Argosy Minerals Limited (ARYMF) 20-F 2008 FY Annual report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 20-F

(Mark One)

Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

or

  X  

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended

December 31, 2008

or

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________________ to __________________

or

Shell Company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report.  _______________________

Commission file number

0-29500

ARGOSY MINERALS INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

Level 2 Suite 10, Peninsular Place

57 Labouchere Road

South Perth, Western Australia, 6151

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None

(Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares, Without Par Value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the registrant’s classes of capital or common stock as of the close of the period covered by the annual report.

99,919,105 Common Shares

Indicate by check mark if the Registrant is a well-known seasonal issuer, as defined in Rule 405 of the Securities Act

Yes        No  X  

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.  

Yes        No  X  

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   X    No    

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

Large accelerated filer

Accelerated filer

Non-accelerated filer  X  

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17   X    Item 18        

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes       No  X  

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TABLE OF CONTENTS

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Glossary Of Technical Terms

The following is a glossary of mining terms used in this document:

alluvial	-	resulting from erosion and weathering of primary occurrences and later transported, relocated and concentrated by a river.
amphibole	-	a group of dark, iron and magnesium bearing rock forming minerals.
assays	-	metallurgical procedure for determining grade of sample.
basal	-	lowermost layer or horizon.
biotite	-	a dark to black mica; common rock forming mineral.
breccia	-	rock consisting of fragments, more or less angular, in a matrix of finer-grained material.
calcsilicates	-	a calcium silicate mineral commonly in skarn deposits.
chalcopyrite	-	a yellow coloured copper iron sulphide.
chargeability	-	the primary unit of measurement in time-domain induced polarisation geophysical surveys.
chlorite	-	a soft platy mineral; a hydrated silicate that is a common alteration mineral.
clastic	-	sedimentary rock composed principally of broken fragments derived from pre-existing rocks or minerals.
concentrate	-	a product containing valuable minerals from which most of the waste material in the ore has been separated, usually by a flotation technique.
conductivity	-	relating to electrical conductivity in rocks.
decantation	-	metallurgical process where solutions flow or pumped from one process to another.
development	-	the preparation of a mining property for production.
diamond drilling	-	a type of rotary core drilling in which diamonds are used as the cutting tool.
diamondiferous	-	containing diamond
epidote	-	a yellowish green hydrated calcium, aluminium, iron silicate that often forms as an alteration mineral.
epithermal	-	applied to hydrothermal deposits formed at low temperature and pressure.
fault	-	a fracture in a rock along which there has been displacement.
fault system	-	two or more interconnecting faults.
flotation	-	a metallurgical process involving air bubbles to recover a specific mineral from an ore.
gabbro	-	dark, coarse grained igneous (cooled from deeply buried magma body) rock.
grade	-	the proportion of an element (or substance) in an ore body – commonly expressed as a percentage for base metals and grams/tonne or oz/ton for precious metals.
g/t	-	grams per tonne.
gravels	-	coarse alluvially derived sediments.
IP	-	“induced polarisation”; a geophysical technique that uses electrical currents.
km	-	kilometres (1000 metres).
laterite	-	a residual deposit derived from the weathering of ultrabasic rocks by the drainage of meteoric water through fractures.
lateritic ore	-	laterite containing nickel and cobalt values in economic concentrations.
leaching	-	the dissolution stage of a hydrometallurgical process.

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limonite	-	a hydrated oxide of iron which, in the context of a laterite orebody represents the most heavily weathered portion of the laterite profile, lying closest to surface with high concentrations of contained iron and low concentrations of contained magnesium.
m	-	metres.
magnetite	-	an iron oxide mineral.
measured resource	-	the estimated quantity and grade of that part of a deposit for which the size, configuration, and grade have been very well-established by observation and sampling of outcrops, drill holes, trenches and mine workings.
metamorphic	-	metamorphic rocks are those that have undergone heat+pressure that has commonly resulted in recrystallisation and/or growth of new minerals.
metaconglomerate	-	a metamorphosed conglomerate; a conglomerate is a coarse grained sedimentary rock
metasediment	-	a metamorphosed sedimentary rock.
metavolcanic	-	a metamorphosed volcanic rock.
mineralization	-	the presence of minerals of possible economic value.
mineralogy	-	the study of minerals.
mineral resource	-	a deposit or concentration of natural, solid, inorganic or fossilised organic substance in such quantity and at such a grade or quality that extraction of the material at a profit is potentially viable.
ore	-	a body of rock from which it is or may be possible to extract minerals profitably.
oxide	-	a mineral compound of an element (or elements) with oxygen.
palaeochannel	-	ancient river course usually filled in with overburden.
pentlandite	-	pale bronze coloured iron nickel sulphide mineral.
plagioclase	-	feldspar mineral; a common aluminium silicate rock forming mineral.
pyrite	-	a yellow iron sulphide mineral.
pyroxene	-	dark, rock forming silicate mineral.
pyrrhotite	-	a brownish yellow iron sulphide mineral.
quartzite	-	a metamorphosed sandstone.
refinery	-	a plant or processing facility where ore, concentrates, mixed sulphides or matte are processed into partially or fully refined metals.
reserves	-	proven, probable, possible.
resources	-	measured, indicated, inferred.
saprolite	-	weathered rock in which the original minerals have been almost completely replaced (e.g. by clays) but the original texture of the rock type is preserved.
saprolitic ore	-	saprolite containing nickel and cobalt values in economic concentrations.
serpentinised dunite	-	altered mafic rock.
skarn	-	a calcilicate-bearing rock type sometimes formed at or near the contact between intrusions and carbonate rocks (e.g.limestones).
stockwork	-	a 3 dimensional network of vein.
stoping	-	underground mining activity to remove ore.
strike	-	the course or bearing of a bed or layer of rock.
structural corridor	-	regional lineations of geological structures such as faults.
talc	-	a very soft hydrated magnesium silicate mineral.
vein	-	an occurrence of ore with a regular development in length, width and depth.

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NOTE TO US READERS – DIFFERENCES REGARDING THE DEFINITIONS OF RESOURCE AND RESERVE ESTIMATES IN THE U.S. AND CANADA  

Mineral Reserve

The terms “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” used in Argosy Minerals Inc.’s (the “Registrant”) disclosure are Canadian mining terms that are defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Best Practice Guidelines for the Estimation of Mineral Resource and Mineral Reserves (the “CIM Standards”), adopted by the CIM Council on November 23, 2003. These definitions differ from the definitions in the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 under the Securities Act of 1933, as amended (the “Securities Act”). Under Industry Guide 7 standards, mi neralization may not be classified as a “reserve” unless the determination has made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

Mineral Resource

The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” used in the Registrant’s disclosure are Canadian mining terms that are defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards; however, these terms are not defined terms under Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.  “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgrad ed to a higher category.  Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.  Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically mineable.

Accordingly, information contained in this report containing descriptions of the Registrant’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.  

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Some, but not all, forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” statements that an action or event “may,” “might,” “could,” “should,” or “will” be taken or occur, or other similar expressions.  Forward-looking statements in this report include, but are not limited to, the ability of the Registrant to fund its operations for the next 12 months.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Registrant, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks:  risks associated with project development; the Registrant’s history of losses and lack of revenues; risks related to the worldwide economic crisis, the Registrant’s lack of mineral properties; the potential inability of investors to enforce U.S. judgments against the Registrant or its officers or directors; the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in metal prices; title matters; uncertainties and risks related to carrying on business in foreign countries; political risks and political risk insurance; environmental liability claims and insurance; infrastructure issues; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters of the Registrant with certain other projects; the absence of d ividends; currency fluctuations; competition; dilution; the volatility of the Registrant’s common share price and volume; adverse tax consequences to U.S. shareholders resulting from the Registrant’s “passive foreign investment and company” status.  Additional information concerning these and other factors that could affect the operations or financial results of the Registrant are included in this document under“Item 3. Key Information – Risk Factors”. Although the Registrant believes that the expectations reflected in its forward-looking statements are reasonable, it cannot guarantee future results, performance and achievements or other future events.  The Registrant is under no duty to update any of its forward-looking statements after the date of this report.  Investors should not place undue reliance on such forward-looking statements.

METRIC EQUIVALENTS

For ease of reference, the following factors for converting metric measurements into imperial equivalents are provided:

To Convert From Metric	To Imperial	Multiply By
hectares	acres	2.471
metres	feet	3.281
kilometres	miles	0.621
tonnes	tons (2000 pounds)	1.102

The information set forth in this Form 20-F is as at February 28 , 2009 unless an earlier or later date is indicated.

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PART  I

Item 1 – Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2 – Offer Statistics and Expected Timetable

Not applicable.

Item 3 – Key Information

A.

Selected Financial Data

The following table summarizes selected consolidated financial data for the Registrant (stated in Canadian dollars) prepared in accordance with Canadian Generally Accepted Accounting Principles (“Canadian GAAP”).  The table also summarizes certain corresponding information prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).  The information in the table was extracted or derived from the more detailed audited consolidated financial statements and related notes included herein and should be read in conjunction with such financial statements and with the information appearing under the heading “Item 5. – Operating and Financial Review and Prospects”.  Reference is made to Note 12 of the December 31, 2008 consolidated financial statements of the Registrant, included herein, for a discussion of the material differences between Canadian GAAP and U.S. GAAP, and their effects on the Registrant’s financial statements.

To date, the Registrant has not generated any cash flow from operations to fund ongoing operational requirements and cash commitments.  The Registrant has financed its operations principally through the sale of its equity securities, and reimbursement of prior expenditures.  The Registrant currently has sufficient funds to maintain operations for the remainder of its fiscal year at its current level of activity.  In the event that activities increase or new projects are acquired, the Registrant’s ability to continue operations will be dependent on its ability to obtain additional financing.  For particulars, see “Item 4. Information on the Company – Business Overview”and “Item 5. – Operating and Financial Review and Prospects – Liquidity and Capital Resources”.  

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	Year Ended Dec. 31, 2008	Year Ended Dec. 31, 2007	Year Ended Dec. 31, 2006	Year Ended Dec. 31, 2005	Year Ended Dec. 31, 2004
Statement Of Operations And Deficit
Operating Revenues	n/a	n/a	n/a	n/a	n/a
Net Loss for the Period
Canadian GAAP	$2,959,219	$2,819,889	$1,635,182	$1,198,637	$3,148,252
U.S. GAAP	$2,959,219	$2,819,889	$1,635,182	$1,198,637	$3,148,252
Basic & Diluted Loss per Common Share
Canadian GAAP	$0.03	$0.03	$0.02	$0.01	$0.03
U.S. GAAP	$0.03	$0.03	$0.02	$0.01	$0.03
Dividends Declared	n/a	n/a	n/a	n/a	n/a
Balance Sheet
Total Assets
Canadian GAAP	$2,118,782	$3,361,689	$2,378,898	$3,671,161	$4,812,927
U.S. GAAP	$2,118,782	$3,361,689	$2,378,898	$3,671,161	$4,812,927
Net Assets
Canadian GAAP	$1,978,439	$3,189,067	$2,267,358	$3,463,289	$4,661,926
U.S. GAAP	$1,978,439	$3,189,067	$2,267,358	$3,463,289	$4,661,926
Shareholders’ Equity
Canadian GAAP	$1,978,439	$3,189,067	$2,267,358	$3,463,289	$4,661,926
U.S. GAAP	$1,978,439	$3,189,067	$2,267,358	$3,463,289	$4,661,926
Weighted Average Number of Shares Outstanding	99,919,105	98,023,272	95,969,105	95,969,105	95,969,105

In this Annual Report on Form 20-F, unless otherwise specified, all monetary amounts are expressed in Canadian dollars.  The following table sets out the exchange rates, based on the noon buying rate in New York City for cable transfer in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York, for the conversion of Canadian dollars (CDN$) into United States dollars (US$) in effect for each of the following periods, and the average exchange rates (based on the average of the exchange rates on the last day of each month) and the high and low exchange rates for each of the previous six months:

Year Ended December 31
	2008	2007	2006	2005	2004
Average for Period	0.9335	0.9384	0.7547	0.8276	0.7702

Month Ended
	February 28,  2009	January 31,  2009	December 31,  2008	November 30, 2008	October 31,  2008	September 30,  2008
High for Period	0.8059	0.8459	0.8360	0.8694	0.9428	0.9673
Low for Period	0.7868	0.7844	0.7710	0.7782	0.7726	0.9262

Exchange rates are based upon the noon buying rate in New York City for cable transfers in foreign currencies for customs purposes by the Federal Reserve Bank of New York.  The noon rate of exchange on February 27, 2009 as reported by the United States Federal Reserve Bank of New York for the

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conversion of Canadian dollars into United States dollars was 0.7868 (US$1.00 = CDN$1.2710) and for the conversion of Australian dollars into United States dollars was 0.6419 (US$1.00 = AUS$1.5579).

B.

Capitalization and Indebtedness

Not applicable.

C.

Reasons for the Offer and Use of Proceeds

Not applicable.

D.

Risk Factors

An investment in the common shares, without par value, of the Registrant (the “Common Shares”) should be considered to be highly speculative due to the nature of the Registrant’s business, the present stage of its projects and the risks inherent in the development, construction, commissioning of mines and the processing and the sale of diamonds, nickel, cobalt, gold and silver products.  

Some of the risks associated with an investment in the Common Shares of the Registrant include, but are not limited to, the following:

i.

Lack of Revenues; History of Losses

The Registrant has not recorded any revenues or net income from its operations nor has the Registrant commenced commercial production on any of its properties over the Registrant’s more than twenty (20) year existence.  The Registrant has accumulated net losses of approximately $48 million through December 31, 2008.  There can be no assurance that significant additional losses will not occur in the near future or that the Registrant will generate any revenues from mining operations or be profitable in the future.  The Registrant anticipates that its operating expenses and capital expenditures may increase significantly in subsequent years if it adds the consultants, personnel and equipment associated with advancing exploration, development and possible commercial production of properties that it may acquire should it decide to put a property into production.  The amounts an d timing of expenditures will depend on the Registrant’s ability to secure suitable properties, its ability to obtain financing on acceptable terms, the progress of exploration where exploration results are positive, the potential future development, the results of consultant’s analysis and recommendations, the rate at which operating losses are incurred, the execution of any joint venture agreements over properties that may be secured and other factors, many of which are beyond the Registrant’s control.  

The Registrant does not expect to receive revenues from operations in the foreseeable future, if at all.  The Registrant expects to continue to incur losses unless and until such time as properties enter into commercial production, if at all, and generate sufficient revenues to fund its continuing operations.  The potential development of properties that the Registrant acquires will first require the commitment of substantial resources to conduct the necessary time-consuming exploration and, only if exploration results are successful can decisions be made regarding the future development of properties.  There can be no assurance that the Registrant will generate any revenues or achieve profitability.

ii.

No Mineral Producing Properties; Registrant is in Exploration Stage

The Registrant is an exploration-stage company.  Currently the Registrant does not have any mineral properties.  Any work program carried out on a property that may be acquired would be an exploratory search for ore grade mineralization.  There can be no assurance that an exploration program will result in a profitable commercial mining operation.  

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The exploration for and development of mineral deposits is a speculative venture necessarily involving substantial risks.  There is no certainty that the expenditures to be made by the Registrant will result in discoveries of commercially viable mineral deposits.  Few properties which are explored are ultimately developed into producing mines.  The Registrant has no plant or equipment to conduct mining operations and it would have to raise and commit a substantial amount of funds to any mining operation that it may undertake should it acquire a suitable property.  Major expenses may be required to establish ore reserves, develop metallurgical processes, construct mining and processing facilities at a particular site and establish the required infrastructure (i.e., electricity and roads).  In exploring properties, the Registrant may be subjected to an array of comp lex economic factors and accordingly, there can be no assurance that feasibility studies will be carried out on any property that it may acquire or that results projected by any feasibility study that may be carried out in future will be attained in the event that the Registrant commences production on such a property.

iii.

Risk of Development

The Registrant has not brought any property in which it had an interest into commercial production.  As such, the Registrant’s ability to meet production, timing and cost estimates for properties cannot be assured.  Technical considerations, delays in obtaining government approvals, the inability to obtain financing or other factors could cause delays in developing properties.  Such delays could materially adversely affect the financial performance of the Registrant.  

iv.

Additional Financing Requirements

The Registrant’s operations currently do not provide any cash flow.  In the past the Registrant has relied on sales of equity securities and the recovery of exploration expenditures to meet its cash requirements.  With the current global economic crisis, funding is no longer readily available for junior resource companies and additional equity financing may not be available on terms acceptable to the Registrant, or at all. In addition, there can be no assurance that any future operations will provide cash flow sufficient to satisfy operational requirements and cash commitments.

The Registrant presently has sufficient financial resources to maintain its current level of operations for at least the remainder of its current fiscal year.  Property acquisitions or changes in the scope of the Registrant’s operations may require additional funding.  The Registrant’s operational budgets are based in part on estimates provided by independent contractors.  In the past these estimates have proven to be less than amounts ultimately paid by the Registrant, largely resulting from changes in the scope of projects.  Failure of the Registrant to obtain additional financing, if and as required, on a timely basis could delay future projects.  

Construction of any projects may require that the Registrant raise substantial project financing.  The Registrant has not previously completed financing of a development project and a financing of this magnitude will be dependent on a large number of factors beyond the Registrant’s control, including the state of financial and equity markets, interest rates, currency exchange rates, commodity prices for amongst others, commodity prices including, depending on the nature of any project acquired, the prices of precious metals, nickel, cobalt, copper and sulphur, energy prices and other factors.  Failure by the Registrant to secure financing for any project could materially adversely affect the Registrant’s future financial performance.  

v.

Operational Risks

The business of mining and processing is generally subject to certain types of risks and hazards, including fires, power outages, labour disruptions, the inability to obtain suitable or adequate land,

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machinery, equipment, or labour, environmental hazards, industrial accidents, unusual or unexpected rock formations, cave-ins,flooding, finished product losses, theft, periodic interruptions due to inclement or hazardous weather conditions and political risk.  Such risks could result in damage to, destruction of or expropriation of mineral properties or production facilities, personal injury, environmental damage, delays in mining, monetary losses and possible legal liability.  Projects may also be affected by risks of fluctuations in exchange rates and inflation.  No assurance can be given that insurance to cover these risks will be available at economically feasible premiums or at all.  Insurance against environmental risks (including potential for pollution or other hazards as a result of the disposal of waste p roducts occurring from production) is not generally available to the Registrant or to other companies within the industry.  To the extent that the Registrant is subject to environmental liabilities, the payment of such liabilities would reduce or exhaust the funds available to the Registrant.  Should the Registrant be unable to fund fully the cost of remedying an environmental problem should it arise, the Registrant might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy.

vi.

Fluctuations in Commodity Prices

The mining industry in general is intensely competitive and there is no assurance that, even with commercial quantities of mineral deposits discovered, a profitable market will exist for the sale of any metals produced.  Factors beyond the control of the Registrant may affect the marketability of any substances discovered.  The prices of various metals have experienced significant movement over short periods of time, and are affected by numerous factors beyond the control of the Registrant, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining production methods.  The supply of and demand for metals are affected by various factors, including political events, economic conditions and production co sts in major producing regions.  There can be no assurance that the price of any metal will be such that the Registrant can mine properties that may be acquired at a profit.

vii.

Uncertainty of Title

Third parties may dispute the Registrant’s rights to its mining and other interests.  While the Registrant investigates title to property interests that it may acquire, title to properties is generally   subject to permit renewal applications and title may be lost.  The Registrant recently was advised that it had lost title to the Burundi Nickel Project when the Government of Burundi awarded an exploration license to a third party while the Registrant was engaged in arbitration proceedings to secure title. (See Foreign Countries and Regulatory Requirements and Extension of the Mining Convention immediately below)

Potential project sites may be subject to dispute, prior unregistered claims, or native land claims and ultimate transfer to the Registrant may be affected by undetected defects.  Such claims or defects could materially adversely affect future projects and the Registrant’s financial performance.  

viii.

Foreign Countries and Regulatory Requirements and Extension of the Mining Convention

The current or future operations of the Registrant, including development activities and commencement of production on any property acquired require permits from various foreign, federal, state and local government authorities and such operations are and will be governed by existing and possible future laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances,

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land use, environmental protection, mine safety and other matters.  Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits for exploration and permit renewals.  Applications for the renewal of prospecting permits will be made as and when required.  The Registrant commenced arbitral proceedings in the International Court of Arbitration of the International Chamber of Commerce (the “ICC”) in Paris against the Government of Burundi to enforce the Registrant’s right to proceed with the Burundi Nickel Project pursuant to the Mining Convention (as defined herein) between Andover Resources N.L., (“Andover”) a subsidiary of the Registrant and the Governme nt of Burundi dated February 11, 1999.  Recently the Registrant was advised that title had been awarded to a third party and consequently the Registrant no longer has title to the Burundi Nickel Project.  The Registrant’s management does not expect that any property that may be acquired will have progressed to completion of a feasibility study during the current fiscal year and the Registrant would not commence operations on any property until a feasibility study has been prepared on that property.

The Registrant will be required to comply with all material laws and regulations which apply to its future activities.  There can be no assurance, however, that all permits which the Registrant may require for prospecting or the construction of mining facilities and to conduct mining operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any mining project which the Registrant might undertake.

ix.

Political Risk and Political Risk Insurance

The Registrant is generally exposed to political risk as the projects that it is pursuing are in areas which may be subject to unstable political situations. To date, the Registrant has not applied for political risk insurance on any exploration property that it has acquired.  Should the Registrant apply for such insurance there can be no assurance that insurance will be available at economically feasible premiums or available at all.  

The Canadian Government, through the Export Development Corporation, may provide insurance to cover unforeseen political risk.  In deciding whether to provide insurance coverage, the Canadian government considers the following factors: whether the Registrant’s activities involve economic advantages to Canada, such as the development and preservation of foreign markets or the securing of sources of raw materials not available in Canada; whether there are economic advantages to the host country, such as expansion of employment; whether there is host government approval of the proposed activity; and the size and nature of the activity; however, as a matter of policy, the Canadian government’s insurance program covers almost any right that a Canadian company may acquire in a foreign enterprise, including equity, loans, management contracts and royalty and licensing agreements.  

x.

