3.10                                                   Bylaws of US Gold Canadian Acquisition Corporation (incorporatedby reference to Form S-4 filed October 30, 2006, Exhibit 3.10,File No. 333-133725-01)

 

4.1                                                         Rights, Privileges, Restrictions and Conditions Attaching to theexchangeable shares of US Gold Canadian Acquisition Corporation (incorporatedby reference from Report on Form 10-Q of US Gold Corporation for thequarterly period ended March 31, 2007, Exhibit 10.1, File No. 001-33190)

 

4.2                                                         Support Agreement between US Gold Corporation, US Gold Alberta ULCand, US Gold Canadian Acquisition Corporation dated March 22, 2007(incorporated by reference from Report on Form 10-Q of US Gold Corporationfor the quarterly period ended March 31, 2007, Exhibit 10.3 , File No. 001-33190)

 

9.1                                                         Voting andExchange Trust Agreement among US Gold Corporation, US Gold Alberta ULC, USGold Canadian Acquisition Corporation and Computershare Trust Company of Canadadated March 22, 2007 (incorporated by reference from Report on Form 10-Qof US Gold Corporation for the quarterly period ended March 31, 2007, Exhibit 10.2,File No. 001-33190)

 

10.1                                                   ServicesContract between US Gold Corporation and Diagnos Inc. dated November 23,2007 (incorporated by reference from Report on Form 10-K of US GoldCorporation for the year ended December 31, 2007, Exhibit 10.26, FileNo. 001-33190.)

 

10.2                                                   Mineral Leasebetween Nevada Pacific Gold (US) and Bertha C. Johnson, Trustee of The Lyle F.Campbell Trust under an Agreement of Trust dated August 5, 1986 andamended on May 21, 1987, August 19, 1987, April 19, 1991, and May 19,1998, and Julian E. Simpson and Jean C. Simpson (incorporated by reference fromReport on Form 10-K of US Gold Corporation for the year ended December 31,2007, Exhibit 10.27, File No. 001-33190.)

 

11                                                            Not applicable

 

12                                                            Not applicable

 

64

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13                                                            Not applicable

 

14                                                            Not applicable

 

16                                                            Not applicable

 

18                                                            Not applicable

 

*21                                                     List ofSubsidiaries

 

22                                                            Not Applicable

 

23                                                            Not applicable

 

24                                                            Not Applicable

 

*31.1                                            Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 for Robert R. McEwen

 

*31.2                                            Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 for William F. Pass

 

*32                                                     Certification pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 for Robert R. McEwen and William F. Pass

 

99                                                                        Not Applicable

 

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*  Filed with this report. 

 

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