Environmental Factors

While the Registrant reviews environmental legislation of each country in which it acquires a project, these assessments are preliminary in nature.  Any project that the Registrant’s acquires will likely be at an early stage and will require substantial work regarding environmental matters and will be required to meet World Bank standards or regulations of the local governments, whichever is more stringent.  Therefore, existing and possible future environmental legislation, regulations and actions in countries where projects are secured could cause additional expense, capital expenditures, restrictions and delays in the Registrant’s activities undertaken in connection with such projects.  The ability of the Registrant to conduct work on projects acquired will depend, to a large extent, on the obtaining and maintaining of environmental approvals and there

14

is no assurance that such approvals will be granted when requested.  Delays in the granting of such approvals and/or changes in environmental legislation and regulations could materially adversely affect the Registrant’s future operations and financial performance.

xi.

Reliance on Key Personnel

The Registrant is heavily dependent upon the expertise of certain of its own or its subsidiaries’ key officers.  The loss of the services of one or more of these individuals could have a material adverse effect on the Registrant.  The Registrant’s ability to recruit and retain highly qualified management personnel is critical to its success.  There can be no assurance that the Registrant will be successful in attracting and retaining skilled and experienced management; if it is unable to do so this may materially adversely affect the Registrant’s financial performance.

xii.

Conflicts of Interest

Certain directors, officers or promoters of the Registrant are directors, officers, significant shareholders or promoters of other publicly listed companies.  As a result, potential conflicts of interest may arise with respect to the exercise by such persons of their respective duties for the Registrant.  In the event that such a conflict of interest arises at a meeting of the directors of the Registrant, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms.  In the appropriate cases, the Registrant will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict.  Other than as indicated, the Registrant has no other procedures or mechanisms to deal with conflicts of interest.

xiii.

Absence of Dividends

The Registrant has never declared or paid cash dividends on its Common Shares and does not anticipate doing so in the foreseeable future.  There can be no assurance that the Registrant’s board of directors (the “Board”) will ever declare cash dividends, which action is exclusively within its discretion.  Investors cannot expect to receive a dividend on the Registrant’s Common Shares in the foreseeable future, if at all.

xiv.

Currency Fluctuation

The Registrant currently maintains its banking accounts in Australian and Canadian dollars.  The Registrant’s office in Australia (using Australian Dollars) makes it subject to foreign currency fluctuations and such fluctuations may materially affect the Registrant’s financial position and results from operations.  The Registrant does not currently engage in hedging activities.

xv.

Competition

The Registrant competes with other development companies which have similar operations, and many such competitor companies have operations and financial resources and industry experience far greater than those of the Registrant and such competition may materially adversely affect the Registrant’s financial performance.

xvi.

Dilution

The Registrant may attempt to raise additional capital in the future from the issue of new Common Shares and grant to some or all of its own and its subsidiaries’ directors’, officers’, insiders’, key employees’ and consultants’ options to purchase the Registrant’s Common Shares as non-cash incentives to those entities and individuals.  Such capital raisings may be at prices below or equal to market prices and such options may be granted at exercise prices equal to market prices at times when the public market is depressed.  To the extent that significant numbers of new Common

15

Shares are issued or such options may be granted and exercised, the interests of then existing shareholders of the Registrant will be subject to additional dilution.  

The Registrant is currently without a source of revenue and will be required to issue additional shares to finance its operations.

xvii.

Volatility of Common Share Price and Volume; Lack of Liquidity

The Registrant’s Common Shares are listed for trading on the Australian Stock Exchange (“ASX”).  The Registrant’s listing on the CDNX, in Canada, was voluntarily terminated on October 4, 2001 due to lack of trading volume. Shareholders of the Registrant may still be unable to sell significant quantities of the Common Shares into the public trading markets without a significant reduction in the price of the shares, if at all.  Furthermore, there can be no assurance that the Registrant will continue to be able to meet the listing requirements of the ASX or achieve listing on any other public trading exchange.  The market price of the Common Shares may be affected significantly by factors such as changes in the Registrant’s operating results, fluctuations in the price of metals, the interest of investors, traders and others in small exploration stage public comp anies such as the Registrant and general market conditions.  In recent years, and in particular during the current worldwide economic crisis, the securities markets in Australia have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small capitalisation exploration companies similar to the Registrant, have experienced wide fluctuations which have not necessarily been related to the operating performances, underlying asset values or future prospects of such companies.  There can be no assurance that future fluctuations in the price of the Registrant’s shares will not occur.

xviii.

Adverse Tax Consequences to U.S. Shareholders Resulting From the Registrant’s PFIC Status

The Registrant believes that it may qualify as a passive foreign investment company (“PFIC”) for the current taxable year, may have qualified as a PFIC for past taxable years, and may qualify as a PFIC in the future with respect to U.S. Holders of the Registrant’s Common Shares because the Registrant’s only source of income is interest, a passive source of income under the PFIC rules.

See “Item 10.E. Taxation - United States Federal Income Tax Consequences” for a more detailed discussion of material United States federal income tax consequences for U.S. shareholders.

xix.

Potential Inability to Enforce U.S. Judgements against the Registrant or its Officers and Directors

The Registrant is incorporated under the laws of British Columbia, Canada and, all of the Registrant’s directors and officers are residents of either Canada or Australia.  Consequently, it may be difficult for United States investors to effect service of process within the United States upon the Registrant or upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgements of United States’ courts predicated upon civil liabilities under the Securities Act.  A judgement of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgement was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Registrant predicated solely upon such civil liabilities.

xx

Uncertain global economic conditions will affect the Registrant and its common share price.

Current conditions in the domestic and global economies are uncertain. There continues to be a high level of market instability and market volatility with unpredictable and uncertain financial market projections.  The impacts of a global recession or depression, commodity price

16

fluctuations, the availability of capital and the acceptance of nuclear energy may have consequences on the Registrant and its share price.  Global financial problems and lack of confidence in the strength of global financial institutions have created many economic and political uncertainties that have impacted the global economy.  As a result, it is difficult to estimate the level of growth for the world economy as a whole. It is even more difficult to estimate growth in various parts of the world economy, including the markets in which the Registrant participates.

xxi

Potential Shell Company Status; Restrictions on Resale of Shares

As the Registrant currently has nominal operations and its assets consist of cash and/or cash equivalents, the Registrant may be deemed a "shell company," as defined in Rule 12b-2 of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act").  Accordingly, if the Registrant is considered a "shell company", until (i) the Registrant is no longer a "shell company" and (ii) the Registrant continues its reporting obligations pursuant to the Exchange Act and twelve months elapses thereafter, shareholders holding restricted, non-registered shares will not be able to use the exemptions provided under Rule 144 ("Rule 144") under the United States Securities Act of 1933, as amended, for the resale of their common shares of the Registrant.  Such restriction may be more difficult for the Registrant to sell equity securities or equity-related securiti es in the future to investors in the United States and potential investors in the United States may require the Registrant to register their shares for resale in a future prospectus.

 Item 4 – Information on the Company

A.

History and Development of the Company

The Registrant’s legal name is Argosy Minerals Inc.  The Registrant was incorporated in the Province of Alberta pursuant to the Business Corporations Act (Alberta) on December 17, 1985, was continued under the Canada Business Corporations Act on September 24, 1987, was continued pursuant to theBusiness Corporations Act (Yukon) on June 17, 1997 and on May 26, 2005 was continued into British Columbia under theBusiness Corporations Act (British Columbia).  

The address for service of the Registrant is at its registered and records office in Canada, located at 925 West Georgia Street, Vancouver, BC V6C 3L2, Canada – tel. (604) 685-3456.  Its registered office in Australia is Suite 10, Peninsula Place, 57 Labouchere Road, South Perth, Western Australia, Australia 6151 – tel. (011) 618-9474-4234.

The Burundi Nickel Project was acquired in 1999 pursuant to a Mining Convention between the Registrant’s wholly owned subsidiary, Andover, and the Government of Burundi, has been subject to force majeure due to political instability in Burundi.  In May 2005 the Registrant lifted force majeure and initiated discussions with the Ministry of Mines to secure a continuation of the Mining Convention.  After extensive, but futile, attempts by Andover to negotiate with the Government of Burundi to continue its work under the Mining Convention, and to obtain the necessary research permit from the Minister of Mines, Andover instructed its legal counsel to commence arbitral proceedings against the Government of Burundi at the International Chamber of Commerce in Paris.  Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded the rights to a third party and consequently the Registrant does not have any projects at this time.See Item 4B Business Overview – Burundi Nickel Project – Musongati.  

17

In March 2003, the Registrant entered into an option agreement, with subsequent amendments for the acquisition of 85% of Albetros Inland Diamond Exploration Pty Ltd. (“Albetros”), the owner of a prospecting permit in Namaqualand, South Africa (the “Albetros Diamond Project”).  See Item 4B Business Overview, Albetros Diamond Project.

In December 2003 and May 2004, the Registrant entered into option agreements over the Gold Creek properties in Nevada, USA.  See Item 4B Business Overview, Gold in Nevada, US.

In April 2005, the Registrant entered into an option agreement for the acquisition of the Lac Panache Project in Sudbury, Ontario.  In April 2006, the Registrant entered into an agreement to acquire the Fish Creek property in Nairn Township, 50km southwest of Sudbury, Ontario and in May 2007, acquired the rights to the Copper Cliff Property in Sudbury, Ontario.  See Item 4B Business Overview, Lac Panache, Fish Creek and Copper Cliff Projects, Sudbury, Canada.  

Principal Capital Expenditures and Divestitures

The Registrant’s Principal Accounting Policies for Project Assessment and Mineral Properties and Deferred Costs are as follows:

Project Assessment Expenditures

Project assessment costs consist of expenditures to evaluate new projects.  These expenditures are charged to income when incurred.  Once the Registrant decides to acquire the property, costs associated with its acquisition and exploration or development will be accounted for as described under Mineral Properties below.  Project assessment expenditures include property option payments for mineral properties where applicable, which are charged to income when incurred.  

Mineral Properties

a)

Mineral property acquisition costs

Mineral properties consist of exploration and mining concessions, options and contracts.  Acquisition costs are capitalized and deferred until such time as the property is put into production, or the property is disposed of, either through sale or abandonment or becomes impaired.  If a property is put into production, the cost of acquisition will be written off over the life of the property, based on estimated economic reserves.  Proceeds received from the sale of any interest in a property will be credited against the carrying value of the property, with any excess included in operations for the period.  If a property is abandoned, the acquisition costs will be written off to operations.

Recorded costs of mineral properties, if any, are not intended to reflect present or future values of resource properties.  The recorded costs are subject to measurement uncertainty and, based on existing knowledge, it is reasonably possible that changes in future conditions could require a material change in the recognized amount.

Although the Registrant takes steps to verify title to mineral properties in which it acquires an interest, these procedures do not guarantee the Registrant’s title.  Such properties may be subject to prior undetected agreements or transfers and title may be affected by such defects.

b)

Mineral property exploration expenditures

When proven and probable reserves are determined for a property, subsequent development costs of the property will be capitalized and amortized over the life of the property, based on estimated economic reserves.  Proceeds received from the sale of any interest in a property will be credited

18

against the carrying value of the property, with any excess included in operations for the period. If a property is abandoned, the exploration costs will be written off to operations.

Recorded costs of mineral property exploration expenditures, if any, are not intended to reflect present or future values of resource properties.  Recorded costs are subject to measurement uncertainty and, based on existing knowledge, it is reasonably possible that changes in future conditions could require a material change in the recognized amount.

c)

Impairment of mineral property acquisition costs and exploration expenditures

Carrying values of mineral properties and, the property, plant and equipment associated with those mineral properties, if any, are reviewed for impairment when events or changes in circumstances occur that suggest possible impairment.  If the property is assessed to be impaired, it is written down to its estimated fair value.

The Registrant has not incurred any capital expenditures on any mineral resource projects over the last three years.  All of its projects except the Burundi Nickel Project were held under option agreements and any expenditure on the property was expensed when incurred.  No significant expenditure was incurred on the Burundi Nickel over the last three years; however, project assessment expenditures are reflected below:

Project	Location	2008	2007	2006
Burundi Nickel Project1,2	Burundi, Central Africa	Nil	Nil	Nil

1.

The Registrant acquired the Burundi Nickel Project during the year ended December 31, 1999 following the completion of a plan of arrangement whereby Argosy Mining Corp. (“AMC”) became a wholly-owned subsidiary of the Registrant.

2.

Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded title to a third party. Consequently, the Registrant no longer has any right to the Burundi Nickel Project.

Where exploration on a mineral project proves unsatisfactory, the Registrant disposes of the project and writes off expenses and deferred costs associated with that project.  No expenditures were written off over the last three years due to unsatisfactory exploration results.  In addition, the Registrant reviews the carrying costs, if any, of each of its investments quarterly and writes down mineral properties and deferred costs associated with projects whose carried costs may not be recoverable.  No mineral properties and deferred costs were written down over the last three years due to continued low metals prices, political instability, loss of the project or the inability to introduce a joint venture partner or to sell the underlying project.  

Capital Expenditures and Divestiture of Assets are Reflected Below:  

Capital Expenditures:

Project	Location	2008	2007	2006
n/a	n/a	n/a	n/a	n/a

Divestiture of Assets:

		Proceeds
Project	Location	2008	2007	2006
n/a	n/a	n/a	n/a	n/a

There has been no divestiture of assets over the last three years.

Details of Project Assessment Expenditures during the years ended December 31, 2008, 2007and 2006 are as follows:  

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	2008	2007	2006
Lac Panache, Fish Creek and Copper Cliff Projects
Consulting	$ 1,444	$ 51,761	$ 4,755
Travel and Accommodation	-	-	-
Geophysics & Assays	-	-	54,343
Option and Claim Fees	-	193,026	100,000
Contractor, Equipment and Labor	-	-	-
	1,444	244,787	159,098
Other Projects (Zambia and South Africa)
Consulting and Assessment	15,536	450,709	140,151
Option Fees	-	-	-
Travel, Accommodation and other	39,609	293,618	8,932
Expenses Recovered	-	-	(79,535)
	55,146	744,327*	69,548
Total	$ 56,589	$ 989,114	$ 228,646

*

Includes expenditures on projects that are currently the subject of negotiation for possible acquisition, travel related to   attempts to advance the Burundi Nickel project and expenditures on a number of projects that were reviewed but which   did not meet the Corporation’s criteria for ongoing exploration.  

At this time the Registrant is seeking new opportunities and project assessment or capital expenditures will vary depending   on the nature of new projects acquired or the results of assessments of current projects.

These expenditures will be financed from the Registrant’s working capital.

There has been no indication of any public takeover offers by third parties in respect of the Registrant’s Common Shares nor has the Registrant attempted the public takeover of other companies’ shares during the last or in the current financial year.

The Registrant was not involved in any bankruptcy, receivership or similar proceedings, nor was it a party to any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets, since December 31, 2003 through the date of this Annual Report.

B.

Business Overview

The Registrant is a British Columbia company involved in the exploration and possible future development of mineral resources.  Its Common Shares are listed for trading on the ASX under the trading symbol “AGY”.  

At December 31, 2008, the Registrant had one project, namely:

-

The Burundi Nickel Project in Burundi, Central Africa, which was subject to arbitral proceedings at the ICC.  Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded an exploration license over the project to a third party.  Consequently, the Registrant does not currently have any projects.  The Registrant is actively engaged in the search for new projects.

In April 2005 and in April 2006, the Registrant acquired the Lac Panache and Fish Creek properties and in May 2007, the Registrant acquired the rights to the Copper Cliff Property, all in Sudbury, Ontario.  All

20

the projects in Sudbury, Ontario were terminated in the fiscal year ended December 31, 2007.  See Item 4B Business Overview, Lac Panache, Fish Creek and Copper Cliff Projects, Sudbury, Canada below.  

The Registrant does not have a source of revenue other than interest income from cash balances.  

To date, the Registrant has not earned any revenues.

1.

Lac Panache, Fish Creek and Copper Cliff Projects, Sudbury, Canada

In April 2005, the Registrant entered into an option agreement with a private owner over the Lac Panache Project in Sudbury Mining Division, Ontario, Canada.  The project area comprised 43 claims containing a total of 162 claim units distributed across four separate blocks: Lake Panache, Brazil Lake, Little Panache and Norwest. The Registrant announced in June 2005 that the total land area of the project had been increased by a further 39 claim units in five claims bringing the total area to 32.2 km².

The Registrant could have earned 100% of the project through staged cash payments totalling $300,000 and completing staged work commitments over three years of $455,000.  On production, the vendor would have retained a 3% net smelter return (“NSR”).  This NSR was subject to buy-back provisions.  

In April 2006, the Registrant entered into an agreement to acquire the Fish Creek property in Nairn Township, 50km southwest of Sudbury.  Covering 2.88 km², the property consists of 2 claims containing a total of 18 claims units, each 400m by 400m in area.  The Registrant could have earned 100% of the project through staged cash payments totalling $100,000 and completing staged work commitments over three years of $21,600.  On production, the vendor would have retained a 3% NSR.  This NSR was subject to buy-back provisions.

In May 2007, the Registrant entered into an agreement to acquire a 100% interest in the Copper Cliff property, comprising 16 mineral claims covering 29.44 km²in Eden Township in Sudbury, Ontario.  The Copper Cliff property is believed to cover a portion of the southern extension of the Copper Cliff Offset dike.

The terms of the agreement were that the Registrant would have incurred staged expenditures totalling $494,600 over three years with a minimum expenditure of $78,200 in the first year.  In addition, the Registrant would have made staged cash payments totaling $313,200 and issued 1 million fully paid shares over the three years.  On execution of the agreement, the Registrant paid $33,200 cash and issued 250,000 fully paid shares to the vendor.  Should the Registrant have exercised its option to acquire the Copper Cliff property, the vendor would have retained a 3% NSR which was also subject to buy-back provisions.

The Registrant terminated its options over the Lac Panache, Fish Creek and Copper Cliff properties during the year ended December 31, 2007 as described under “2007 Exploration” below.  

Regional Geology

The Lac Panache project area lies within the Southern Province, one of three subdivisions within the Canadian Shield. Metasedimentary and subordinate metavolcanics of the Huronian Supergroup (~2.5 - 2.22 billion year old) form part of the Southern Province.

The Huronian metasediments have been described as being dominantly coarse clastic sedimentary rocks derived mainly from the Superior Province craton to the north and deposited, for the most part, in fluvial-

21

deltaic and marine environments. Intrusive rock units identified in the project area include Nipissing Gabbro (2.15 billion year) and gabbro dikes (1.2-1.5 billion year). Rocks in the region were subjected to deformation and regional metamorphism during a series of events that started prior to emplacement of the Nipissing Diabase and culminated around 1.7-1.8 billion years ago.

The term “Nipissing Gabbro” (or “Nipissing Diabase”) has been used to refer to mostly gabbroic intrusions of ~2.1 billion year age that occur throughout the eastern part of the Southern Province. These intrusions commonly exhibit the effects of low to moderate grade regional metamorphism.  In the metagabbros the original pyroxene and calcic plagioclase have been replaced by amphibole, sodic plagioclase, epidote, talc, chlorite and quartz.

Situated approximately 50 km southwest of Sudbury, the Fish Creek property is positioned over a possible southwest extension of the “Mystery Offset Dike” exposed some 10 km to the northeast. The Mystery Offset Dike has been described by other explorers as being an extension of the Worthington Offset Dike on which CVRD’s (originally Inco’s) Totten Deposit is located. Offsets are dike-like bodies of quartz diorite that have been interpreted as infilling major fracture zones. Thee dikes are known to occur both radiating from and concentric to the Sudbury Igneous Complex (“SIC”).

Summary of Activities

2005 Exploration

During the second half of 2005, the Registrant commenced a program of trail construction and trenching of known geophysical and geochemical anomalies at its Lac Panache Project.

Field activities included reconnaissance-scale sampling of the three smaller claim block areas (Brazil Lake, Little Panache and Norwest) and more detailed mapping and sampling within the larger Panache claim block.  Activities in the Panache claim block were mainly at Boundary Prospect. Approximately 2.5 km of new access trails plus 900 metres of trenching (measured along the long axis of the trench) were completed.  A total of 129 rock samples were collected during the field program and these were submitted to SGS Canada Inc. for assaying.  Of the total number of samples, 62 were channel samples with a cumulative length of 122.7 metres and an average length of about 2 metres.

Sawmill Bay Prospect Geology and Sampling

Reconnaissance-scale rock chip sampling was conducted across the eastern end of the Nipissing Gabbro at Sawmill Bay in order to help define areas for future trenching and possible drilling. Sampling by earlier explorers identified anomalous concentrations of gold, platinum, palladium, copper and nickel in sulphide-bearing gabbroic rocks belonging to the Nipissing Gabbro.

A total of 45 grab samples of outcrop/subcrop were taken along a 2.9 km long interval of gabbro. A central 1km length of strike in which 25 samples were collected returned 11 samples with greater than 0.2% copper (maximum of 0.59% copper), five with greater than 0.1% nickel (maximum of 0.17%), and six with greater than 1ppm platinum+palladium+gold (maximum of 2.213 ppm). Samples carrying anomalous grades are metagabbro with disseminated and/or fracture-controlled sulphides (chalcopyrite, pyrrhotite, pyrite and pentlandite). The metagabbro is typically a weakly metamorphosed gabbro in which the mafic phases exhibit alteration to biotite and amphibole.

Boundary Prospect Geology and Sampling

All of the trenching and most of the channel sampling activities that took place during the field program were carried out at Boundary Prospect. Trenching was carried out by means of an excavator that removed topsoil and overburden (mostly less than 2m thick) and stockpiled the material adjacent to the trench. The

22

trench was then washed down to expose bedrock. A portable Stihl diamond blade cutter was used to cut a set of parallel slots from which the channel sample was extracted. Individual channel samples, averaging 2m in length, range from 1.4 – 2.6m in length and 8 – 25 kg in weight.

A ground IP/resistivity geophysical survey, carried out in 2000, by a previous explorer identified a series of chargeability/conductivity anomalies that are related to the presence of sulphides. Some of these anomalies had been investigated in 2000 by means of trenching and channel sampling.  The Registrant focused on trenching of anomalies and their extensions not previously investigated.

A roughly linear NW-trending conductivity anomaly within the southern half of the geophysical survey area is located along the southern contact zone between Nipissing Gabbro and Espanola Formation.  As a result of the recent trenching program, this contact zone, up to 14m in thickness, has now been traced for some 960m. The mineralogy of the zone changes along strike from a sulphide and magnetite bearing skarn-style assemblage, within the NW half, to a quartz +/- calcsilicates +/- sulphides vein/breccia/replacement style of mineralisation to the SE. Sulphide minerals in the skarn are chalcopyrite, pyrite and pyrrhotite; magnetite is locally abundant.

Channel sampling was carried out at seven locations along the strike of the contact zone with a total of 30 channel samples being collected. Copper assays ranged between 19 ppm in quartz vein material at the eastern end of the contact zone to 2m with 0.49% copper (within 6m @ 0.34% copper and 0.17% nickel) in quartz-pyrite breccia near the central part.

The strong chargeability anomaly along the gabbro’s northern contact was intersected in two trenches. In each the anomaly was found to be caused by the presence of disseminated pyrite and pyrrhotite within metaconglomerates belonging to the Bruce Formation.

Isolated chargeability anomalies within the Nipissing Gabbro are related to zones of disseminated and fracture-controlled sulphides (mainly pyrrhotite and chalcopyrite with minor pentlandite). Channel sampling of Nipissing gabbro returned only weakly anomalous grades, best being 6m with 0.27ppm platinum+palladium+gold. The best grab sample returned 0.57 ppm.

Little Panache Claim Block

Consisting of two claim units, the Little Panache claim block is located north of the main Panache claim block. Two outcrop samples were collected during a brief reconnaissance visit to the property.

A composite outcrop grab sample taken across a 5m x 5m area of chalcopyrite-bearing quartz stockwork veining in quartzite returned 0.6 ppm gold and 1.38% copper. A grab outcrop sample of silicified limestone cut by stockwork quartz veining assayed 0.18 ppm gold and 3.48% copper. Separated by 450 metres, further investigations will be needed to determine continuity of mineralisation between and around the two areas sampled.

2006 Exploration

The Registrant contracted Aeroquest Limited to carry out a 323 line kilometer combined electromagnetic (“EM”) and magnetic helicopter-borne survey (AeroTEM II) across the Fish Creek project area and portions of the Lac Panache project area.  Areas flown include the Sawmill Bay prospect area on the eastern side of the main Panache block of claims, the Little Panache claims, the Brazil Lake area and the Fish Creek project area.  The primary application of the AeroTEM II system is the detection of near-surface massive sulphides.

23

The Registrant contracted Southern Geoscience Consultants (“SGC”) of Perth, Western Australia, to act as its geophysics consultant for the processing and interpretation of survey results.  SGC identified 15 EM conductors (anomalies) at Sawmill Bay, one conductor anomaly at Little Panache with a further six at Brazil Lake – Fish Creek.  Of interest to the Registrant are a cluster of 6 EM conductors spread out along a 1.5 km area between Sawmill Bay and the southwest corner of the AeroTEM II survey area.  All but one of the conductors are sourced within the Nipissing Gabbro.  Two of the anomalies have strike lengths in excess of 200m with one of these still being open to the west.  The remaining conductors are more discrete.  All of the conductors have strong on time as well as off time responses indicating relatively high conductivity.  The po sition and overall strength of these conductors are consistent with a massive sulphide source.

2007 Exploration

In 2007, the Registrant contracted a geological consulting firm based in Ontario, Canada to conduct a review of the properties and if warranted, recommend a work program to be conducted.  The Registrant received a report from the consultants and following a review of the report, in November 2007 decided that the exploration potential of the properties did not meet its criteria for further exploration and terminated its option agreements with respect to the Sudbury projects in Ontario, Canada.   

2.

Burundi Nickel Project – Musongati

The Burundi Nickel Project was a proposed venture to mine and process lateritic nickel-cobalt ore to produce nickel and cobalt metal in Burundi.  The Registrant expected that the nickel laterite deposits at Musongati, identified by previous exploration work conducted between 1972 and 1990 by other parties, were sufficiently large to support a mining operation with a life exceeding 20 years.  Testwork by Universal Oil Products in 1978-79 indicated the ore was amenable to leaching using the pressure acid leach (“PAL”) process, followed by counter current decantation and iron precipitation, prior to the precipitation of an intermediate product which may then be further refined to produce LME grade nickel and LMB grade cobalt.  The Registrant planned to assess the potential to recover nickel through a conventional heap leach operation.  

The Burundi Nickel Project was based on three nickel cobalt laterite deposits.  Considerable exploration and engineering work was completed on the deposits in the period 1972 to 1990.  The major deposit known as Musongati was drilled and evaluated the most.  The other two deposits, Waga and Nyabikere are far less advanced but had potential to supply the project with quantities of high-grade saprolite ore.  The Musongati deposit also has anomalous platinum-group-metal concentrations, along with indications of sulphide mineralisation underlying the laterites.

Musongati lies at an elevation of 1,700 m, in the tropical highlands of Burundi, about 1,000 m above Lake Tanganyika.  The outlying Waga deposit is 30 km west of Musongati and the Nyabikere deposit is 40 km north.

The Musongati laterites are derived from the weathering of an ultrabasic complex, particularly, serpentinised dunite with a primary nickel content of about 0.3%.  Two types of mineralisation are present in approximately equal proportions: limonite and saprolite (a less weathered laterite rock type generally found beneath limonite).  Nickel in the limonite mineralisation is tied to goethite whereas in the saprolite mineralisation it is related to serpentine group and clay minerals.  The typical weathering profile is canga (iron caprock), the limonite zone (averaging 15 m thick), the saprolite zone (averaging 12 m thick) and ultrabasic bedrock.

24

The Musongati nickel/cobalt deposit is situated within the Musongati exploration licence on three adjacent plateaux as a result of erosion of a single layer of laterite.  The plateaux are referred to from west to east as the Geyuka, Rubara and Buhinda zones, of which Buhinda is the most significant and best defined.  Historical exploration (by diamond drilling) was completed in three stages from 1975 to 1990, by different parties with different objectives.  A total of 237 holes were drilled at Musongati, while 81 holes were drilled at Waga and Nyabikere.  Due to the large size of the mineralised area, an effort directed to identifying zones with a high nickel content resulted in a greater focus on the Buhinda Zone.

Mining Convention

In 1998, Andover, now a wholly-owned subsidiary of the Registrant, negotiated a Mining Convention (the “Mining Convention”) with the Government of Burundi to explore and develop the Musongati deposits.  The Mining Convention was ratified by the Burundian National Assembly on March 10, 1999, giving the Registrant the exclusive right to develop the Musongati deposit.  The Mining Convention is a comprehensive agreement that awards mineral rights to the Registrant and sets out a work program and a detailed framework for future development and operation of a mine.  During the initial 3-year exploration period, geological and engineering studies were to be completed, leading to a full project feasibility study.  The Registrant planned a staged exploration program including scoping and pre-feasibility studies that would lead to a full feasibility study.  The program included drilling, ore reserve estimations, me tallurgical testing, infrastructure studies and an environmental impact study.  Upon completion of the feasibility study and a decision to proceed, the agreement provides for the awarding of a mining title known as a Mining Concession.  The term of the Mining Concession is 25 years, renewable twice for successive periods of 10 years.  If the project proceeded, a new Burundian company in which the Burundian government would have had 15% interest, would have been incorporated to develop and operate the project and within 30 days of receiving project finance for full mine development, the government would have been reimbursed their previous expenditure of US$8.3 million.  A 5-year tax holiday was to apply to the project, followed by a 35% income tax rate.  Mine equipment, materials and fuels would have been tax and duty exempt.  Force majeure and international arbitration provisions normal to the industry applied.

The Mining Convention required that Andover complete a feasibility study for the development of a nickel/cobalt processing facility by the end of 2001 or such later date as may have been determined by extensions granted by the Minister of Mines.  On April 19, 2000, Andover declared force majeure and curtailed its activities in Burundi as a result of the deterioration in security in the region.  Pursuant to the terms of the Mining Convention the declaration of force majeure could be in place for up to two years during which time Andover’s obligations were interrupted and the completion of the feasibility study delayed by the period of force majeure.  Pursuant to the terms of the Mining Convention, Andover was required to post a performance bond of US$100,000.

On March 28, 2002 Andover announced the withdrawal of the declaration of force majeure and planned to resume its exploration activities, however security deteriorated ahead of the implementation of an agreed cease-fire between various political parties and the Registrant re-imposed the declaration of force majeure in August 2002.  Following improved security conditions, the Registrant lifted force majeure in July 2004 and commenced planning of a drilling program at Musongati.  However, following a massacre outside Bujumbura, the Registrant re-imposed force majeure in August, 2004.  In 2005, following elections, a new government was elected, resulting in improved stability in Burundi.  Consequently, Andover lifted the declaration of force majeure in May 2005 and commenced discussions with the Ministry of Mines regarding a continuation to the term of the Mining Convention and the re-commencement of activities at Musongati .  

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On June 21, 2007, Andover instructed its legal counsel to commence arbitral proceedings under the Rules of the International Court of Arbitration of the ICC in Paris against the Government of Burundi to enforce its rights pursuant to the Mining Convention between the parties dated February 11, 1999.  

This decision was taken after extensive, but futile, attempts by Andover to negotiate with the Government of Burundi to continue its work under the Mining Convention, and to obtain the necessary research permit from the Minister of Mines for that purpose.  

Andover’s efforts to resume work under the Mining Convention followed periods of violence in Burundi which delayed the feasibility study work on the Musongati deposits.  These interruptions constituted periods of force majeure which, under the Mining Convention, and in Andover’s opinion, entitled it to extensions and the further opportunity to proceed with exploration and feasibility study work.  This was confirmed in December 2005 by an Inter-Ministerial Commission which was established by the Burundian Government to study the continued validity of the Mining Convention.

The Government’s Inter-Ministerial Commission was comprised of members from the offices of the Second Vice President of the Republic, the Ministry of Foreign Affairs and Co-Operation, the Ministry of Justice, the Ministry of Energy and Mines and the Ministry of Finance.  The conclusions reached by the Commission supported Andover’s position, as was confirmed by the following excerpts from the Commission’s report:

“The current state of affairs is that the Mining Convention is in full force and both parties must accept and fulfill their obligations.  There is no point in the Administration of the Ministry of Energy and Mines to keep boycotting the Mining Convention and turning its back on Andover.  Instead it is time to restore calm and revive the relationship with Andover and re-launch the work programme with renewed vigor.  There is no other choice.”

"It would be ill advised for the State to break the Mining Convention as a result of force majeure invocations which appear valid.  Any termination of the Mining Convention must, to the extent possible, strictly follow the Mining Convention’s provisions in terms of justification and procedure.  The alternative could expose the State to the risk of paying damages in immense sums that could exceed the value of the mine itself.”

Despite the findings of the Inter-Ministerial Commission, the Minister of Mines initially failed to take any steps under the Mining Convention to enable Andover to resume work.  It came to Andover’s attention that, without notice, that the Ministry of Mines then proceeded with a second, internal study that issued recommendations that were in opposition to those reached by the Inter-Ministerial Commission.  

At a meeting of the Council of Ministers held on June 14, 2007, the Minister of Mines presented the findings of this internal study, and recommended termination of the Mining Convention.  The minutes of the meeting of the Council of Ministers make no reference to the December 2005 report of the Inter-Ministerial Commission or to the fact that the conclusions of the more recent, internal study flatly contradict the Commission’s earlier recommendations.  With this information, the Council of Ministers accepted the recommendations of the Minister of Mines to terminate the Mining Convention.  

Andover’s position was that there is no proper basis for the termination of the Mining Convention and that the Minister’s recent conduct constitutes a further breach of the Mining Convention.  Andover

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pursued its claims in arbitration through 2008, seeking declaratory relief confirming its rights under the Mining Convention and pursued claims for damages.  

Having been advised, subsequent to December 31, 2008, that the Government of Burundi had awarded the rights to the Musongati deposits to a third party, together with the fact that current low nickel prices make the potential development of nickel laterite projects in challenging environments unlikely at this time, together with the current global economic crisis which makes funding exploration activities more difficult as well as the Registrant’s view that it would be unlikely that it could collect a damages award if it were successful with its claims, it has decided not to proceed with the arbitration process at this time.

Technology

Previous metallurgical studies identified pressure acid leach (“PAL”) as a suitable process technology for Musongati.  These studies provide initial benchmark results, which will require further testwork to optimise the specific PAL process plant design.  With recent developments, the potential exists to extract nickel utilizing a conventional heap leach process.  

Project Information

The proposed mine and plant was to be situated at the Musongati deposit located approximately 120 km east-southeast of Bujumbura, the capital of Burundi.  Burundi is a small country located in Central Africa and borders the western edge of Tanzania.

i.

Land

An exploration licence covering 171.1 km² was granted March 18, 1999 for three years covering the Musongati deposit; the Waga and Nyabikere deposits were reserved for Andover pending the completion of a feasibility study at Musongati.  The Musongati licence area is sparsely populated due in part to the poor lateritic soil.  On April 19, 2000, Andover declared force majeure and curtailed operations in Burundi due to the deteriorating security situation.  In March 2002, the declaration of force majeure was lifted due to improved security conditions in Burundi; however, due to the deterioration in security in Burundi, force majeure was re-imposed on August 1, 2002.  The project was subject to force majeure between August 2002 (except for a brief period during 2004) and May 2005 when Andover lifted force majeure following elections for a new government and improved securi ty.  Andover initiated discussions with the Ministry of Mines regarding the continuation of the Mining Convention, to take into account time lost due to the project being subject to force majeure, however no agreement had been reached and in June 2007, the Registrant initiated arbitral proceedings at the ICC due to the Government of Burundi’s purported termination of the Mining Convention.  Subsequent to December 31, 2008 the Registrant was advised that the Government of Burundi had awarded the rights to a third party.  

ii.

Transportation

The Burundi Nickel Project is accessed by roads which are mostly in good condition.  A network of trails and roads crosses the main areas of the licence.  During construction and operation, the Burundi Nickel Project would require the importation of significant quantities of goods not locally available.  As Burundi is a landlocked country, approximately 1,100 km from the Indian Ocean, transportation infrastructure is a key issue to the economics of the project.  Initial investigations determined both the preferred route, as well as which consumables would need to be imported and the preferred transportation corridor was from the port of Dar es-Salaam in Tanzania on the east coast of Africa, by the existing railway to Kigoma, just south of Burundi.  From there, a regional road network could have been utilised to truck material north to Musongati.  Most of the parts nece ssary to construct the plant would have to have been imported and transported along this route.  The major consumables required for the project in the event that production commenced

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were fuel, sulphur (for acid) and dolomite (as a neutralising agent).  Fuel and sulphur would have been sourced on the world markets and shipped via the above route, while dolomite could have been sourced locally within Burundi and trucked to Musongati.  

iii.

Services

The Burundi Nickel Project potentially had access to electricity via hydroelectric facilities in the country and elsewhere in the region.  The existing national electricity grid does not have enough capacity to provide power to a PAL operation, however if a heap leach process was feasible, the potential existed to produce surplus power, which could have been sold in Burundi.  In the event that electricity was required, the Registrant intended to generate electricity via fuel-powered generator sets or alternatively to utilise new sources of electricity.  There is potential to generate electricity by steam co-generators powered by the sulphuric acid plant.  There are also a number of independent proposals in the planning stage to create or expand hydroelectric facilities in the country and in the region, which could have been advantageous to the project.  

iv.

Tailings

The process residue (or tailings), that remains after the production of nickel and cobalt would have been safely stored in tailings impoundment areas in the general vicinity of the processing plant.  

v.

Environment

The Mining Convention specified a requirement for an environmental impact study as part of the feasibility study.  World Health Organization standards were to be the reference standards and the Mining Convention allowed for a minimum monitoring/maintenance period of two years following the completion of mining.

vi.

Permitting/Approvals

The Mining Convention required that the government issue “mining title” to the Registrant within three months of application following the completion of a feasibility study and the decision to proceed to development of the mine.

Plan of Operations

The Registrant’s plan of operations for the Burundi Nickel Project was to develop a PAL plant to produce nickel, cobalt and possibly copper and by-product platinum group metals (“PGMs”) from the nickel laterite deposits at Musongati.  The Registrant provided to the government a staged work program and scheduled a costing study to update the previous studies which would have led to a full project feasibility study in 2001.  The plan was based on previous studies and involved a feasibility study which would focus on the transportation, logistics and infrastructure issues, as well as metallurgy and environmental aspects.  On April 19, 2000, Andover declared force majeure due to delays to the feasibility study caused by security issues in the region.  As a result of this declaration, activities on the project were suspended.  Pursuant to the Mining Convention, Andover’s obligations under the Mining Convention were suspended for a period of up to 2 years while the declaration of force majeure was in effect.  The declaration of force majeure was lifted on March 28, 2002 and the rights and obligations pursuant to the Mining Convention were extended by that period of force majeure.  Due to the subsequent deterioration in security in Burundi, force majeure was re-imposed on August 1, 2002 and remained in place, except for a brief period in 2004, until May 2005.  The Registrant initiated discussions with the Ministry of Mines regarding the continuance of the Mining Convention, however no agreement could be reached and in June 2007, the Registrant initiated arbitral proceedings at the ICC due to the Government of Burundi’s purported termination of the Mining Convention.  

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As a result of not yet being able to resolve the disagreement with the government regarding the continuance of the Mining Convention, the Registrant was unable to conduct any significant activity at its Burundi Nickel Project during 2008.

The Registrant’s activities in Burundi were able to be conducted throughout the year.  The Registrant’s activities on any of its projects are subject to government regulations and restrictions and require the Registrant to apply for, in certain cases, exploration permits, mining licences and various other governmental approvals and comply with environmental regulations.  

C.

Organizational Structure

The following chart represents the inter-corporate relationships between the Registrant and its wholly-owned subsidiaries, as well as the jurisdiction of incorporation of each of these entities.  

Following the continuance into British Columbia under theBusiness Corporations Act on May 26, 2005, the Registrant and its wholly owned Canadian subsidiaries, Argosy Mining Corp and Calliope Metals (Holdings) Ltd. amalgamated.  In addition, various subsidiaries, namely Balzan Investments Limited, Melling Investments Limited and Liberex Ltd. were deregistered during the year, resulting in the organizational structure outlined above.  

D.

Property, Plants and Equipment

At December 31, 2008 the Registrant did not have any significant plant and equipment, mines or producing properties.  The Registrant is an exploration stage company, and it has not determined whether its properties contain ore reserves that are economically recoverable.  Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded an exploration license over the Musongati project to a third party.  Consequently, the Registrant does not currently have any projects.  The Registrant is actively engaged in the search for new projects.

The Registrant owns and has options to acquire certain mineral properties as part of its business, as described in detail in “Item 4.B. – Business Overview”.  These included the following at December 31, 2008:

Name	Licence	Type	Size
1  Burundi Nickel Project	Decree 100/32	Musongati Exploration Licence	171.1 km2

1.

The Burundi Nickel Project was held pursuant to a Mining Convention with the Government of Burundi.  The Registrant commenced arbitral proceedings under the Rules of the International Court of Arbitration of the ICC   in Paris against the Government of Burundi to enforce its rights pursuant to the Mining Convention between the   parties dated February 11, 1999, however following the award of the rights to the Musongati property to a third   party by the Government of Burundi, the Registrant is not pursuing the enforcement in the ICC at this time.

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Burundi Nickel Project - Musongati

Musongati lies at an elevation of 1700 m, in the tropical highlands of Burundi, about 1000 m above Lake Tanganyika.  The outlying Waga deposit is 30 km west of Musongati and the Nyabikere deposit is 40 km north.

The Musongati laterites are derived from the weathering of an ultrabasic complex, particularly serpentinised dunite with a primary nickel content of about 0.3%.  Two types of mineralisation are present in approximately equal proportions: limonite and saprolite (a less weathered laterite rock type generally found beneath limonite). Nickel in the limonite mineralisation is tied to goethite, whereas in the saprolite mineralization, it is related to serpentine group and clay minerals. The typical weathering profile is canga (iron caprock), the limonite zone (averaging 15 m thick), the saprolite zone (averaging 12 m thick) and ultrabasic bedrock.

The Musongati nickel/cobalt deposit is situated within the Musongati exploration licence on three adjacent plateaux as a result of erosion of a single layer of laterite.  The plateaux are referred to from west to east as the Geyuka, Rubara and Buhinda zones, of which Buhinda is the most significant and best defined.  Historical exploration (by diamond drilling) was completed in three stages from 1975 to 1990, by different parties with different objectives.  A total of 237 holes were drilled at Musongati, while 81 holes were drilled at Waga and Nyabikere.  Due to the large size of the mineralised area, an effort directed to identifying zones with a high nickel content resulted in a greater focus on the Buhinda Zone.  For more information, please see“Item 4B – Burundi Nickel Project – Musongati.”

Item 4A. – Unresolved Staff Comments

Not applicable

Item 5 – Operating and Financial Review and Prospects

The following discussion of the financial condition, changes in cash flows and results of operations of the Registrant for the past three fiscal years should be read in conjunction with the consolidated financial statements of the Registrant and related notes included therein.

A.

Operating Results

Critical Accounting Estimates

The detailed accounting policies are discussed in the attached annual financial statements, however, the following accounting policies require the application of management’s judgment:

(a)

Contingent liabilities – Management evaluates any claims against the Registrant and provides for those claims, where necessary, based on information available to it, including in some instances, legal advice.  

(b)

Income Tax – Income taxes are calculated using the liability method of accounting.  Temporary differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the consolidated balance sheet are used to calculate future income tax assets or liabilities.  Future income tax assets or liabilities are calculated using the tax rates anticipated to apply in the periods that the temporary differences are expected to reverse.  Valuation allowances are established when necessary to reduce future income tax assets arising from loss carry-forwards to amounts expected to be realized.  

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Overview

The Registrant’s activities are primarily directed to exploring future mining mineral properties.  The Registrant does not currently have a producing mine or processing facility.  Activities over the last three years include a pre-feasibility study for the construction of a nickel/cobalt processing facility and general exploration to locate and evaluate mineral properties that have been acquired by the Registrant.  Costs incurred for general exploration that did not result in the acquisition of mineral properties with ongoing exploration or development potential were charged to operations.  Once proven and probable revenues are determined for a property, exploration costs, if any, relating to the Registrant’s properties and engineering studies are capitalized as mineral deferred costs.  Should the Registrant abandon a property or project, the related deferred costs will be charged to operations.  Adm inistrative costs not associated with property exploration were charged to operations.  Costs associated with the evaluation of new opportunities are charged to operations as project assessment expenditure, when incurred.  Excess cash is invested by the Registrant in short-term investments.

The Registrant’s consolidated financial statements are in Canadian dollars and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Registrant, conforms quantitatively in all material respects for the periods presented with US GAAP.  See Note 12 to the financial statements of the Registrant.

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

From incorporation in December 1985, the Registrant has been exclusively a natural resource company engaged in the business of exploration of diamonds, metals and minerals.  At this stage of its development, the Registrant has no producing properties and, consequently, has no current operating income or cash flow.

At this stage the Registrant has no properties which contain ore reserves that are economically recoverable.  As a result, the Registrant is considered an exploration stage company.

The recoverability of amounts shown for mineral properties and deferred costs, if any, is dependent upon the discovery of economically recoverable reserves, completion of positive feasibility studies, confirmation of the Registrant’s interest in the underlying mineral claims, the ability of the Registrant to obtain necessary regulatory and environmental operating permits, the ability of the Registrant to obtain necessary financing to complete exploration and development and future profitable production from the disposition thereof.

2008 Fiscal Year

Burundi Nickel Project

During the year ended December 31, 2008, the Registrant continued with arbitration proceedings against the Government of Burundi to enforce its rights pursuant to the Mining Convention.  Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded an exploration license over the Musongati project to a third party.  Consequently, the Registrant does not currently have any projects.  The Registrant is actively engaged in the search for new projects.

See“Item 4B – Burundi Nickel Project – Musongati.”

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Other Opportunities

The Registrant has investigated various other opportunities in Africa and elsewhere during the fiscal year ended December 31, 2008 and incurred approximately $55,146 in consulting fees and travel costs investigating such opportunities.

2007 Fiscal Year

Lac Panache, Fish Creek and Copper Cliff

During the year ended December 31, 2007, the Registrant secured an option to acquire the Copper Cliff project in Sudbury, Ontario.  Expenditures on the Lac Panache, Fish Creek and Copper Cliff Projects during the year on option fees and exploration activities totalled $244,787.  By November of 2007, the Registrant decided that exploration results did not meet its criteria for further exploration and terminated its option agreements with respect to the Sudbury projects in Ontario, Canada.  

Burundi Nickel Project

During the year ended December 31, 2007 the Registrant had been in communication with the Department of Mines in Burundi regarding the continuance of the Mining Convention.  In June of 2007 the Registrant announced that it had commenced arbitration proceedings against the Government of Burundi to enforce its rights pursuant to the Mining Convention.  See“Item 4B – Burundi Nickel Project – Musongati.”

Other Opportunities

The Registrant investigated various other opportunities in Africa and elsewhere during the fiscal year ended December 31, 2007 and incurred approximately $744,000 in consulting fees and travel costs investigating such opportunities, as well as the costs associated with travelling to Burundi in April 2007 to meet with the government.  

2006 Fiscal Year

Lac Panache and Fish Creek

During the year ended December 31, 2006, the Registrant secured an option to acquire the Fish Creek project in Sudbury, Ontario.  Expenditures on the Lac Panache and Fish Creek Projects during the year on option fees and exploration activities totalled $159,098. Exploration consisted primarily of an airborne geophysical survey.

Burundi Nickel Project

No significant activities were undertaken on the Burundi Nickel Project during the year ended December 31, 2006 as the Registrant had been in communication with the Department of Mines in Burundi regarding the continuation of the Mining Convention.  The Registrant engaged a consultant during 2006 to assist in the negotiations with the Ministry of Mines.

Other Opportunities

The Registrant investigated various other opportunities in Africa and elsewhere during the fiscal year.

Variation in Operating Results

The Registrant is presently looking for new opportunities and continues to pursue projects in Africa.  Until the Registrant secures new projects there is little variation expected in operating results from year to year and little is to be expected until such time as the Registrant secures new projects.  

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The Registrant derives interest income on its bank deposits and other short-term deposits, which depend on the Registrant’s ability to raise funds.  Changes in the amount of interest received will be affected by changes in the rate of interest paid on deposits and more significantly, if further cash received from the issuance of shares to fund ongoing operations or received from future joint venture partners reimbursing prior expenditures made by the Registrant on its projects or from the sale of its projects.  

Through the exploration process, management periodically reviews results both internally and externally through mining related professionals.  Decisions to abandon, reduce or expand exploration efforts are based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labour and capital costs.  Geological and/or economic circumstances render each property unique.  Consequently, it is not possible to have any predetermined hold period.

The dollar amounts shown as deferred exploration expenditures, if any, are direct costs of maintaining and exploring properties, including costs of structures and equipment employed on the properties and allocations of administrative management salaries based on time spent and directly related to specific properties net of write-downs provided.  These deferred amounts may not accurately reflect present or future values.

Outlook

Existing Projects

Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded an exploration license over the Musongati project to a third party.  Consequently, the Registrant does not have any existing projects.  

New Projects

The Registrant continues to seek additional projects through which shareholder value may be enhanced and has focused on precious and base metals.  The Registrant is investigating suitable projects on a global basis and has been active in examining precious metal base metal projects in Africa and the Pacific region.  There can be no assurance however that the Registrant will be able to locate any additional suitable projects on terms acceptable to the Registrant if at all.

Administration

Administrative expenses during fiscal 2009 are expected to be lower than those of 2008 as the Registrant reduces expenditures as a result of the ongoing global economic crisis which has resulted in increased difficulty for small exploration companies to secure funding required to conduct operations.  However, expenses may increase significantly should the Registrant acquire new projects which require the use of technical consultants and necessitate increased travel and additional administrative support.  Expenses for future periods cannot be predicted.  

Summary and Analysis of Financial Operations

Comparison of Fiscal 2008 to 2007

The Registrant incurred a loss of $2,959,220 for the year ended December 31, 2008 compared to a loss of $2,819,889 for the year ended December 31, 2007.  This increased loss of $139,331 is mostly attributable to the increased arbitration costs of $167,082 as the Registrant pursued its claims against the Burundi Government, increased stock based compensation expense of $892,427 arising on the grant of 6,500,000 stock options to directors, which was approved by shareholders at the last Annual General

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Meeting; increased management and consulting fees of $89,885 due to increased fee rates paid to management, offset by decreased project assessment fees of $932,525 as a result of the Registrant terminating its option over the projects in Sudbury Canada at the end of 2007.  

At December 31, 2008 the Registrant’s cash balances were held mainly in Australian dollars and the balance in Canadian dollars.  Exchange losses in 2008 were as a result of a decline in the exchange rate of the Australian dollar compared to the Canadian dollar.  The Registrant conducts its activities in various countries which require it to incur expenditures in currencies other than Canadian dollars and consequently it will continue to be exposed to exchange gains or losses in the future.  

Interest income of $152,959 for the year ended December 31, 2008, was similar to interest earned in 2007.

During the year ended December 31, 2008, cash required for operating activities amounted to $1,226,051 compared to $1,693,745 for the year ended December 31, 2007.  The decrease in cash required for operating activities of approximately $468,000 resulted mainly from decreased project assessment expenditures offset by the cost associated with the arbitration proceedings.  

During 2008 administrative expenses were $3,049,032 compared to $1,846,591 for the year ended December 31, 2007, an increase of approximately $1,202,000.  The increase was mainly due to an increased stock based compensation expense recognized on the granting of stock options to directors during 2008 of $892,000 and the increased cost associated with the arbitral proceedings of $167,082.   

Comparison of Fiscal 2007 to 2006

The Registrant incurred a loss of $2,819,889 for the year ended December 31, 2007 compared to a loss of $1,635,182 for the year ended December 31, 2006.  The increased loss of $1,184,707 is mainly due to increased non-cash stock based compensation costs, project assessment expenditures and arbitration costs of approximately $417,000, $760,000 and $203,000, respectively, offset by decreased management fees of $126,000 and a decrease in other administration costs.  

Administration expenditures decreased in the year ended December 31, 2007 due to a consolidation of the Registrant’s activities in Australia.  At December 31, 2007 the Registrant’s cash balances were held in Australian and Canadian dollars.  Exchange losses in 2007 were as a result of a decline in the exchange rates between the Australian and Canadian dollar.  The Registrant conducts its activities in various countries which require it to incur expenditures in currencies other than Canadian dollars, consequently it will continue to be exposed to exchange gains or losses in the future.  

Interest income of $141,220 for the year ended December 31, 2007, increased from $107,563 for the year ended December 31, 2006 as a result of increased cash balances.   

During the year ended December 31, 2007, cash required for operating activities amounted to $1,693,745 compared to $1,271,415 for the year ended December 31, 2006.  

The increase in cash required for operating activities of approximately $422,000 resulted mainly from an increase in project assessment expenditures of approximately $760,000 and arbitration costs of $203,000, offset by decreased administration expenditures of $287,000 and changes in non-cash working capital of approximately $157,000.  

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During 2007, administrative expenses (excluding stock based compensation and arbitration costs) were $787,759 compared to $1,075,224 for the year ended December 31, 2006.  The decrease, as previously advised, was mainly due to the Registrant consolidating its administrative activities in Australia.  

B.

Liquidity and Capital Resources

The Registrant’s primary source of funds since incorporation has been the issuance of Common Shares pursuant to various public and private financings and reimbursement of prior project expenses.  The Registrant has had no revenue from mining operations to date and does not anticipate having mining revenues in the foreseeable future.

The Registrant’s cash balance at December 31, 2008 totalled $2,091,150 compared to $3,341,050 at December 31, 2007.  Aside from such cash, the Registrant has no material unused sources of liquid assets.  

The Registrant does not have any loans or bank debt and there are no restrictions on the use of its cash resources.  

At December 31, 2008, the Registrant had met all its expenditure requirements under the various property agreements it held or had interests in. See “Item 4.D. - Property, Plant and Equipment.”  

In addition, the Registrant anticipates spending approximately $850,000 during 2009 for administrative and other operating expenditures at its principal administrative office in Perth, Australia and its office in Langley, Canada and on project assessment expenditures.  

The Registrant is currently looking for new projects and may decide to acquire new properties, at which time the Registrant may require additional equity financing.  Any such decision will be based on the results of exploration programs and the response of equity markets to the Registrant’s properties and business plans.  The Registrant expects to fulfil these cash commitments through its current cash on hand.  

The Registrant believes it has sufficient cash resources to fund its operations for at least the next 12 months.  The Registrant does not have any source of funds other than from the issuance of capital stock and the exercise of options.  While the Registrant has been successful in the past in raising the necessary funds for the exploration of mineral properties the current credit and economic crisis has resulted in increased difficulty in raising funds and consequently there is no assurance that funding will be available on terms acceptable to the Registrant or at all.  If such funds cannot be secured, the Registrant will likely be forced to curtail its exploration efforts to a level for which funding can be secured or relinquish properties or interests that it may acquire in the future or be restricted from acquiring new properties due to a lack of available funds.

C.

Research and Development, Patents and Licences, etc.

Please see“Item 4.A. – History and Development of the Company”and“Item 4.B. – Business Overview” for a description of the Registrant’s mineral exploration activities.

D.

Trend Information

None of the Registrant’s assets are currently in production or generate revenue.  Please see“Item 4.A. – History and Development of the Company” and “Item 4B – Business Overview” for a description of the Registrant’s proposed expenditures and any known trends for the upcoming year.

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E.

Off-balance Sheet Arrangements

The Registrant does not have any off-balance sheet arrangements that require disclosure under this Item 5.

F.

Contractual Obligations

The Registrant has no contractual obligations required to be disclosed under this item.  

 Item 6 – Directors, Senior Management and Employees

A.

Directors and Senior Management

The following provides a description of the backgrounds of the directors and officers of the Registrant.

Peter H. Lloyd, Chief Executive Officer of the Registrant from February 2004 to present.  President and Chief Executive Officer of the Registrant from April 2005 to present and from March 1998 to February 2004; a Director of the Registrant from August 1996 to November 1996 and September 1997 to present.  Chairman of AMC from April 1993 to March 1998; a Director of Emmerson Holdings Pty Ltd from 1988 to present; a Director of Wedgefield Holdings Pty Ltd from 1988 to present; a Director of Peninsular Services Pty Ltd from January 2000 to present; and a Director of Java Black Mining Pty Ltd from June 1995 to present.   

Cecil R. Bond, a Director of the Registrant from March 1997 to present; Corporate Secretary of the Registrant from April 1998 to February 2007 and Chief Executive Officer of the Registrant from February 2004 to March 2005; Chief Financial Officer of the Registrant from April 1998 to June 2004; Chief Financial Officer of Exeter Resource Corporation from April 2005 to present; Chief Financial Officer and Corporate Secretary of AMC from August 1998 to May 2005 and a Director of AMC from November 1999 to May 2005; Senior Financial Officer of a number of other public and private companies. Mr. Bond is a Chartered Accountant.   

John Maloney,a Director of the Registrant from April 2003 to present.  Secretary of Wesley College Endowment Fund Association Inc. from 1982 to 2003, and a Director of Cybertop Pty Ltd from 1998 to 2003; Bursar of Wesley College from 1968 to 1993.

Philip Thick,a Director of the Registrant from August 2007 to present.  Director of Coogee Chemicals Pty Ltd. from 2007 to present, Director of Esperance Port Authority from 2007 to present, Director of Perth Home Care Services from 2007 to present and Director of GulfX Limited 2008 to present.  Previously a director for Shell Australia Limited.  Mr. Thick is a qualified engineer.  

There are no arrangements or understandings pursuant to which any director or executive officer was selected as a director or executive officer.  There are no family relationships between any two or more directors or executive officers.

B.

Compensation

The aggregate amount of compensation paid by the Registrant and its subsidiaries during the Registrant’s most recent fiscal year, directly and indirectly, including directors’ fees, to all officers and directors in their capacity as such totalled $627,176.

The Registrant paid a total of $62,686 in directors’ fees during the year ended December 31, 2008.  Each director receiving directors’ fees is paid a maximum of A$30,000 per year, except for the Chairman, who receives A$40,000.  

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Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board.  The Board may award special remuneration to any director undertaking any special services on behalf of the Registrant other than services ordinarily required of a director.  Other than as indicated above or in “Item 6. C. – Board Practices”, no director received any compensation for his or her services as a director, including committee participation and/or special assignments.

The following table sets out a summary of compensation paid to the executive officers (the “Executive Officers”) of the Registrant during the year ended December 31, 2008.

	Annual Remuneration			Long Term Remuneration
				Awards		Payouts
Name and Principal Position	Salary ($)	Bonus ($)	Other Annual Compensation(3)($)	Securities Under Options/SARs Granted(#)	Restricted Shares or Restricted Share units(1)($)	Long Term Incentive Plan Payouts($)	All Other Compensation ($)	Total
Peter H.Lloyd Chief Executive Officer, Chairman and a Director	Nil	Nil	$445,152	2,500,000(2)	Nil	Nil	Nil	$445,152

⁽¹⁾

The term “restricted shares” as it is used in this table means shares granted or awarded as compensation, other than incentive stock options, which may be subject to vesting conditions based on performance, lapse of time or continued service with the Registrant or its subsidiary. There are no restricted shares issued by the Registrant within this meaning.

⁽²⁾

The options granted to the executive officers at A$0.35 per share were approved by shareholders on May 23, 2008

⁽³⁾

Other annual compensation consists of management fees

The Registrant does not provide for pension, retirement or similar benefits for directors or officers and has not accrued for any such benefits.  

Stock options to purchase securities from the Registrant are granted to directors, officers and employees of the Registrant pursuant to Incentive Option Agreements on terms and conditions acceptable to the regulatory authorities in Australia, notably the ASX.  Stock options granted to directors of the Registrant must be approved by the Registrant’s shareholders.  

No option granted under the option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee.  Options to directors expire up to 6 months following the termination of service of the optionee, while options to employees expire at various times between 30 days and up to six months following termination of service.

The exercise prices for all currently outstanding stock options were determined in accordance with the ASX guidelines and with the minimum exercise price reflecting the average closing price of the Registrant’s common stock for the five trading days on the ASX immediately preceding the day on which the grant of the stock options was announced, but not including a closing price that occurred earlier than the trading day following the day on which any material change was announced.

The following table sets forth the stock options outstanding at February 28 , 2009 to directors and officers of the Registrant and any of its subsidiaries.  No director or officer holds any warrants or other convertible securities.

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Name and Title	Number of Common Shares Issuable upon Exercise	Exercise Price	Expiry Date
Peter H. Lloyd, CEO, President, CEO and a Director	2,500,000	A$0.10	May 25, 2011
	2,500,000	A$0.50	May 26, 2012
	2,500,000	A$0.35	May 23, 2013
Cecil R. Bond, Director	1,250,000	A$0.10	May 25, 2011
	250,000	A$0.50	May 26, 2012
	2,000,000	A$0.35	May 23, 2013
John S. Maloney Chairman and a Director	1,000,000	A$0.10	May 25, 2011
	1,000,000	A$0.35	May 23, 2013
Philip Thick, Director	1,000,000	Á$0.35	May 23, 2013

In total, directors, officers and employees hold options that are exercisable into 14,350,000 common shares.  The options expire at various times up to May 23, 2013.  

The terms and conditions of options which are issued from time to time upon shareholder approval are as follows:

1.

The options may be exercised in a specific period.

2.

Directors’ options remain exercisable for up to 6 months after the date the optionee ceases to be a director or officer of the Registrant.  Employees’ options remain exercisable for between 30 days and up to six months after the date the optionee ceases to be an employee of the Registrant.

3.

The exercise price for the options shall be set by the Registrant and all options granted to directors will be approved by shareholders.  Options granted to employees are not subject to approval by shareholders.  

4.

The Registrant will not make application to ASX for official quotation of the options.

5.

The Registrant will make application to ASX for the quotation of the shares allotted and issued upon the exercise of an option within 10 business days after allotment and issue of those shares.

6.

All shares issued upon exercise of the options will rank pari passu in all respects with the Registrant’s then outstanding shares.

7.

There is no participating rights or entitlements inherent in the options and optionees will not be entitled to participate in new issues of capital offered to shareholders during the currency of the options.  However, the Registrant will send a notice to each holder of options at least nine business days before the relevant record date.  This will give option holders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue.

8.

If the Registrant makes a bonus issue of shares pro-rata to existing shareholders (other than an issue in lieu in satisfaction of dividends or by way of dividend investment) and no share has been allotted in respect of an option before the books closing date for determining entitlements to the bonus issue, then the number of shares over which the option is exerciseable shall be increased by the number of shares which the option holder would have received if the option holder had exercised the option prior to the closing date of the books.

9.

If there is a pro-rata issue (except a bonus issue) to holders of shares, the exercise price of an option may be reduced in accordance with the formula provided for in ASX Listing Rule 6.22.2.

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10.

In the event of any reorganization of the issued capital of the Registrant on or prior to the expiry of the options, the rights of an option holder will be changed to the extent necessary to comply with the applicable ASX Listing Rules in force at the time of the reorganization.  

C.

Board Practices

Members of the Board have served in their respective capacities since their election and/or appointment and will serve until the next annual general meeting of shareholders or until a successor is duly elected, unless the office is vacated in accordance with the articles and bylaws of the Registrant.  The executive officers of the Registrant serve at the pleasure of the Board.

Pursuant to an agreement dated February 2006 as amended between the Registrant and Peninsular Services Pty Ltd (“Peninsular”), Peninsular has provided the services of Mr. Lloyd in consideration of an annual fee of A$480,000.  Subsequent to December 31, 2008, the annual fee has been reduced to A$288,000.  The agreement provides for a two year payout upon termination by the Registrant unless the agreement is terminated for cause.  In addition Peninsular provides administrative and technical support personnel as required by the Registrant from time to time.  The consideration paid to Peninsular for these services during the fiscal year was approximately $59,000.  Mr. Lloyd was appointed Chief Executive Officer of the Registrant in April 2005.   

Since July, 2005, Emmerson Holdings Pty Ltd., a company controlled by Mr. Lloyd has provided office facilities to the Registrant in Australia at a cost of A$2,803 per month.  The consideration paid to Emmerson Holdings during the fiscal year for office rent totalled A$33,642.  

Audit Committee

In accordance with theBusiness Corporations Act (British Columbia), the Registrant is required to have an audit committee.  The Registrant’s current Audit Committee consists of:

Name	Present Office
Peter H. Lloyd	CEO and Director
John Maloney	Non Executive Chairman
Philip Thick	Director

The Audit Committee meets with the Registrant’s independent accountants and management periodically to review the scope and results of the annual audit and to review the Registrant’s financial statements and related reporting matters prior to the submission of the financial statements to the Board.

The Audit Committee meets as often as it determines, but not less frequently than quarterly.  The committee reviews all financial statements prior to the submission of those statements to the Board for approval.  In addition, the committee meets with the independent auditors at least on an annual basis to review and discuss the audit of the Registrant’s financial statements.  The Audit Committee pre-approves all the audit engagement terms and all non-audit services.  Certain services are pre-approved by the Audit Committee on an annual basis.  

The Registrant has established an Audit Committee charter which deals with the establishment of the Audit Committee and sets out its duties and responsibilities.  

Remuneration Committee

The Registrant does not have a separate remuneration committee.  The full Board reviews the terms and conditions of employment and remuneration levels for employees.

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D.

Employees

The following table sets forth the number of direct and indirect employees of the Registrant and all of its subsidiaries at December 31 for each of the years indicated.  The employees listed below can all be characterised as administrative personnel.  

Year	Canada	Australia	Total
2006	1	3	4
2007	1	2	3
2008	1	1	2

None of the Registrant’s employees are members of a labour union.

E.

Share Ownership

The following table sets forth, as of February 28, 2009, the number of the Registrant’s Common Shares beneficially owned by the directors and members of senior management of the Registrant, individually, and the percentage ownership of the outstanding Common Shares represented by such shares.  The security holders listed below are deemed to be the beneficial owners of Common Shares underlying options and warrants which are exercisable within 60 days from the above date.

Name  and positions held in the Registrant		Number of shares owned or controlled at Feb. 28, 2009(6)		Percentage of  shares outstanding
	PETER H. LLOYD(1) President, CEO, Chairman & Director		13,787,539(2)		12.8 %
	CECIL R. BOND Director		4,232,000(3)		4.1 %
	JOHN MALONEY(1) Non Executive Chairman		2,000,000(4)		2.0 %
	PHILIP THICK(1) Director		1,250,000(5)		1.2 %

(1)

Member of Audit Committee.

(2)

Includes options to purchase 2,500,000 common shares at an exercise price of A$0.10 that expire on May 25, 2011, options to

purchase 2,500,000 common shares at an exercise price of A$0.50 that expire on May 26, 2012 and options to purchase 2,500,000   common shares at an exercise price of A$0.35 that expire on May 23, 2013.

(3)

Includes options to purchase 1,250,000 common shares at an exercise price of A$0.10 that expire on May 25, 2011, options to

purchase 250,000 common shares at an exercise price of A$0.50 that expire on May 26, 2012 and options to purchase 2,000,000   common shares at an exercise price of A$0.35 that expire on May 23, 2013.  

(4)

Includes options to purchase 1,000,000 common shares at an exercise price of A$0.10 that expire on May 25, 2011 and options to   purchase 1,000,000 common shares at A$0.35 that expire on May 23, 2013.  

(5)

Includes options to purchase 1,000,000 common shares at an exercise price of A$0.35 that expire May 23, 2013.

(6)

The information regarding share ownership has been provided by the individuals themselves.

Stock options to purchase securities from the Registrant are granted to directors, officers and employees of the Registrant pursuant to Incentive Option Agreements on terms and conditions acceptable to the regulatory authorities in Australia, notably the ASX.  Stock options granted to directors of the Registrant must be approved by the Registrant’s shareholders.  

No option granted under the option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only

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by such optionee.  Options to directors expire up to six months following the termination of service of the optionee, while options to employees expire between 30 days and up to six months following termination of service.

The exercise prices for all currently outstanding stock options were determined in accordance with the ASX guidelines and with the minimum exercise price reflecting the average closing price of the Registrant’s common stock for the five trading days on the ASX immediately preceding the day on which the grant of the stock options was announced, but not including a closing price that occurred earlier than the trading day following the day on which any material change was announced.

The following table sets forth the stock options outstanding at February 28 , 2009 to directors and officers of the Registrant and any of its subsidiaries.  No director or officer holds any warrants or other convertible securities.  

Name and Title	Number of Common Shares Issuable upon Exercise	Exercise Price	Expiry Date
Peter H. Lloyd, CEO, President, CEO and a Director	2,500,000	A$0.10	May 25, 2011
	2,500,000	A$0.50	May 26, 2012
	2,500,000	A$0.35	May 23, 2013
Cecil R. Bond, Director	1,250,000	A$0.10	May 25, 2011
	250,000	A$0.50	May 26, 2012
	2,000,000	A$0.35	May 23, 2013
John S. Maloney Chairman and a Director	1,000,000	A$0.10	May 25, 2011
	1,000,000	A$0.35	May 23, 2013
Philip Thick, Director	1,000,000	Á$0.35	May 23, 2013

There are no arrangements for involving employees in the capital of the Registrant.  Stock options are granted to employees at the discretion of the Board of Directors.  

Item 7 – Major Shareholders and Related Party Transactions

A.

Major Shareholders

No beneficial owners of 5% or more of the Common Shares are known to the Registrant except for Mr. Lloyd as disclosed above under “Item 6.E. - Share Ownership”.  Mr Lloyd’s voting rights do not differ in any way from those of the Registrant’s other shareholders.

At February 27, 2009, there were 178 record holders of the Registrant’s Common Shares resident in the United States, holding 3,814,905 Common Shares.  This number represents approximately 3.8% of the total issued and outstanding Common Shares of the Registrant at that date.  

At February 27, 2009, there were a total of 2,156 record holders of the Registrant’s Common Shares.  

The Registrant is a publicly owned corporation, the Common Shares of which are owned by Canadian residents, Australian residents, United States residents, and residents of other countries.  To the extent known to the Registrant, it is not directly owned or controlled by another corporation, any foreign government or any other natural or legal person(s) severally or jointly.  The Registrant is not aware of any arrangement, the operation of which may result in a change of control of the Registrant.

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B.

Related Party Transactions

See “Item 6.C. – Board Practices” for further information.

Other than as disclosed here and in “Item 6.C. – Board Practices”, there have been no material transactions since January 1, 2006 to date, and there are no presently proposed transactions, to which the Registrant or any of its subsidiaries was or is to be a party, in which any director, officer or significant shareholder of the Registrant or its subsidiaries, or any relative or spouse of any of the foregoing persons or any relative of such spouse who has the same home as such person, had or is to have a direct or indirect material interest.

Management believes the transactions referenced above, if any, were on terms at least as favourable to the Registrant as the Registrant could have obtained from unaffiliated parties.

C.

Interests of Experts and Counsel

Not applicable.

Item 8 –Financial Information

A.

Consolidated Statements and Other Financial information

See “Item 17 – Financial Statements”.

Legal Proceedings

Musongati Arbitration – In June 2007, the Registrant commenced arbitral proceedings at the ICC following the purported termination of the Mining Convention by the government of Burundi. Subsequent to December 31, 2008, the Registrant was advised that the Government of Burundi had awarded an exploration license over the Musongati project to a third party and consequently the Registrant is no longer pursuing the arbitration at this time.

Except as further disclosed in“Item 4 – Information on the Company”, there is no pending, threatened or recently concluded legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings that involve any third party, which may have, or have had in the recent past, significant effects on the Registrant’s financial position.  This includes governmental proceedings pending or known to be contemplated.  

Dividend Policy

The Registrant has not declared any dividend to date and has no present intention to declare any such dividend in the foreseeable future.

B.

Significant Changes

There have been no significant changes in the financial condition of the Registrant since the most recent consolidated financial statements dated December 31, 2008.  

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Item 9 – The Offer and Listing

A.

Offer and Listing Details

Stock Price History

In recent years, securities markets in Canada and Australia have experienced a high level of price and volume volatility, and the market price of many resource and resource related companies have experienced wide fluctuations in price which have not necessarily been related to operating performance or underlying asset values or prospects of such companies.  There can be no assurance that fluctuations in the Registrant’s share price and volume will not occur.

The following table sets out the high and low market prices and the volume of the Common Shares traded on the ASX for the last 5 years and eight quarters ended December 31, 2008 and for the last six months to February 27, 2009. 

Year Ended		ASX high		ASX Low		ASX Volume
2004		A$0.280		A$0.060		16,064,905
2005		A$0.090		A$0.030		9,501,720
2006		A$0.100		A$0.042		8,920,390
2007		A$1.340		A$0.064		146,117,651
2008		A$0.670		A$0.031		6,931,605
Quarter Ended
March 31, 2007	A$0.530		A$0.064		33,960,959
June 30, 2007	A$1.340		A$0.300		79,106,609
September 30, 2007	A$0.685		A$0.230		22,178,045
December 31, 2007	A$0.860		A$0.335		10,872,038
March 31, 2008	A$0.670		A$0.280		3,374,142
June 30, 2008	A$0.400		A$0.180		2,726,024
September 31, 2008	A$0.320		A$0.115		1,364,349
December 31, 2008	A$0.115		A$0.031		1,235,850
Month Ended
September 30, 2008	A$0.210		A$0.115		473,116
October 31, 2008	A$0.115		A$0.060		1,037560
November 30, 2008	A$0.080		A$0.060		95,560
December 31, 2008	A$0.066		A$0.031		102,730
January 31, 2009	A$0.070		A$0.050		302,423
February 28, 2009	A$0.050		A$0.025		600542

B.

Plan of Distribution

Not applicable.

C.

Markets

The principal trading market for the Registrant’s Common Shares is the ASX.  Effective June 6, 1997, the Registrant’s Common Shares commenced trading on the ASX under the trading symbol “CIO”.  The

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Registrant’s Common Shares previously traded on the CDNX from 1996 under the symbol “CYO”.  Effective May 7, 1999, the Registrant’s Common Shares began trading on the ASX under the symbol “AGY” and traded on the CDNX under the symbol “AGY” until October 4, 2001 when the Registrant delisted its shares from the CDNX due to a lack of trading volume.  

D.

Selling Shareholders.

Not applicable.

E.

Dilution

Not applicable.

F.

Expenses of the Issue

Not applicable.

Item 10 – Additional Information

A.

Share Capital

Not applicable.

B.

Memorandum and Articles of Association

Not applicable.

Objects and Purposes of the Company

The Articles of the Registrant impose no restrictions on the business the Registrant may undertake.  

Directors’ Powers

Section 16.1 of the Articles gives directors broad discretion to manage the affairs of the Registrant.  The directors may, from time to time on behalf of the Registrant, borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit, and may authorize the guaranteeing of any obligations of any other person.  Furthermore, the directors may issue bonds, debentures and other debt obligations outright or as security for any liability or obligation of the Registrant or other person.  Finally, the directors may mortgage, charge, whether by way of specific or floating charge, or give other security on the undertaking, or on the whole or any part of the property and assets of the Registrant.

Section 18.10 of the Articles provides that the quorum necessary for the transaction of the business of the directors shall be a simple majority of directors.

Section 14.8 of the Articles authorizes the Board to appoint one or more additional directors between annual general meetings.

Section 13.5 of the Articles provides that the remuneration of the directors may be determined from time to time by the directors.  There are no restrictions in the Articles upon the directors’ power to vote compensation to themselves or any members of their body. However ASX rules require that the total amount that can be paid to directors for services as directors be approved by shareholders.  

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Section 17.4 of the Articles provides that a director who is a party to a material contract or a proposed material contract with the Registrant or who is the director or an officer of or has a material interest in any person who is a party to a material contract, or a proposed material contract with the Registrant, shall disclose in writing to the Registrant or request to have entered in the minutes of meetings of directors, the nature and extent of his interest.  All such disclosures shall be made at the time required by the applicable provisions of the BC Business Corporations Act (the “Act”) and directors shall refrain from voting in respect of the material contract or proposed material contract if and when prohibited by the Act.  Subject to the Act, a director who is prohibited by the Act from voting on a material contract or proposed material contract will be counted in determining whether a quorum is present for the purpose of the resolution.

The directors of the corporation have the authority under the Articles to provide financial assistance by means of loan guarantee or otherwise on account of expenditures incurred on behalf of the corporation, to a wholly-owned subsidiary and to employees to assist with living accommodations or share purchase plans unless the corporation does not have the funds.

The directors have the authority under the Articles to appoint officers to serve at the pleasure of the Board.  The powers of the directors set forth in the Articles can be varied by amending the Articles.  Section 259 of the Act provides that a corporation may amend its Articles by filing with the registrar of corporations articles of amendment approved by shareholders by special resolution.  A special resolution means a resolution passed by a majority of not less than two-thirds of the votes cast by those members of a corporation who, being entitled to do so, vote in person or by proxy at an annual or special meeting of the corporation.  

Qualifications of Directors

There is no provision in the By-laws or Articles imposing a requirement for retirement or non-retirement of directors under an age limit requirement.

There is no requirement for directorsto hold a share in the capital of the Registrant as qualification for holding office.  Section 124 of the Act provides that no person is qualified to act as a director if that person is:

(a)

under the age of 19 years;

(b)

found to be incapable of managing the person’s own affairs;

(c)

not an individual;

(d)

a person who has the status of bankruptcy, or

(e)

a person who is convicted of an offence in connection with the formation, promotion or management of a corporation or fraud.  

Section 120 of the Act provides that every corporation must have at least one director, and a distributing corporation must have not less than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.  

Section 14.10 of the Articles provides for the election and removal of a director.  The office of a director shall be vacated if the director (i) dies or resigns his or her office by notice in writing delivered to the registered office of the Registrant; or (iii) ceases to be qualified to act as a director pursuant to the Act.  Section 128 of the Act provides that the shareholders may by ordinary resolution at a special meeting remove any director before the expiration of his period of office, and may by an ordinary resolution appoint another personin his or her stead.

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Share Rights

All of the authorized shares of common stock of the Registrant are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets, surpluses and profits and in all other respects, on liquidation, dissolution or winding up of the Registrant, whether voluntary or involuntary, or any other distribution of the assets of the Registrant among its shareholders for the purpose of winding up its affairs after the Registrant has paid out its liabilities.  There are no time limits on dividend entitlement.  The issued Common Shares are not subject to call or assessment rights or any pre-emptive or conversion rights.  The holders of Shares are entitled to one vote for each Share on all matters to be voted on by the shareholders.  There are no provisions for redemption, purchase for cancellation, surrender or purchase funds.

Changing the rights of shareholders, where such rights are attached to an issued class or series of shares requires amending the Articles as described in section 259 of the Act and must be enacted via shareholder consent by special resolution, defined as requiring a two-thirds majority .

Meetings

The Act provides that the Registrant must hold an annual general meeting within 18 months of incorporation or amalgamation and not more than 15 months after the last annual general meeting was held.  The Registrant must give to its shareholders entitled to receive notice of a general meeting not less than 21 days’ and not more than two months’ notice of any general meeting of the Registrant, but those shareholders may waive or reduce the period of notice for a particular meeting by unanimous consent in writing.  The directors must place before each annual general meeting of its shareholders comparative annual financial statements and the report of the auditor to the shareholders.

The Act provides that one or more shareholders of a corporation holding not less than 1% of the issued voting shares of the corporation or holding shares having a value of at least $2,000 may requisition the directors to call and hold a general meeting.  

Two persons present in person and entitled to vote at the meeting will constitute a quorum for a general meeting.

Persons entitled to attend a meeting of shareholders shall be those entitled to vote thereat, the auditor and any lawyer of the Registrant, the Directors, the President and the Secretary.  Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting.

Every shareholder, including a corporate shareholder, entitled to vote at meetings of shareholders may by instrument in writing appoint a proxy, who need not be a shareholder, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

All questions at meetings of shareholders shall be decided by the majority of the votes cast in favour.  Any question at a meeting of shareholders shall be decided by show of hands unless a ballot thereon is requested.  If a poll is required by the chairman of the meeting or is duly demanded by a shareholder, a poll upon the question shall be taken in the manner the chairman of the meeting directs.  In the case of an equality of votes, the chairman of the meeting will not be entitled to a second or casting vote.

Limitations on Ownership of Securities

Except for as described in “Item 10. D. – Exchange Controls”, there are no limitations on the right to own securities, imposed by foreign law or by the charter or other constituent documents of the Registrant.

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Change in Control of Corporation

No provision of the Registrant’s articles of association, charter or bylaws would have the effect of delaying, deferring, or preventing a change in control of the Registrant, and operate only with respect to a merger, acquisition or corporate restructuring of the Registrant or any of its subsidiaries.

Ownership Threshold

There are no provisions in the Articles governing the ownership threshold above which shareholder ownership must be disclosed.  Upon reaching 10% of the issued capital, a shareholder is required to make disclosure of further acquisitions under the Securities Act.

Conditions Governing Changes in Capital

There are no conditions imposed by the By-laws or Articles of the Registrant regarding changes in the capital that are more stringent than is required by law.

C.

Material Contracts  

Contract	Item Reference	Exhibit Number
Management Agreement with Peninsular Services Pty Ltd	6 C	4.12

Management Agreement with Peninsular Services Pty Ltd

Pursuant to an agreement dated February 2006 between the Registrant and Peninsular, Peninsular provides the services of Mr. Lloyd in consideration of an annual fee of A$480,000.  This amount was reduced to A$288,000 in January 2009.  The agreement provides for a two year payout upon termination by the Registrant unless terminated for cause.  In addition, Peninsular provides administrative and technical support personnel as required by the Registrant from time to time.  The consideration paid to Peninsular for those services during the fiscal year was approximately $89,444.

D.

Exchange Controls

There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or affecting the remittance of interest, dividends or other payments to non-resident holders of the Registrant’s Common Shares.  Any remittances of dividends to United States residents are, however, subject to a 15% withholding tax (5% if the shareholder is a corporation owning at least 10% of the outstanding Common Shares of the Registrant) pursuant to Article X of the reciprocal tax treaty between Canada and the United States.  See “Item 10. E. – Taxation”.

Except as provided in theInvestment Canada Act(“ICA”), there are no limitations under the laws of Canada, the Province of British Columbia or in the Registrant’s charter or any other constituent documents of the Registrant on the right of foreigners to hold or vote the Common Shares of the Registrant.

The ICA, which became effective on June 30, 1985 and which was significantly amended on March 12, 2009, requires a non-Canadian making an investment to acquire control, directly or indirectly, of a Canadian business, to file a notification or an application for review with Investment Canada.  An application for review must be filed if the investor is not a citizen or resident of a World Trade Organization member country and the value of the assets of the Canadian business is greater than

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$5,000,000 for direct investments and $50,000,000 for indirect investments, or if the investor is a citizen or resident of a World Trade Organization member country and is making a direct investment value of which is over $312,000,000.  Recent amendments to the ICA will, when proclaimed in force, increase the threshold for review for investors who are citizens or resident in a World Trade Organization member country to $600,000,000 in "enterprise value".  For all acquisitions of a Canadian business which do not meet the threshold criteria for filing an application for review, the ICA requires the investor to file a notification.

The provisions of the ICA are complex, and the above is a limited summary of the main provisions of the ICA.  Any non-Canadian citizen contemplating an investment to acquire control of the Registrant should consult professional advisors as to whether and how the ICA might apply.

For purposes of the ICA, direct acquisition of control means a purchase of the voting interests of a corporation, partnership, joint venture or trust carrying on a Canadian business, or any purchase of all or substantially all of the assets used in carrying on a Canadian business.  An indirect acquisition of control means a purchase of the voting interest of a corporation, partnership, joint venture or trust, whether a Canadian or foreign entity, which controls a corporation, partnership, joint venture or trust company carrying on a Canadian business in Canada.

E.

Taxation

Canadian Federal Income Tax Consequences

The following is a summary of the material Canadian federal income tax considerations generally applicable to U.S. holders of the Registrant’s Common Shares.

The tax consequences to any particular holder of Common Shares will vary according to the status of that shareholder as either an individual, trust, corporation or member of a partnership, the jurisdiction in which the shareholder is subject to taxation, the place of residence of the shareholder and, generally, the shareholder’s particular circumstances.  

This summary is applicable to only those shareholders who are resident in the United States, have never been resident in Canada, deal at arm’s length with the Registrant, hold their Common Shares as capital property, and who will not use or hold the Common Shares in carrying on business in Canada.  Special rules not discussed in this summary may apply to a U.S. shareholder that is an issuer carrying on business in Canada and elsewhere.

This summary is based upon the provisions of theIncome Tax Act of Canada and the regulations thereunder (collectively, either the “TaxAct” or “ITA”), theCanada-United States Tax Convention current at the date of this Annual Report(the “Tax Convention”), and the current administrative practices of the Canada Revenue Agency.  This summary does not take into account provincial income tax consequences.

This summary is not exhaustive of all possible income tax consequences.  It is not intended as legal or tax advice to any particular shareholder and should not be so construed.  Each shareholder should consult his or her own tax advisor with respect to the income tax consequences applicable in that shareholder’s own particular circumstances.  

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Dividends

Pursuant to theTax Convention, any dividends paid to non-resident shareholders of the Registrant, will generally be subject to Canadian withholding tax (“Part XIII Tax”) in respect of any dividend paid or deemed to be paid on his or her shares.   The Registrant will be required to withhold the applicable amount of Part XIII Tax from each such dividend and remit the withheld amount directly to the Receiver General of Canada for the account of the shareholder.  By virtue of Article X of theTax Convention, the rate of Part XIII Tax on dividends paid to U.S. resident shareholders is generally limited to 15% of the gross amount of the dividend (or 5% in the case of certain corporate shareholders owning at least 10% of the Registrant’s voting shares).  In the absence of the treaty provisions, the rate of Part XIII Tax imposed is 25% of the gross amount of the dividend.  

In addition, under Article XXI of theTax Convention, dividends may be exempt from Canadian withholding tax if paid to certain US residents that are qualifying religious, scientific, literary, educational or charitable tax-exempt organization and qualifying trusts, companies, organization or arrangements operated exclusively to administer or provide pension, retirement or employee benefits that are exempt from tax in the United States and that have complied with specific administrative procedures.  

Disposition of Common Shares

A non-resident of Canada who disposes of a share, including by deemed disposition on death, will generally not be subject to Canadian tax under the ITA in respect of any capital gains (or be entitled to deduct any capital loss) thereby realized upon the disposition of Common Shares listed on a prescribed stock exchange unless the shares represent ‘taxable Canadian property’ (as defined by the ITA) to the shareholder.  A Common Share of the Registrant will be deemed to be taxable Canadian property to a non-resident shareholder if, Common Shares of the Registrant represent ‘taxable Canadian property’ and who is under Article XIII of theTax Convention), generally no Canadian tax is payable on a capital gain realized unless the value of such shares is derived principally from real property located in Canada and at any time during the five years preceding the disposition, the non-resident shareholder, persons wi th whom the non-resident shareholder did not deal at arm’s length, or the non-resident shareholder and persons with whom he/she did not deal at arm’s length, owned 25% or more of the issued Common Shares of the Registrant.  

If a non-resident shareholder disposes of the Registrant’s Common Shares to another Canadian corporation which deals or is deemed to deal on a non-arm’s length basis with that shareholder and which, immediately after the disposition, is connected with the Registrant (i.e., holds 10% or more of the voting rights and market value of the Registrant’s Common Shares), the amount by which the fair market value of any consideration (other than shares of the purchasing corporation) exceeds the paid-up capital for the Common Shares sold will be deemed to be taxable as a dividend paid by the purchasing corporation and subject to Part XIII tax as described above.

Where a shareholder disposes of Common Shares to the Registrant (unless the Registrant acquired the shares in the open market in like manner to any member of the public) the result will be a deemed dividend to the shareholder equal to the amount by which the consideration paid by the Registrant exceeds the paid-up capital of the Common Shares.  The amount of such dividend will be subject to withholding tax as previously described.

Material Australian Income Tax Consequences

Management of the Registrant believes that the following general summary fairly describes the principal Australian income tax consequences applicable to a holder of Common Shares of the Registrant who is a

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resident of the United States and who is not a resident of Australia and who does not use or hold, and is not deemed to use or hold, his Common Shares of the Registrant in connection with carrying on a business in Australia (a “non-resident shareholder”).

This summary is based upon the current provisions of theIncome Tax Assessment Acts 1936 and 1997 (Australia) (the “ITAA”), the regulations thereunder (the “Regulations”), the current publicly announced administrative and assessing policies of the Australian Taxation Office, and all specific proposals (the “Tax Proposals”) to amend the ITAA and Regulations announced by the Treasurer (Australia) prior to the date hereof.  This description is not exhaustive of all possible Australian federal income tax consequences and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial action, nor does it take into account provincial or foreign tax considerations which may differ significantly from those discussed herein.  The holders and prospective holders of Common Shares of the Registrant should consult with their own t ax advisors about the federal, provincial and foreign tax consequences of purchasing, owning and disposing of Common Shares of the Registrant in light of their particular tax circumstances.

Dividends

Dividends received by the Registrant from its Australian subsidiary which are paid from profits which have borne Australian company tax (“franked dividends”) are not subject to Australian withholding tax.  Unfranked dividends (which are paid from profits which have not borne Australian company tax) paid by the Australian subsidiary to the Registrant will be subject to a withholding tax in Australia.  Where the Registrant is a US resident corporation with at least a 10% shareholding, the withholding rate will reduce to 5%. 

Disposal of shares

A non-resident of Australia will only be subject to Australian capital gains tax on the disposal of an asset if it has the “necessary connection with Australia”. As the Registrant is not an Australian resident public company, as defined by the ITAA, there will not be this necessary connection and the non-resident shareholders of the Registrant will not be subject to Australian capital gains tax on the disposal of their Common Shares in the Registrant.

An exception is noted where a non-resident realizes a profit or gain which represents income attributable to a business of the shareholder carried on in Australia through a “permanent establishment” as defined in the Australia/US Double Tax Agreement.  In this instance, a non-resident of Australia may be subject to tax in respect of that profit or gain.

Material U.S. Federal Income Tax Consequences

TO COMPLY WITH UNITED STATES INTERNAL REVENUE SERVICE CIRCULAR 230, PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS ANNUAL REPORT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY PROSPECTIVE INVESTORS, FOR THE PURPOSES OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE UNITED STATES INTERNAL REVENUE CODE; AND (B) PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following is a general discussion of certain U.S. federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of shares in the Registrant.  This discussion

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is of a general nature only and does not take into account the particular facts and circumstances, with respect to U.S. federal income tax issues, of any particular U.S. Holder.  In addition, this discussion does not cover any state, local or foreign tax consequences.  (See “Taxation--Canadian Federal Income Tax Consequences” and “Taxation-Material Australian Income Tax Laws” above).

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (“Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations.  This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

This discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any U.S. Holder or prospective U.S. Holder of shares issued by the Registrant, and no opinion or representation with respect to the U.S. federal income tax consequences to any such U.S. Holder or prospective U.S. Holder is made.  Accordingly, U.S. Holders and prospective U.S. Holders of Common Shares issued by the Registrant should consult their own financial advisor, legal counsel or accountant regarding the U.S. federal, state, local and foreign tax consequences of purchasing, owning and disposing of shares issued by the Registrant.

U.S. Holders.

As used herein, a “U.S. Holder” means a holder of Common Shares issued by the Registrant who is (i) a citizen or individual resident of the U.S., (ii) a corporation created or organized in or under the laws of the U.S. or of any political subdivision thereof, (iii) an estate whose income is taxable in the U.S. irrespective of source or (iv) a trust subject to the primary supervision of a court within the U.S. and control of a U.S. fiduciary as described Section 7701(a)(30) of the Code.  If a partnership or other “pass-through” entity treated as a partnership for U.S. federal income tax purposes holds shares issued by the Registrant, the U.S. federal income tax treatment of the partners or owners of such partnership or other pass-through entity generally will depend on the status of such partners or owners and the nature and activities of such partnership or pass-through entity.

Persons Not Covered.

This summary does not address the U.S. federal income tax consequences to persons (including persons who are U.S. Holders) subject to special provisions of U.S. federal income tax law, including but not limited to (i) persons who are tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, or brokers, dealers or traders in securities, (ii) persons who have a “functional currency” other than the U.S. dollar, (iii) persons subject to the alternative minimum tax, (xi) persons who own their Common Shares as part of a straddle, hedging, conversion transaction, constructive sale or other arrangement involving more than one position, (iv) persons who acquired their Common Shares through the exercise of employee stock options or otherwise as compensation for services, (v) persons that own an interest in an entity that owns Common Shares, (vi) persons who own, exercise or dispose of any options, warrants or other rights to acquire Common Shares, (vii) persons who are partners or owners of partnerships or other pass-through entities such as corporations subject to Subchapter S of the Code, (viii) persons who own their Common Shares other than as a capital asset within the meaning of Section 1221 of the Code, or (ix) persons that own, actually or constructively, 10% or more of the voting power of the Registrant’s outstanding Common Shares.  

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Distributions Made by the Registrant to U.S. Holders.

General Rules.  U.S. Holders receiving distributions (including constructive distributions) with respect to Common Shares issued by the Registrant are required to include in gross income as a dividend for U.S. federal income tax purposes the gross amount of such distributions (without reduction for any Canadian income tax withheld from such distributions), equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Registrant has current or accumulated earnings and profits.  To the extent that distributions from the Registrant exceed its current and accumulated earnings and profits, such distributions will be treated first as a return of capital, to the extent of the U.S. Holder’s adjusted basis in the shares, and thereafter as gain from the sale or exchange of the shares.  (See more detailed discussion at “Disposition o f Shares” below).  Any Canadian tax withheld from a distribution by the Registrant may be credited, subject to certain limitations, against the U.S. Holder’s U.S. federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's U.S. federal taxable income by those who itemize deductions.  (See more detailed discussion at “Foreign Tax Credit” below).

Currency Gain or Loss.  In the case of foreign currency received as a distribution that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.  

Dividends not Eligible for Reduced Tax Rate.  Under current U.S. tax laws, for taxable years beginning after December 31, 2002 and before January 1, 2011, dividends received by U.S. Holders that are individuals, estates or trusts from “qualified foreign corporations,” as defined in Section 1(h)(11) of the Code, generally are taxed at the same preferential tax rates applicable to long-term capital gains.  Although not free from doubt, it appears that the Registrant would be a “qualified foreign corporation,” as defined in Section 1(h)(11) of the Code if the Registrant is not a Passive Foreign Investment Company (“PFIC”).  A corporation that is properly described as a PFIC with respect to a specific US holder for its taxable year during which it pays a dividend, or for its immediately preceding taxable year, will not be treated as a “qualifying foreign corporation” and divi dends received by U.S. Holders that are individuals, estates or trusts generally will be subject to U.S. federal income tax at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains).

Dividends not Eligible for Dividends Received Deduction.  Dividends paid by the Registrant generally will not be eligible for the “dividends received deduction” allowed to corporate shareholders receiving dividends from certain U.S. corporations.  Under certain circumstances, a U.S. Holder that is a corporation and that owns shares representing at least 10% of the total voting power and the total value of shares issued by the Registrant may be entitled to a deduction of the “U.S. source” portion of dividends received from the Registrant (unless the Registrant qualifies as a “PFIC” as defined below).  The availability of the dividends received deduction is subject to several complex limitations that are beyond the scope of this discussion, and U.S. Holders of shares issued by the Registrant should consult their own financial advisor, legal counsel or accountant regarding the dividen ds received deduction.

Dividends Paid to Shareholder who Made QEF Election may be Exempt from Tax.  Generally, shareholders are not subject to additional income taxation on distributions made by a PFIC to the extent of the shareholder’s basis in the corporation’s shares if a Qualified Electing Fund (“QEF”) election is in effect.  (Please see the “QEF election” discussion below.)  A shareholder’s basis in this situation is usually equal to the cost of purchasing the shares plus the amount of the corporation’s income that was reported on the shareholder’s return pursuant to the QEF election less any prior distributions made by the

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corporation to the shareholder.  Again, these rules are subject to several exceptions that are beyond the scope of this discussion, and U.S. Holders of shares issued by the Registrant should consult their own financial advisor, legal counsel or accountant regarding whether dividends paid by the Registrant to them will be exempt from U.S. federal income tax if a QEF election is made.

Disposition of Shares.

General Rule.  A U.S. Holder will recognize gain or loss upon the sale or other taxable disposition of shares issued by the Registrant equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in the shares.  This gain or loss will be capital gain or loss if the Common Shares are a capital asset in the hands of the U.S. Holder, which will be long-term capital gain or loss if the shares are held for more than one year.

Reduced Tax Rate.  Under current U.S. tax laws, preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder that is a corporation (other than a corporation subject to Subchapter S of the Code).  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders that are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted.  For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.  Sales of PFIC stock are not eligible for the reduced long-term capital gains rates that are usually applicable to sales of stock unless the shareholder made a QEF election regarding such shares.  As discussed below, the Registrant believes it is a PFIC.

Management Believes Registrant is a Passive Foreign Investment Company.

General Discussion.  Management of the Registrant believes it may qualify as a PFIC, within the meaning of Sections 1291 through 1298 of the Code, for the current taxable year and may have qualified as a PFIC in prior years and may qualify as a PFIC in subsequent years.  A U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to numerous special U.S. federal income taxation rules and may elect to be taxed under two alternative tax regimes.  The following is a discussion of special rules applied to U.S. Holders of shares issued by the Registrant.  In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a “controlled foreign corporation” (as defined below) and a U.S. Holder owns, actually or constructively, 10 % or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (See more detailed discussion at “Controlled Foreign Corporation” below).

Definition of PFIC.  Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. and, for any taxable year, either (a) 75% or more of its gross income is “passive income” or (b) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of “passive income” is 50% or more.  “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.  However, gains resulting from commodities transactions are generally excluded from the definition of passive income if “substantially all” of a merchant’s, producer’s or handler’s business i s as an active merchant, producer or handler of such commodities.  For purposes of the PFIC income test and the assets test, if a foreign corporation owns (directly or indirectly) at least 25% by value of the stock of another corporation, such foreign corporation shall be treated as if it (a) held a proportionate share of the assets of such other corporation, and (b) received directly its

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proportionate share of the income of such other corporation.  Also, for purposes of such PFIC tests, passive income does not include any interest, dividends, rents or royalties that are received or accrued from a “related” person to the extent such amount is properly allocable to the income of such related person which is not passive income.  For these purposes, a person is related with respect to a foreign corporation if such person “controls” the foreign corporation or is controlled by the foreign corporation or by the same persons that control the foreign corporation.  For these purposes, “control” means ownership, directly or indirectly, of stock possessing more than 50% of the total voting power of all classes of stock entitled to vote or of the total value of stock of a corporation.  

Generally Applicable PFIC Rules.  If a U.S. Holder does not make a timely election to be taxed in conformity with the Mark-to-Market rules or the QEF rules during a year in which it holds (or is deemed to have held) shares issued by the Registrant while it is a PFIC (a “Non-Electing U.S. Holder”), then special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his Common Shares and (ii) certain “excess distributions” (generally, distributions received in the current taxable year that are in excess of 125% of the average distributions received during the three preceding years or, if shorter, the U.S. Holder’s holding period) by the Registrant.

A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of his Common Shares and all excess distributions on his Common Shares over the entire holding period for the common shares.  All gains or excess distributions allocated to prior years of the U.S. Holder (other than years prior to the Registrant’s first taxable year during such U.S. Holder’s holding period and beginning after January 1, 1987 for which the Registrant was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income.  The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year.  A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as “personal interest” which, as discussed above, is wholly non-deductible.  The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.

If the Registrant is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds shares issued by the Registrant, then it will continue to be treated as a PFIC with respect to such common shares and such Non-Electing U.S. Holder, even if it ceases meeting the definition of a PFIC.  A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Common Shares had been sold on the last day of the last taxable year for which it was a PFIC.

Market-to-Market Election.  Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold, actually or constructively, marketable stock (as specifically defined in the Treasury Regulations) of a foreign corporation that qualifies as a PFIC may annually elect to mark such stock to the market (a “mark-to-market election”).  If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above.  However, if the mark-to-market election is made by a Non-Electing U.S. Holder after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to the Registrant’s common shares.  A U.S. Holder who makes the mark-to market election will include in income for the taxable year for which the election was made an amount equal to the excess, if any, of the fair market value of the Registrant’s Common Shares as of the close of such tax year over such U.S. Holder’s adjusted basis in such common shares.  In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder’s adjusted

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tax basis in the Common Shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for the Registrant’s shares included by such U.S. Holder for prior tax years, including any amount which would have been included for any prior tax year but for the Section 1291 interest on tax deferral rules discussed above with respect to Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years.  A U.S. Holder’s adjusted tax basis in his shares will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election.  A mark-to-market election applies to the taxable year in which the election is made and to each subsequent taxable year, unless the shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election.

QEF Election.  A U.S. Holder who makes a timely QEF election (an “Electing U.S. Holder”) regarding his shares issued by the Registrant will be subject, under Section 1293 of the Code, to current U.S. federal income tax for any taxable year in which the Registrant qualifies as a PFIC on his pro rata share of the Registrant’s (i) “net capital gain” (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder and (ii) “ordinary earnings” (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the shareholder’s taxable year in which (or with which) the Registrant’s taxable year ends, regardless of whether such amounts are actually distributed.

The effective QEF election also allows the Electing U.S. Holder to (i) generally treat any gain realized on the disposition of his Common Shares (or deemed to be realized on the pledge of his shares) as capital gain; (ii) treat his share of the Registrant’s net capital gain, if any, as long-term capital gain instead of ordinary income; and (iii) either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the Registrant’s annual realized net capital gain and ordinary earnings subject, however, to an interest charge.  If the Electing U.S. Holder is not a corporation, such an interest charge would be treated as “personal interest” that is not deductible.

The procedure a U.S. Holder must comply with in making an effective QEF election, and the U.S. federal income tax consequences of the QEF election, will depend on whether the year of the election is the first year in the U.S. Holder’s holding period in which the Registrant is a PFIC.  If the U.S. Holder makes a QEF election in such first year,i.e., a timely QEF election, then the U.S. Holder may make the QEF election by simply filing the appropriate QEF election documents at the time the U.S. Holder files his tax return for such first year.  However, if the Registrant qualified as a PFIC in a prior year, then in addition to filing the QEF election documents, the U.S. Holder must elect to recognize (i) under the rules of Section 1291 of the Code (discussed herein), any gain that he would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if the Registrant is a controlled foreign corporation, the U.S. Holder’s pro rata share of the Registrant’s post-1986 earnings and profits as of the qualification date.  The qualification date is the first day of the Registrant’s first tax year in which the Registrant qualified as a QEF with respect to such U.S. Holder.  The elections to recognize such gain or earnings and profits can only be made if such U.S. Holder’s holding period for the shares includes the qualification date.  By electing to recognize such gain or earnings and profits, the U.S. Holder will be deemed to have made a timely QEF election.  U.S. Holders are urged to consult a tax advisor regarding the availability of and procedure for electing to recognize gain or earnings and profits under the foregoing rules.  In addition to the above rules, under very limited circumstances, a U.S. Holder may make a retroactive QEF election if such U.S. Holder failed to file the QEF election documents in a timely manner.

A QEF election, once made with respect to the Registrant, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to

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revocation of the election.  If a QEF election is made by a U.S. Holder and the Registrant ceases to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which the Registrant does not qualify as a PFIC.  Therefore, if the Registrant again qualifies as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax years in which the Registrant qualifies as a PFIC.  In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of his or its direct and indirect interest in the Registrant’s shares.  Therefore, if such U.S. Holder reacquires an interest in the Registrant, that U.S. Hold er will be subject to the rules described above for Electing U.S. Holders for each tax year in which the Registrant qualifies as a PFIC.

Generally, shareholders do not make a QEF election unless they have sufficient information to determine their proportionate shares of a corporation’s net capital gain and ordinary earnings.  The Registrant has not calculated these amounts for any shareholder and does not anticipate making these calculations in the foreseeable future.  Therefore, U.S. Holders of the Registrant’s Common Shares should consult their own financial advisor, legal counsel or accountant regarding the QEF election before making this election.

Other PFIC Rules.  Under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death.  Generally, in such cases the basis of shares in the hands of the transferee and the basis of any property received in the exchange for those shares would be increased by the amount of gain recognized.  However, the specific U.S. federal income tax consequences to the U.S. Holder and the transferee may vary based on the manner in which the Common Shares are transferred.

Certain special, generally adverse, rules will apply with respect to shares issued by the Registrant while it is a PFIC whether or not it is treated as a QEF.  For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

The PFIC rules are very complicated, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the PFIC rules, including the advisability of and procedure for making a QEF election or a mark-to-mark election, and how these rules may impact their U.S. federal income tax situation.

Foreign Tax Credit.

A U.S. Holder who pays (or has withheld from distributions) Canadian or other foreign income tax with respect to the ownership of shares issued by the Registrant may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for U.S. federal income tax purposes with respect to such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces U.S. federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from distributions to) the U.S. Holder during that year.

There are significant and complex limitations that apply to the foreign tax credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s U.S. income tax liability that the U.S. Holder’s “foreign source” income bears to his or its worldwide taxable income.  

56

In applying this limitation, the various items of income and deduction must be classified as either “foreign source” or “U.S. source.”  Complex rules govern this classification process.  

In addition, U.S. Holders that are corporations and that own 10% or more of the Registrant’s voting stock may be entitled to an “indirect” foreign tax credit under Section 902 of the Code with respect to the payment of dividends by the Registrant under certain circumstances and subject to complex rules and limitations.  The availability of the foreign tax credit and the application of the limitations with respect to the foreign tax credit are fact specific, and each U.S. Holder of Common Shares issued by the Registrant should consult their own financial advisor, legal counsel or accountant regarding the foreign tax credit rules.

Information Reporting; Backup Withholding.

Certain information reporting and backup withholding rules may apply with respect to certain payments related to shares issued by the Registrant.  In particular, a payor or middleman within the U.S., or in certain cases outside the U.S., will be required to withhold at a current rate of 28% (which rate is scheduled for periodic adjustment) of any payments to a U.S. Holder regarding dividends paid by the Registrant, or proceeds from the sale of, such Common Shares within the U.S., if a U.S. Holder fails to furnish its correct taxpayer identification number (generally on Form W-9) or otherwise fails to comply with, or establish an exemption from, the backup withholding tax requirements.  Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.  U.S. Hold ers should consult their own financial advisor, legal counsel or accountant regarding the information reporting and backup withholding rules applicable to the Registrant’s shares.

Other Considerations for U.S. Holders.

In the following circumstances, the above sections of this discussion may not describe the U.S. federal income tax consequences to U.S. Holders resulting from the ownership and disposition of shares issued by a foreign corporation.

Controlled Foreign Corporation.  If more than 50% of the total voting power or the total value of the Registrant’s outstanding shares is owned, directly or indirectly, by citizens or residents of the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), each of which own, directly or indirectly, 10% or more of the total voting power of the Registrant’s outstanding shares (each a “10% Shareholder”), the Registrant could be treated as a “Controlled Foreign Corporation” (“CFC”) under Section 957 of the Code.

The classification of the Registrant as a CFC would effect many complex results, including that 10% Shareholders would generally (i) be treated as having received a current distribution of the Registrant’s “Subpart F income” and (ii) would also be subject to current U.S. federal income tax on their pro rata shares of the Registrant’s earnings invested in “U.S. property.”  The foreign tax credit may reduce the U.S. federal income tax on these amounts for certain 10% Shareholders (See more detailed discussion at “Foreign Tax Credit” above).  In addition, under Section 1248 of the Code, gain from the sale or other taxable disposition of the Registrant’s Common Shares by a U.S. Holder that is or was a 10% Shareholder at any time during the five-year period ending with the sale is treated as a dividend to the extent of the Registrant’s earnings and profits attributable to the Comm on Shares sold or exchanged.

If the Registrant is classified as both a PFIC and a CFC, it generally will not be treated as a PFIC with respect to 10% Shareholders.  This rule generally will be effective for taxable years of 10% Shareholders

57

beginning after 1997 and for its taxable years ending with or within such taxable years of 10% Shareholders.

The Registrant does not believe that it currently qualifies as a CFC.  However, there can be no assurance that it will not be considered a CFC for the current or any future taxable year.  The CFC rules are very complicated, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the CFC rules and how these rules may impact their U.S. federal income tax situation.

F.

Dividends and Paying Agents

Not applicable.

G.

Statement by Experts

Not applicable.

H.

Documents on display

The Registrant’s documents can be viewed at its Australian office, located at 57 Labouchere Road, South Perth, Western Australia.  The Registrant is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and it files reports, registration statements and other information with the U.S. Securities and Exchange Commission (the “SEC”).  The Registrant’s reports, registration statements and other information can be inspected on the SEC’s website atwww.sec.gov and such information can also be inspected and copiesobtained in person or by mail at prescribed rates from the Public Reference Room of the SEC, 100 F Street NE, Room 1580, Washington, DC  20549 or by calling the SEC at 1-800-SEC-0330.

I.

Subsidiary Information

Not applicable.

Item 11 – Quantitative and Qualitative Disclosures about Market Risk

The Registrant has not entered into any activities in derivative financial instruments, other financial instruments, or derivative commodity instruments.  The Registrant’s financial assets in the form of cash and cash equivalents are held in short-term interest-bearing deposits at institutions with high credit quality ratings.  The Registrant holds some foreign currency, mainly in Australian dollars.  As such the Registrant is exposed to exchange rate risk.  The Registrant does not currently engage in foreign currency hedging and its operations are subject to foreign currency fluctuations, and such fluctuations may materially affect its financial position and results of operations.

There can be no assurance that steps taken by management to address foreign currency fluctuations will eliminate all adverse effects and accordingly, the Registrant may suffer losses due to adverse foreign currency fluctuations.

As the Registrant intends to engage in exploring mineral properties which, if successful, will produce commodities, it may be exposed indirectly to commodity risk.  Such exposure cannot be accurately estimated by quantitative means although the risk would increase as the possibility of project success increased.  Industry practice dictates that attempts to hedge commodity risk not begin until at least there are funding agreements in place supported by a bankable feasibility study.  The Registrant has in the past

58

and may in the future finance its activities by the sale of equity and/or debt instruments.  This is also an indirect exposure to equity and/or interest-rate risk, which cannot be accurately estimated by quantitative means.

Item 12 – Description of Securities other than Equity Securities

Not applicable.

PART  II

Item 13 – Defaults, Dividend Arrearages and Delinquencies

There have been no defaults, dividend arrearages or delinquencies.

Item 14 – Material Modifications to the Rights of Security Holders and Use of Proceeds

There have been no material modifications to the Registrant’s common shares.

Item 15 – Controls and Procedures

Under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, the Registrant has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the Exchange Act.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Registrant’s disclosure controls and procedures were effective in timely alerting it to the material information relating to it (or its consolidated subsidiaries) required to be included in the reports it files or submits under the Exchange Act.

During the period covered by this report, there has been no change in the Registrant’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Management, including its Chief Executive Officer, does not expect that the Registrant’s disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Registrant have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Addi tionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures

59

may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting.  The Registrant’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with generally accepted accounting principles.  Internal control over financial reporting is defined in Rules 13a-15(f) and 15d–15(f) promulgated under the Exchange Act.  

As of December 31, 2008, management assessed the effectiveness of the Registrant’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.  Based on the assessment, management has determined that there are material weaknesses to its internal control consequently internal control was not effective as a result thereof.  Due to the Registrant’s limited resources, it is not feasible to engage additional personnel to address the lack of segregation of duties.  Management has, however, determined that there are compensating controls which mitigate the potential for error in the Registrant’s financial statements due to the involvement of its directors and review by the audit committee.  Management intends to improve internal control over financial reporting in future as the Registrant’s resources permit by engaging additional personnel.  This annual report does not include an attestation report of the Registrant’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Registrant’s registered public accounting firm pursuant to a transition period established by rules of the United States Securities and Exchange Commission that permit the Registrant to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect the Registrant’s internal control over financial reporting.  

Item 16A – Audit Committee Financial Expert

The Registrant’s Board has determined that it does not have an audit committee member who meets the requirements set forth under the SEC rules to be deemed to be an “audit committee financial expert”.  The Registrant is currently seeking a suitably qualified person who meets these requirements.  

Item 16B – Code of Ethics

The Registrant has adopted a code of ethics that applies to its executive officers, a copy of which is available, without charge, upon written request to the Registrant’s Secretary at 57 Labouchere Road, South Perth, Western Australia, 6151.

Item 16C – Principal Accountant Fees and Services

Meyers Norris Penny LLP (“MNP”) formerly Horwath Orenstein LLP, who were appointed as auditors of the Registrant on February 1, 2005 and reappointed on May 23, 2008 audited the Registrant’s books and records for the years ended December 31, 2008, 2007 and 2006.

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Audit Fees

Fees billed by MNP for professional services totalled $45,850 for the year ended December 31, 2008 and $45,850 for the year ended December 31, 2007.  Such fees were for the audit of the Registrant’s annual financial statements and review of its half year financial statements and for services in connection with statutory and regulatory filings for that fiscal year and the audit for the years ended December 31, 2008 and 2007.

Audit-Related Fees

Fees for audit-related services totalled $ nil for the years ended December 31, 2008, 2007 and 2006.  

Tax Fees

No fees related to tax services were billed by MNP for the years ended December 31, 2008, 2007 and 2006.  

All Other Fees

No other fees were billed by MNP for the years ended December 31, 2008, 2007 and 2006.  

During the fiscal years ended December 31, 2008, 2007 and 2006, MNP did not bill for any products or services other than as described above.

The audit committee pre-approves audit engagement terms and fees prior to the commencement of any audit work, other than that which may be necessary for the Registrant’s independent auditors to prepare the proposed audit approach, scope and fee estimates; and other than de minimus non audit related services allowed by applicable law or regulation.  The independent auditors annually submit a written proposal that details all audit and audit related services.  Audit fees are fixed and contained in the proposal, and the audit committee reviews the nature and dollar value of services provided under such proposal.  Any revisions to such proposal after the engagement has begun are reviewed and pre-approved by the audit committee.

There were no fees in 2008, 2007 or 2006 that were not pre-approved by the Audit Committee.  All services described above under the captions “Audit Fees”, “Audit Related Fees” and “Tax Fees” and “All Other Fees” were approved by the Audit Committee pursuant to SEC Regulation S-X, Rule 2-01(c)(7)(i).

Item 16D – Exemptions from the Listing Standards for Audit Committees.

Not applicable.  

Item 16E – Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Neither the Registrant not any affiliated purchaser engaged in any repurchases of the registrant’s equity securities during the year ended December 31, 2008.

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PART  III

Item 17 – Financial Statements

These financial statements were prepared in accordance with Canadian GAAP and are expressed in Canadian dollars.  Such financial statements have been reconciled to U.S. GAAP for measurement differences between Canadian and United States GAAP (see Note 12 therein).  

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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements and the information contained in the annual report have been prepared by the management of the Corporation.  The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and, where appropriate, reflect management's best estimates based on currently available information.  A system of internal accounting control is maintained to provide reasonable assurance that financial information is accurate and reliable.

The Corporation's registered independent accountants, Meyers Norris Penny LLP, who have been appointed by the directors, conduct an audit in accordance with generally accepted auditing standards in Canada and the Public Company Accounting Oversight Board (United States) to allow them to express an opinion on the financial statements.

The Audit Committee of the Board of Directors meets periodically with management to review the financial statements and related reporting matters prior to submission to the Board, and meets with the registered independent accountants to review the scope and result of the annual audit.  

Chief Executive Officer

Argosy Minerals Inc.

March 27, 2009

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders of Argosy Minerals Inc.

We have audited the consolidated balance sheet of Argosy Minerals Inc. as at December 31, 2008 and 2007 and the consolidated statements of operations and deficit and cash flows for each of the years in the three-year period ended December 31, 2008.  These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2008 and  2007 and the results of its operations and changes in its cash flow for each of the years in the three-year period ended December 31, 2008 in accordance with Canadian generally accepted accounting principles.

Toronto, Ontario March 27, 2009 Chartered Accountants Licensed Public Accountants

63

Argosy Minerals Inc.
(an exploration stage corporation)
CONSOLIDATED BALANCE SHEETS
As at December 31, 2008 and 2007
(expressed in Canadian dollars)
			2008	2007
ASSETS
Current Assets
	Cash and cash equivalents		$            2,091,150	$           3,341,050
	Accounts receivable		18,054	6,916
			2,109,204	3,347,966
Office equipment and furniture		Note 3	9,578	13,723
			$            2,118,782	$           3,361,689
LIABILITIES
Current Liabilities
	Accounts payable and accrued liabilities		$               140,343	$              172,622
SHAREHOLDERS' EQUITY
Capital Stock		Note 6
	Issued		46,991,751	46,991,751
	Contributed Surplus		3,013,073	1,264,482
Deficit			(48,026,385)	(45,067,166)
			1,978,439	3,189,067
			$            2,118,782	$           3,361,689

APPROVED ON BEHALF OF THE BOARD

                                                                                         

__________________________

____________________________

John Maloney, Chairman

Peter Lloyd, President & Director

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

64

Argosy Minerals Inc.
(an exploration stage corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
For the Years Ended December 31, 2008, 2007 and 2006
(expressed in Canadian dollars)
			2008	2007	2006
Income
	Interest		$              152,959	$                141,220	$               107,563
	Foreign exchange gain / (loss)		(6,558)	(125,404)	376
			146,401	15,816	107,939
Expenses
	Accounting and audit		$                63,695	$                  46,805	$                 53,683
	Arbitration	Note 4(a)	369,750	202,668	-
	Bank charges		1,563	1,996	1,837
	Amortization		4,145	6,429	12,515
	Directors' fees		62,686	48,566	45,833
	Insurance		1,779	2,032	4,673
	Legal		8,041	70,351	95,745
	Management and consulting fees		564,490	279,865	405,986
	Office		11,160	15,911	15,189
	Project assessment expenditures	Note 5	56,589	989,114	228,646
	Rent		31,087	34,765	52,036
	Salaries and benefits		101,084	129,436	191,581
	Stock based compensation		1,748,591	856,164	439,251
	Shareholder communications		16,133	13,111	25,722
	Telecommunications		6,677	7,825	14,960
	Transfer agent and stock exchange		58,150	107,617	43,623
	Travel		-	23,050	111,841
			3,105,620	2,835,705	1,743,121
Net Loss for the Year			(2,959,219)	(2,819,889)	(1,635,182)
Deficit - Beginning of Year			(45,067,166)	(42,247,277)	(40,612,095)
Deficit - End of Year			$        (48,026,385)	$         (45,067,166)	$         (42,247,277)
Basic & Fully Diluted Loss per Common Share			$                   (0.03)	$                    (0.03)	$                    (0.02)
Weighted Average Number of Common Shares
	Outstanding, Basic and Fully Diluted		99,919,105	98,023,272	95,969,105

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

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Argosy Minerals Inc.
(an exploration stage corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007 and 2006
(expressed in Canadian dollars)
		2008	2007	2006
Cash Provided from (Used for)
Operating Activities
Net loss for the year		$    (2,959,219)	$    (2,819,889)	$     (1,635,182)
Items not affecting cash:
	Amortization	4,145	6,429	12,515
	Foreign exchange (gain) / loss	23,849	97,235	(794)
	Project assessment expenditures - common shares issued	-	94,889	-
	Stock based compensation	1,748,591	856,164	439,251
		(1,182,634)	(1,765,172)	(1,184,210)
Changes in Non-cash Working Capital
(Increase) Decrease in accounts receivable		(11,138)	10,346	9,127
Increase/(Decrease) in accounts payable
	and accrued liabilities	(32,279)	61,082	(96,332)
Cash Flows from Operating Activities		(1,226,051)	(1,693,744)	(1,271,415)
Investing Activities
(Purchase)/disposal of office equipment and furniture		-	(14,846)	837
Cash Flows from Investing Activities		-	(14,846)	837
Financing Activities
Issue of common shares		-	2,790,545	-
Cash Flow from Financing Activity		-	2,790,545	-
Foreign Exchange Gain / (loss) on cash
	held in Foreign Currency	(23,849)	(97,235)	794
Increase (Decrease) in Cash and Cash
	Equivalents	(1,249,900)	984,720	(1,269,784)
Cash and Cash Equivalents -
	Beginning of Year	3,341,050	2,356,331	3,626,115
Cash and Cash Equivalents -
	End of Year	$     2,091,150	$     3,341,051	$       2,356,331

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

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Argosy Minerals Inc.

(an exploration stage corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2008

1.  Nature of Operations

On May 26,2005, the Corporation amalgamated with its wholly owned subsidiaries and continued its jurisdiction of incorporation from the Yukon Territory under the Yukon Corporations Act to British Columbia, under the Business Corporations Act.   

The Corporation and its subsidiaries are engaged in the exploration of mineral properties and it is considered to be an exploration stage company.  The Corporation is in the process of investigating possible property acquisitions.  In August 2002 the Corporation’s subsidiary, Andover Resources N.L., declared force majeure and curtailed its activities in Burundi as a result of the deterioration of the security situation, however in 2005 following elections and the formation of a new government in Burundi, the Corporation lifted force majeure and entered into discussions with the Ministry for Mines regarding the continuation of the Mining Convention and recommencing activities in Burundi. See Note 4(a). )  Subsequent to Dec ember 31, 2008, the Corporation established that the Government of Burundi had awarded a licence over Musonagti to a third party.  The Corporation is currently assessing the legal alternatives ava ilable to it however, in the interim has determined not to continue with the arbitral proceedings at the International Chamber of Commerce at this time.  The Corporation does however retain the right to proceed in the future.  The continuing operations of the Corporation is dependent upon, obtaining necessary financing to meet its commitments as they come due and to finance exploration and development of the properties, the discovery of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties and upon future profitability, production or proceeds from disposition of the mineral properties.  

As yet, where applicable, it has not been determined if the Corporation’s mineral properties contain ore reserves that are economically recoverable.  The recoverability of any amount recorded for mineral properties and deferred costs is dependent on the existence of economically recoverable reserves, the ability of the Corporation to obtain necessary financing to complete the development and future profitable production or proceeds from disposition of the mineral properties.  The amounts shown as mineral properties and deferred costs, if any, represent costs to date, less amounts recovered or written off, and do not necessarily represent present or future values.  

2.  Changes in Accounting Policies and New Accounting Developments

(i)  Capital Disclosures, Section 1535

Effective January 1, 2008, the Corporation adopted Section 1535 “Capital Disclosures” which requires the disclosure of information that enables users of an entity’s financial statements to evaluate its objectives, policies and processes for managing capital such as qualitative information about its objectives, policies and processes for managing capital, summary quantitative data about what the entity manages as capital, whether it has complied with any capital requirements and, if it has not complied, the consequences of non-compliance.  Disclosures required by this standard are included in Note 8.

(ii)  Going Concern - Amendments to Section 1400

Effective January 1, 2008 the Corporation adopted amendments to CICA 1400, General Standards of Financial Statements Presentation to include requirements to assess and disclose an entity's ability to continue as a going concern.  The adoption of this section had no effect on the Corporation’s financial statements.  

(iii)  Financial Instruments Disclosures, Section 3862 / Financial Instruments Presentation, Section 3863

Effective January 1, 2008, the Corporation adopted Section 3862 “Financial Instruments – Disclosures” and Section 3863 “Financial Instruments – Presentation”.  These Section requires entities to provide disclosure of quantitative and qualitative information in their financial statements that enable users to evaluate (a) the significance of

67

financial instruments for the entity’s financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and management’s objectives, policies and procedures for managing such risks.  Disclosures required by this standard are included in Note 9.  The adoption of this section had no effect on the Corporation’s financial statements.

(iv)  Goodwill and intangible assets, Section 3064

The CICA issued the new Handbook Section 3064, “Goodwill and Intangible Assets”, which will replace Section 3062, “Goodwill and Intangible Assets”.  The new standard establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets.  The new standard also provides guidance for the treatment of preproduction and start-up costs and requires that these costs be expensed as incurred.  The new standard applies to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008. Management is currently assessing the impact of this new accounting standard on its consolidated financial statements.

(v)  International financial reporting standards (“IFRS”)

In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies.  The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period.  In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own GAAP.  The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  The transition date of January 1, 2011 will require the restatement, for comparative purposes, of amounts reported by the Corporation for the year ended December 31, 2010.  While the Corporation has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

3.  Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries after elimination of inter-company accounts and transactions:

Company Name	Country
Argosy Mining Corporation Pty. Ltd.	South Africa
Andover Resources N.L. ("Andover")	Australia
Argosy Energy Zambia Limited	Zambia

Financial Statement Presentation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”).  The material measurement differences between Canadian and United States GAAP are explained in Note 11, along with their effect on the Corporation’s consolidated statements of operations and deficit.  

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in Canada requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of income and expenses during the period.  Significant areas where management’s judgement is applied are valuation of future income tax benefits, stock based compensation and contingent liabilities.  Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term deposits maturing within 90 days of the original date of acquisition.  In order to limit its exposure to losses, the Corporation deposits its funds with major Canadian and

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Australian banks.  A portion of the cash balances are held in Australian dollars, accordingly, the Corporation has exposure to fluctuations in currency exchange rates.

Office Equipment and Furniture

Equipment and furniture is recorded at cost less accumulated amortization.  The Corporation records amortization of equipment at the following rates and methods based on the assets’ estimated useful lives:

Computer equipment

35%

declining balance method

Computer software

50%

declining balance method

The Corporation regularly reviews its equipment and furniture to recognize impairments.

Project Assessment Expenditures

Project assessment costs consist of expenditures to evaluate new projects.  These expenditures are charged to income when incurred.  Once the Corporation decides to acquire the property, costs associated with further exploration or development are accounted for as described under Mineral Properties and Deferred Costs below.  Included in project assessment expenditures are option payments for mineral properties.  These payments are charged to income when incurred.  

Mineral Properties and Deferred Costs

The costs of acquiring mineral properties, and related exploration and development costs, are deferred until the property to which they relate is placed into production, sold or abandoned.  Deferred costs will be amortized on a unit production basis of the ore body following commencement of production, or written off if the property is sold or abandoned.

The Corporation will reduce the carrying value of mineral properties and deferred costs by any amount received from the introduction of a joint venture partner.

Management's estimate of carrying values is subject to risks and uncertainties affecting the recoverability of the Corporation's investment in mineral properties.  Although management makes its best estimate of these factors, where applicable, based on current conditions, it is possible that changes could occur in the near term which could adversely affect management's estimate of the recoverability of mineral properties and deferred costs and the need for asset impairment write-downs.

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

Stock Based Compensation

Stock options issued by the Corporation are accounted for in accordance with the fair value based method of accounting.  This section requires that an expense to be recognized in financial statements for all forms of employee stock-based compensation, including stock options.  Stock based compensation expense is calculated using the Black-Scholes Model which requires the input of highly subjective assumptions including expected stock price volatility.  Differences in input assumptions can materially affect the fair value estimate and therefore the existing models do not necessarily provide a reliable single measure of the fair value of any stock options granted.  Upon the exercise of the option, the consideration received together with the amount previously recognized in contributed surplus is recorded as an increase to share capital.

Comprehensive loss

Section 1530 establishes standards for reporting and presenting comprehensive loss which is defined as the change in equity from transactions and other events from non-owner sources.  Other comprehensive income refers to items recognized in comprehensive income but which are excluded from net income calculated in accordance with generally accepted accounting principles.  The Corporation does not have comprehensive loss.

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Loss per Common Share

Loss per common share is calculated using the weighted average number of common shares issued and outstanding during each year.  Basic and fully diluted loss per share, are the same, as the effect of potential issues of shares under stock option arrangements would be anti-dilutive.

Foreign Currency Translation

The Corporation’s foreign subsidiaries are integrated foreign operations.  Currency translations into Canadian dollars are made as follows:

(i)

monetary assets and liabilities at the rates of exchange prevailing at the balance sheet date;

(ii)

non-monetary items at rates prevailing when they are acquired;

(iii)

exploration costs and administration costs at average rates for the period.

Gains and losses arising on currency translation are included in the statement of operations.

Financial Instruments

Under Section 3855, all financial instruments are classified into one of five categories:  Held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities.  

The following is a summary of the accounting model the Corporation has elected to apply to each of its significant categories of financial instruments outstanding at December 31, 2008.  

Cash and cash equivalents

Held-for-trading

Accounts receivable

Loans and receivables

Accounts payable and accrued liabilities

Other financial liabilities

The Corporation initially measures all its financial instruments at fair value.  Subsequent measurement and treatment of any gain or loss is recorded as follows:

(a)

Held for trading financial assets are measured at fair value at the balance sheet date with any gain or loss recognized immediately in net income.  Interest and dividends earned from held-for-trading assets are also included in income for the period.  

(b)

Loans and receivables are measured at amortized cost using the effective interest method.  Any gains or losses are recognized in net income.  

(c)

Other financial liabilities are measured at amortized cost using the effective interest method.

(d)

Transaction costs that are directly attributable to the issuance of financial assets or liabilities are accounted for as part of the carrying value at inception and are recognized over the term of the assets   or liabilities using the effective interest method.  Any gains or losses are recognized in net income.  

Income Taxes

Income taxes are calculated using the liability method of accounting.  Temporary differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the consolidated balance sheet are used to calculate future income tax assets or liabilities.  Future income tax assets or liabilities are calculated using the tax rates anticipated to apply in the periods that the temporary differences are expected to reverse.  Valuation allowances are established when necessary to reduce future income tax assets arising from loss carry-forwards to amounts expected to be realized.  

4.  Mineral Properties

a)

Burundi Nickel Project

During 1998, Andover entered into a Protocol agreement with the Republic of Burundi acquiring the exclusive rights to the Musongati nickel project.  On February 11, 1999, a Mining Convention setting out Andover's rights and obligations for the completion of a feasibility study on the Musongati nickel project was ratified by the Burundian Parliament.  The Mining Convention requires that Andover complete a feasibility study for the development of a nickel/cobalt processing facility by the end of 2001 or such later date as may be determined by extensions granted by the Minister of Mines. On April 19, 2000, Andover declared force majeure and curtailed its activities in Burundi as a result of the deterioration in security in the region.  Pursuant to the terms of the Mining

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Convention the declaration of force majeure may be in place for up to two years during which time Andover’s obligations are interrupted and the completion of the feasibility study delayed by the period of force majeure.  Pursuant to the terms of the Mining Convention, Andover was required to post a performance bond of US$100,000.

On March 28, 2002 the Corporation announced the withdrawal of the declaration of force majeure and planned to resume its exploration activities, however security deteriorated ahead of the implementation of an agreed cease-fire between various political parties and the Corporation re-imposed the declaration of force majeure in August 2002.  Following improved security conditions, the Corporation lifted force majeure in July 2004 and commenced planning of a drilling program at Musongati.  However, following a massacre outside Bujumbura, the Corporation re-imposed force majeure in August, 2004.  In 2005, following elections, a new government was elected, resulting in improving stability in Burundi.  Consequently, Andover lifted the declaration of force majeure in May 2005 and commenced discussions with the Ministry of Mines regarding a continuation to the term of the Mining Convention and the re-commencement of activities at Musongati.  

On June 21, 2007 Andover, instructed its French legal counsel, Shearman & Sterling LLP to commence arbitral proceedings under the Rules of the International Court of Arbitration of the ICC in Paris against the Government of Burundi to enforce its rights pursuant to the Mining Convention between the parties dated February 11, 1999.  

This decision was taken after extensive, but futile, attempts by Andover to negotiate with the Government of Burundi to continue its work under the Mining Convention, and to obtain the necessary research permit from the Minister of Mines for that purpose.  

Andover’s efforts to resume work under the Mining Convention followed periods of violence in Burundi which delayed the feasibility study work on the Musongati deposits.  These interruptions constituted periods of Force Majeure which, under the Convention, entitle Andover to extensions and a further opportunity to proceed with exploration and feasibility study work.  This was confirmed in December 2005 by an Inter-Ministerial Commission which was established by the Burundian Government to study the continued validity of the Mining Convention.

The Government’s Inter-ministerial Commission comprised members from the offices of the Second Vice President of the Republic, Ministry of Foreign Affairs and Co-Operation, Ministry of Justice, Ministry of Energy and Mines and Ministry of Finance.  The conclusions reached by the Commission were unequivocal and fully supported Andover’s position, as confirmed by the following excerpts from the Commission’s report:

1.

“The current state of affairs is that the Convention is in full force and both parties must accept and fulfill their obligations.  There is no point in the Administration of the Ministry of Energy and Mines   to keep boycotting the Convention and turning its back on Andover.  Instead it is time to restore calm   and revive the relationship with Andover and relaunch the work programme with renewed vigor.    There is no other choice.”

2.

"It would be ill advised for the State to break the Convention as a result of force majeure invocations which appear valid.  Any termination of the Convention must, to the extent possible, strictly follow the   Convention’s provisions in terms of justification and procedure.  The alternative could expose the   State to the risk of paying damages in immense sums that could exceed the value of the mine itself.”

In the face of the clear recommendations of the Inter-Ministerial Commission, the Minister of Mines first delayed taking any appropriate steps under the Mining Convention to enable Andover to resume work.  It has now been revealed that, without notice to Andover, the Government recently proceeded with a second, internal study that has issued recommendations diametrically opposed to those reached by the Inter-Ministerial Commission.  

At a meeting of the Council of Ministers held on June 14, 2007, the Minister of Mines presented the findings of the internal study, and recommended termination of the Mining Convention.  The minutes of the meeting of the Council of Ministers make no reference to the December 2005 report of the Inter-Ministerial Commission or to the fact that the conclusions of the more recent, internal study flatly contradict the Commission’s earlier recommendations.  In this context, with partial information, it appears that the Council of Ministers was persuaded to accept the recommendations of the Minister of Mines.

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Andover notes that there is no proper basis for the purported termination of the Mining Convention and that the Minister’s recent conduct simply constitutes a further breach of the Mining Convention.  Andover intends to prosecute its claims in arbitration vigorously.  It shall seek declaratory relief confirming its rights under the Mining Convention and pursue claims for damages as anticipated by the Government itself in the Inter-ministerial Commission report.

Subsequent to December 31, 2008, the Corporation was advised that the Government of Burundi had awarded the rights to the Musongati deposits to a third party.  While the Corporation believes that the award of the mineral rights for Musongati to a third party is a contravention of the terms of the Mining Convention and a breach of the of the procedures applicable to arbitral proceedings at the ICC, it has determined not to pursue the arbitration proceedings at this time due to the poor prospects of being able to realize any meaningful potential damages award.  Further, with the significant decline in commodity prices, notably nickel, and the recent closing down of a major nickel laterite project in Australia, the outlook for nickel laterite projects is poor.  

b)

Lac Panache - Sudbury

In April 2005, the Corporation entered into an agreement whereby it could earn 100% of the Lac Panache Project through staged cash payments totalling $300,000 and incurring expenditures over three years totalling $455,000.  On production the vendor would retain a 3% net smelter return (“NSR”).  The Corporation’s annual cash payment and work expenditure commitments were as follows:  

Cash Payments:	2005	$ 40,000	Work Expenditures:	by April 8, 2006	$ 65,000
	2006	80,000		8, 2007	130,000
	2007	120,000		8, 2008	260,000
	2008	60,000			-
		$ 300,000			$ 455,000

On making cash payments of $300,000 and incurring $455,000 in exploration expenditures the Corporation would have exercised its option to acquire the Lac Panache properties, subject to the 3% NSR.  The Corporation had the right to purchase 2% of the NSR for $3 million and had a right of first refusal to purchase the remaining 1%.  

In November, 2007, the Corporation decided not to exercise its options over the Lac Panache Project in Sudbury and terminated the Agreement.  

c)

Fish Creek – Sudbury

In early April, 2006 the Corporation entered into an agreement to acquire the Fish Creek property in Nairn Township, 50km southwest of Sudbury.  Covering 2.88 km2 in area, the property consists of 2 claims containing a total of 18 claims units each 400m by 400m in area.  The Corporation could earn 100% of the project through staged cash payments totalling $100,000 and completing staged work commitments over three years of $21,600.  On production the vendor would retain a 3% NSR.  

Cash Payments:

Work Expenditure Commitments:

2006	$ 20,000	by April 2006	$ 7,200
2007	25,000	2007	7,200
2008	35,000	2008	7,200
2009	20,000
	$ 100,000		$ 21,600

In November, 2007, the Corporation decided not to exercise its options over the Fish Creek Project in Sudbury and terminated the Agreement.  

d)

Copper Cliff - Sudbury

On May 24, 2007, the Corporation entered into an agreement whereby it had an option to acquire a 100% interest, subject to a 3% NSR, in 16 mineral claims, covering 29.44 sq. kms in Eden Township, Sudbury, Ontario in Canada.  The Copper Cliff property is believed to cover a portion of the southern extension of the Copper Cliff Offset dike.

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The terms of the agreement were that the Corporation would incur staged expenditures totalling $494,600 over three years with a minimum expenditure of $78,200 in the first year.  In addition, the Corporation would make staged cash payments totalling $313,200 and issue 1 million fully paid shares over the three years.  On execution of the agreement, the Corporation made a cash payment of $33,200 and issued 250,000 fully paid shares to the vendor.  

In November, 2007, the Corporation decided not to exercise its options over the Copper Cliff Project in Sudbury and terminated the Agreement.  

5.  Project Assessment Expenditures

Details of Project Assessment Expenditures during the years ended December 31, 2008, 2007 and 2006 are as follows:  

	2008	2007	2006
Lac Panache, Fish Creek and Copper Cliff Projects
Consulting	$ 1,444	$ 51,761	$ 4,755
Travel and Accommodation	-	-	-
Geophysics & Assays	-	-	54,343
Option and Claim Fees	-	193,026	100,000
Contractor, Equipment and Labor	-	-	-
	1,444	244,787	159,098
Other Projects (Zambia and South Africa)
Consulting and Assessment	15,536	450,709	140,151
Travel, Accommodation and other	39,609	293,618	8,932
Expenses Recovered	-	-	(79,535)
	55,146	744,327*	69,548
Total	$ 56,589	$ 989,114	$ 228,646

*

Includes expenditures on projects that are currently the subject of negotiation for possible acquisition, travel related to attempts   to advance the Burundi Nickel project and expenditures on a number of projects that were reviewed but which did not meet the Corporation’s criteria for ongoing exploration.  

6.  Capital Stock

a)

Authorised Capital Stock

The Corporation is authorised to issue an unlimited number of common shares without par value.

Issued and Outstanding

	Number of			Number of
	Shares	Amount		Shares	Amount
Total Issued – December 31, 2007	99,919,105	46,991,751	Total Issued – December 31, 2006	95,969,105	$ 44,075,384
Issued during the 2008 year:	-	-	Issued during the 2007 year:
Private Placement	-	-	Private Placement	3,200,000	2,747,248
For Mineral Property	-	-	For Mineral Property	250,000	94,839
Exercise of Stock Options	-	-	Exercise of Stock Options	500,000	43,297
Contributed Surplus Allocated	-	-	Contributed Surplus Allocated	-	30,953
Total Issued – December 31, 2008	99,919,105	46,991,751	Total Issued – December 31, 2007	99,919,105	$ 46,991,721

Contributed Surplus

	2008	2007
Balance, beginning of year	$ 1,264,482	$ 439,251
Grant of stock options – Stock based compensation	1,748,591	856,164
Contributed Surplus allocated	-	(30,933)
Balance, end of year	$ 3,013,073	$ 1,264,482

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Stock Options

The Corporation grants stock options to employees as determined by the Corporation's Board of Directors.  Stock options granted to the directors of the Corporation are granted subject to approval of the Corporation's shareholders.  All stock options vested on the date of approval.

Compensation expense of $1,748,591 recognised in 2008 (2007: $856,164; 2006: $439,251) on stock options granted was calculated using the Black Scholes model based on the following assumptions with a corresponding charge to contributed surplus:  

Risk free interest rate

2.8%

Expected life of stock options

5 years

Expected volatility

1.50 - 1.55

Expected dividend

Nil

Upon the exercise of the option, consideration received together with the amount previously recognized in contributed surplus is recorded as an increase to share capital.  

The status of stock options granted to employees and directors as at December 31, 2008 and 2007 and the changes during the periods ended on those dates is presented below:

		December 31, 2008		December 31, 2007
	Number of	Weighted	Number of	Weighted
	Options	Average	Options	Average
		Exercise Price		Exercise Price
Options outstanding and exercisable
- Beginning of Year	7,850,000	$0.21	7,100,000	$0.20
Granted	6,500,000	$0.30	2,750,000	$0.43
Cancelled/expired	-		(1,500,000)	$0.09
Exercised	-		(500,000)	$0.09
Options outstanding  and exercisable
- End of Year	14,350,000	$0.25	7,850,000	$0.21

Details of Options Outstanding	Exercise Price	Remaining Life
5,100,000	$ 0.09	2.4 years
2,750,000	$ 0.43	3.4 years
6,500,000	$ 0.30	4.4 years

b)

Escrow Shares

At December 31, 2008 there were no common shares of the Corporation subject to escrow.  

7.  Related Party Transactions

During the year ended December 31, 2008: $627,176 (2007: $381,879, 2006: $457,305) was paid to four directors of the Corporation, or to companies controlled by them, for director’s fees, management consulting services and project management and assessment services.  Generally management fees are paid pursuant to agreements entered into between the Corporation and the related party.

In addition $133,968 (2007: $98,265, 2006: $193,134) was paid to two related companies; $89,444 to an Australian company and $44,524 to a Canadian company, each controlled by a director of the Corporation for the provision of office facilities and personnel in Australia and Canada respectively.  These services are reimbursed at cost, which approximate fair value.  At December 31, 2008, management and consulting fees and directors’ fees payable amounted to $52,393 (2007: $73,045, 2006: $48,024) and are included in accounts payable and accrued liabilities.

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These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.  

8.  Management of Capital

The Corporation’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to pursue the acquisition and potential development of mineral properties and to maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk.

In the management of capital, the Corporation includes the components of shareholders’ equity as well as cash and cash equivalents.

The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.  To maintain or adjust its capital structure, the Corporation may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents.

In order to facilitate the management of its capital requirements, the Corporation prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.  The annual and updated budgets are approved by the Board of Directors.

In order to maximize ongoing development efforts, the Corporation does not pay out dividends.

The Corporation’s investment policy is to invest its cash in highly liquid short-term interest-bearing investments with initial maturity terms of 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.

The Corporation expects that its current capital resources will be sufficient to carry out its exploration plans and operations through its current operating period.

9.  Financial Instruments

a)

Fair Value

The fair value of cash and cash equivalents; accounts receivable and accounts payable approximate their carrying amounts.  The Corporation is not exposed to significant interest rate risk due to the short term maturity of its monetary current assets and current liabilities.  The Corporation maintains substantial cash balances in Australian dollars and as such is subject to substantial currency risk due to fluctuating exchange rates between the Australian and Canadian dollars.  The Corporation does not engage in any hedging activities to mitigate such currency risk.  

The fair value of financial instruments at December 31, 2008 and December 31, 2007 is summarized as follows:

	December 31, 2008		December 31, 2007
	Carrying amount	Fair value	Carrying amount	Fair value
Financial Assets
Held for trading
Cash and cash equivalents	$ 2,091,150	$ 2,091,150	$ 3,341,050	$ 3,341,050
Accounts receivable	18,054	18,054	6,916	6,916
Financial Liabilities
Accounts payable and accrued liabilities	$ 140,343	$ 140,343	$ 172,622	$ 172,622

Fair value estimates are made at the balance sheet date, based on relevant market information and other information about the financial instruments.

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b)

Financial Risk Management

The Corporation’s activities potentially expose it to a variety of financial risks, including credit risk, foreign exchange risk (currency), liquidity and interest rate risk.

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.  Financial instruments that potentially subject the Corporation to credit risk consist of cash and cash equivalents and accounts receivable.  The Corporation deposits the majority of its cash and cash equivalents with high credit quality financial institutions in Canada and Australia.  

Currency risk

The Corporation operates in a number of countries, including Canada and Australia and is therefore exposed to foreign exchange risk arising from transactions denominated in a foreign currency.

The Corporation’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are held in several currencies (mainly Australian dollars) and are therefore subject to fluctuation against the Canadian dollar.

The Corporation had the following balances in foreign currency as at December 31, 2008:

	Australian Dollar	Euro
Cash and cash equivalents	1,986,291	-
Accounts receivable	9,369	-
Accounts payable and accrued liabilities	(100,400)	(6,800)
Net balance	1,895,260	(6,800)
Equivalent in Canadian dollars	$1,620,447	$ (11,635)

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments.  The Corporation manages liquidity by maintaining adequate cash and cash equivalent balances.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates.  Current financial assets and financial liabilities are generally not exposed to interest rate risk because of their short-term maturity.  

10.  Income Taxes

A potential future income tax asset of approximately $2,764,000 arises from the following loss carry forwards (for Canadian Tax purposes):   

a)  Non capital loss carry forwards	$ 9,411,000
b)  Other deductible tax amounts	1,219,000
	$ 10,630,000

The non-capital loss carry forwards can be offset against income for Canadian purposes in future years and expire as follows:

2009	1,506,000
2010	1,505,000
2011	2,088,000
2015	1,067,000
2026	999,000
2027	1,449,000
2028	797,000
Total	$ 9,411,000

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The Corporation does not consider it more likely than not that a future tax asset will be recovered.  The Corporation has reduced the value of the potential future income tax asset to $Nil through the application of a valuation allowance of $2,764,000as the Corporation does not have any current source of income to which the tax losses can be applied.

The Corporation’s statutory tax rate of 31% (2007-34.1%) has been reduced to an effective rate of nil% due to losses for which no tax benefit has been recognized.

11.  Segmented Information

The Corporation operates in one business segment, being the acquisition and exploration of mineral properties.  The Corporation maintains corporate offices in Canada and Australia with each jurisdiction reflected as a segment.  

		2008
	Canada	Australia	Total
Current Assets	$    402,928	$ 1,706,276	$      2,109,204
Office equipment and furniture	-	9,578	9,578
	$    402,928	$ 1,715,854	$      2,118,782
		2007
	Canada	Australia	Total
Current Assets	$ 1,055,800	$ 2,292,166	$      3,347,966
Office equipment and furniture	-	13,723	13,723
	$ 1,055,800	$ 2,305,889	$      3,361,689

The Corporation’s sole operating segment is the exploration for mineral resources.

12.  Differences between Canadian and US Generally Accepted Accounting Principles ("GAAP”)

The Corporation’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada.  There are no material measurement differences between GAAP in Canada and the United States that would have had an effect on these financial statements.  

Project Assessment Expenditures (Exploration Expenses)

For US GAAP purposes the Corporation expenses exploration costs as incurred.  When proven and probable reserves are determined for a property, subsequent development costs of the property will be capitalized.  The capitalized costs of such properties will then be measured, on a periodic basis for recoverability of carrying values.  Acquisition costs of mineral properties are capitalized for US GAAP purposes.

Stock Based Compensation

For US GAAP purposes, the Corporation has adopted the fair value based method of accounting for stock based compensation in accordance with FASB 123(R).

Recent Pronouncements

In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Tax Positions, an Interpretation of FASB Statement No. 109” (“FIN 48”).  FIN 48 addresses the recognition and measurement of all tax positions.  The recognition process involves determining whether it is more likely than not that a tax position would be sustained on audit based solely on its technical merits.  The amount of benefit recognized in the financial statements is the maximum amount which is more likely than not to be realized based on a cumulative probability approach.  FIN 48 is effective for the Corporation on December 1, 2007.  The Corporation finds that FIN 48 has no material impact on its consolidated financial statements.

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In September 2006, the FASB issued FAS Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods of those fiscal years. In February 2008, the FASB released a FASB Staff Position (FSP FAS 157-2 – Effective Date of FASB Statement No. 157) which delays the effective date of FAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. In October 2008, the FASB released a Staff Position (FSP FAS 157-3 – Determining the fair value of a financial asset when the market for that asset is not active) which clarifies the application of FAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that asset is not active. The adoption of FAS 157 for financial assets and liabilities had no impact on the Corporation’s consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued FAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” including an amendment of FASB Statement No. 115 (“FAS 159”).  FAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities o be carried at fair value. The objective of FAS 159 is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. Under FAS 159 a company may elect to use fair value to measure eligible items at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Eligible items include, but are not limited to, accounts and loans receivab le, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and firm commitments. The Corporation has not elected to use the fair value option as of December 31, 2008.

In December 2007, FASB issued Statement 141 (revised), Business Combinations.  Statement 141R establishes principles and requirements of the acquisition method for business combinations and related disclosures.  This statement is effective for fiscal years beginning on or after December 15, 2008.  We do not expect the adoption of this statement to have a material impact on our results of operations or financial position.  

In December 2007, FASB issued Statement 160, Non-controlling Interests In Consolidated Financial Statements, an amendment of ARB No. 51.  This statement clarifies that a non-controlling interest in a subsidiary should be reported as equity in the consolidated financial statements.  This statement is effective for fiscal years beginning on or after December 15, 2008.  The Corporation does not expect the adoption of this statement to have a material impact on our results of operations or financial position.  

In March 2008, FASB issued Statement 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement 133.  The statement requires qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of gains and losses on derivative contracts and details of credit-risk-related contingent features in their hedged position.  The statement also requires the disclosure of the location and amounts of derivative instruments in the financial statements.  This statement is effective for fiscal years and interim periods beginning on or after November 15, 2008.  The Corporation does not expect the adoption of this statement to materially impact our results of operations or financial position.  

In April 2008, the FASB issued FASB Staff Position 142-3, Determination of the Useful Life of Intangible Assets (FSB 142-3).  FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS Statement No 142.  “Goodwill and Other Intangible Assets” (SFAS 142).  The objective of FSP 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R). “Business Combinations”, and other U.S. generally accepted accounting principles.  FSP 142-3 will be effective beginning in fiscal year 2010.  The Corporation is currently evaluating the impact that FSP 142-3 will have on its financial statements and disclosures.  

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Item 18 – Financial Statements

The Registrant has elected to provide financial statements pursuant to “Item 17 – Financial Statements”.

Item 19 – Exhibits

Exhibit No.	Name of Exhibit
1.1(1)	Certificate and Articles of Incorporation (No. 20340926) — Alberta Business Corporations Act (December 17, 1985) — Goldcap Inc.
1.2(1)	Certificate and Articles of Amendment (July 2, 1987) — Goldcap Inc.
1.3(1)	Certificate of Discontinuation — Alberta Business Corporations Act (September 24, 1987) — Goldcap Inc.
1.4(1)	Certificate and Articles of Continuance (No. 222001-6) — Canada Business Corporations Act (September 24, 1987) — Goldcap Inc.
1.5(1)	Certificate of Extra-Provincial Registration — Province of British Columbia (March 12, 1990) — Goldcap Inc.
1.6(1)	Certificate and Articles of Amendment — Canada Business Corporations Act (March 17, 1994) — Goldcap Inc.
1.7(1)	Certificate and Articles of Amendment including Name Change (October 26, 1994) — Durandel Minerals Corporation
1.8(1)	Certificate and Articles of Amendment (November 28, 1995) — Durandel Minerals Corporation
1.9(1)	Certificate and Articles of Amendment including Name Change (April 22, 1996) — Calliope Metals Corporation
1.10(1)	Certificate and Articles of Continuance (No. 25946) — Yukon Business Corporations Act (June 17, 1997) — Calliope Metals Corporation
1.11(2)	Certificate and Articles of Amendment including Name Change (May 10, 1999) — Argosy Minerals Inc
1.12(3)	Amendment to General By-Laws (May 25, 2000) - Argosy Minerals Inc. Section 7:13 “Show of Hands”
1.13(1)	General By-Laws (January 6, 1987) — Goldcap Inc.
1.14(1)	General By-Laws (September 12, 1995) — Durandel Minerals Corporation
1.15(1)	General By-Laws (April 30, 1997) — Calliope Metals Corporation
1.16	Notice of Discontinuance from Yukon – Calliope Metals (Holdings) Ltd.
1.17	Notice of Discontinuance from Yukon – Argosy Mining Corp.
1.18	Notice of Discontinuance from Yukon – Argosy Minerals Inc.
1.19	Certificate of Continuance to BC – Calliope Metals (Holdings) Ltd.
1.20	Certificate of Continuance to BC – Argosy Mining Corp.
1.21	Certificate of Continuance to BC – Argosy Minerals Inc.
1.22	Certificate of Amalgamation of Calliope Metals (Holdings) Ltd. and Argosy Mining Corp under Argosy Minerals Inc.
1.23	General By-Laws (May 26, 2005) - Argosy Minerals Inc.
4.12(5)	Amended Management Agreement with Peninsular Services Pty Ltd. dated February 2006
8.1	List of Subsidiaries
12.1	Section 302 Certification
12.2	Section 302 Certification
13.1	Section 906 Certification
13.2	Section 906 Certification

(1)

Incorporated by reference to Form 20-F Amendment No. 2 filed January 8, 1998.

(2)

Incorporated by reference to Form 20-F filed June 29, 2001.

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SIGNATURES

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

ARGOSY MINERALS INC.

      

Dated:

March 30, 2009

By:

Peter H. Lloyd – Chief Executive Officer

(principal executive officer)

80

Exhibit 8.1

List of Subsidiaries

Andover Resources NL

- Australia

Argosy Mining Corporation Pty Ltd.

- South Africa

Argosy Energy Zambia Ltd.

- Zambia

81

Exhibit 12.1

CERTIFICATION

I, Peter H. Lloyd, certify that:

1.

I have reviewed this annual report on Form 20-F of Argosy Minerals Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.

The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.

The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and  

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

                                                                                                           

Date:  _ March 30, 2009_____________________

________________________________

Peter H. Lloyd, Chief Executive Officer

(Principal Executive Officer)

82

Exhibit 12.2

CERTIFICATION

I, Cecil R. Bond, certify that:

1.

I have reviewed this annual report on Form 20-F of Argosy Minerals Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.

The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.

The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and  

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

                                                                                                                 

Date:  _ _March 30, 2009  ________________

________________________________

Cecil R. Bond, Director

(Principal Financial Officer)

83

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Argosy Minerals Inc. (the “Company”) on Form 20-F for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter H. Lloyd, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

                                                                                                             

Date:

__March 30, 2009______________     

_________________________________

Peter H. Lloyd, Chief Executive Officer

(Principal Executive Officer)

84

Exhibit 13.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Argosy Minerals Inc. (the “Company”) on Form 20-F for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cecil R. Bond, Director and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

                                                                                                                 

Date:

_March 30, 2009_________

_________________________________________

Cecil R. Bond, Principal Financial Officer

85