Max Resource 20F 2006 Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

ÿ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 31, 2005

ÿ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _______________

Commission file number 000-30780

MAX Resource Corp.

(Exact name of Registrant as specified in its charter)

Alberta, Canada

(Jurisdiction of incorporation or organization)

400 Burrard Street, Suite 1400, Vancouver, British Columbia V6C 3G2

(Address of principal executive offices)

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

Title of each class Name of each exchange on which registered

N/A N/A

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 issuer's classes of capital or common stock as of the close of the period covered by the annual report:

9,943,241 common shares without par value

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. X Yes ÿ No

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

X Item 17 ÿ Item 18

MAX Resource Corp.

Form 20-F Annual Report

Table of Contents

Part I

Page

Item 1.

Identity of Directors, Senior Management and Advisers

Item 2.

Offer Statistics and Expected Timetable

Item 3.

Key Information

Item 4.

Information on the Company

Item 5.

Operating and Financial Review and Prospects

Item 6.

Directors, Senior Management and Employees

Item 7.

Major Shareholders and Related Party

Transactions

Item 8.

Financial Information

Item 9.

The Offer and Listing

Item 10.

Additional Information

Item 11.

Quantitative and Qualitative

Disclosures about Market Risk

Item 12.

Description of Securities other than Equity Securities

Part II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

Item 14.

Material Modifications to the Rights of Securities Holders

and Use of Proceeds

Item 15.

Controls and Procedures

Item 16A.

Audit Committee Financial Expert

Part III

Item 17.

Financial Statements

Item 18.

Financial Statements

Item 19.

Exhibits

FORWARD-LOOKING STATEMENTS

We caution you that certain important factors (including without limitation those set forth in this Form 20-F) may affect our actual results and could cause such results to differ materially from any forward-looking statements that may be deemed to have been made in this Form 20-F annual report, or that are otherwise made by or on our behalf. For this purpose, any statements contained in this annual report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “except,” “believe,” “anticipate,” “intend,” “could,” estimate,” or “continue,” or the negative or other variations of comparable terminology, are intended to identify forward-looking statements.

Readers should consult the “Risk Factors” contained in this report on Form 20-F to familiarize themselves with the risks inherent in our business.

PART I

Item 1.

Identity of Directors, Senior Management and Advisers

Not applicable

Item 2.

Offer Statistics and Expected Timetable

Not applicable

Item 3.

Key Information

3.A

Selected Financial Data

The following tables set forth our financial data for the last five years ended December 31. We derived all figures from our financial statements, which were examined by our independent auditor. This information should be read in conjunction with our financial statements included in this annual report.

Our financial statements included in this annual report and the table set forth below, have been prepared in accordance with accounting principles generally accepted in Canada. A reconciliation to United States generally accepted accounting principles is included in Note 9 to our audited financial statements. All amounts are expressed in Canadian dollars.

Selected Financial Data

(CDN$ in 000, except per share data)

	Year Ended 12/31/05	Year Ended 12/31/04	Year Ended 12/31/03	Year Ended 12/31/02	Year Ended 12/31/01


Revenue	Nil	Nil	Nil	Nil	$2
Net Income(Loss)Cdn. GAAP	($464)	($209)	($157)	($110)	($282)
Earnings(Loss) Per Share Cdn GAAP	($0.06)	($0.04)	($0.05)	($0.06)	($0.05)

Net Income(Loss) US GAAP	($1,088)	($693)	($355)	($110)	($155)
Earnings (Loss) Per Share US GAAP	($0.14)	($0.13)	($0.10)	($0.12)	($0.03)

Dividends Per Share Cdn GAAP	0	0	0	0	0
Dividends Per Share US GAAP	0	0	0	0	0

Working Capital	$560	($57)	$199	$12	($64)
Mineral Properties Cdn GAAP	$1,305	$682	$199	0	0
Mineral Properties US GAAP	0	0	0	0	0
Long Term Debt Cdn GAAP	0	0	0	0	0

Shareholder’s Equity Cdn GAAP	$1,865	$625	$397	$13	($63)
Shareholders’ Equity US GAAP	(554)	(63)	$193	$6	($69)
Total Assets Cdn GAAP	$1,895	$687	$476	$55	$4
Total Assets US GAAP	$590	$5	$278	$55	$4

In this annual report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars. Since June 1, 1970, the government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the United States dollar. On June 29, 2006, the exchange rate in effect for Canadian dollars exchanged for United States dollars (the US dollars that a Canadian dollar buys) was $0.8961. This exchange rate is based on the noon buying rates in New York City, for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York. For the past five years ended December 31 and for the last six month ends from December 31, 2005 to May 31, 2006, the following exchange rates were in effect for Canadian dollars exchanged for United States dollars (the US dollars that a Canadian dollar buys), calculated in t he same manner as above:

Annual Period

Average

Year Ended Dec 31, 2005

$0.8258

Year ended Dec 31, 2004

$0.7936

Year ended Dec 31, 2003

$0.7194

Year ended Dec 31, 2002

$0.6369

Year ended Dec 31, 2001

$0.645

Monthly Period

Low – High(1)

Month ended Dec 31, 2005

$0.8508 - $0.8751

Month ended Jan 31, 2006

$0.8479 - $0.8731

Month ended Feb 28, 2006

$0.8610 - $0.8809

Month ended Mar 31, 2006

$0.8530 - $0.8850

Month ended Apr 30, 2006

$0.8496 - $0.8959

Month ended May 31, 2006

$0.8869 - $0.9112

(1) High and low figures are given for intra-day, rather than noon, rates

B. Capitalization and Indebtedness

Not Applicable

C. Reasons for the Offer and Use of Proceeds

Not Applicable

Risk Factors

Any investment in our common shares involves a high degree of risk. You should consider carefully the following information before you decide to buy our common shares. If any of the events discussed in the following risk factors actually occurs, our business, financial condition or results of operations would likely suffer. In this case, the market price of our common shares could decline, and you could lose all or part of your investment in our shares. In particular, you should consider carefully the following risk factors:

We have a history of losses.

We have incurred losses in our business operations since inception, and we expect that we will continue to lose money for the foreseeable future. From our incorporation on April 25, 1994 to December 31, 2005, we have incurred losses. Very few junior resource companies ever become profitable and typically incur large losses until they enter production or are able to sell a mineral property to a major resource company. Failure to achieve and maintain profitability may adversely affect the market price of our common shares.

Very few mineral properties are ultimately developed into producing mines.

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Most exploration projects do not result in the discovery of commercially mineable deposits of ore.

Substantial expenditures will be required for us to establish ore reserves through drilling, to develop metallurgical processes, to extract the metal from the ore and to develop the mining and processing facilities and infrastructure at any site chosen for mining.

Although substantial benefits may be derived from the discovery of a major mineral deposit, no assurance can be given that we will discover minerals in sufficient quantities to justify commercial operations or that we can obtain the funds required for development on a timely basis. The economics of developing precious and base metal mineral properties is affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of processing equipment and other factors such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.

If we do not obtain additional financing, our business will fail.

Our current operating funds are less than necessary to acquire an interest in, and to conduct exploration on, a mineral property, and therefore we will need to obtain additional financing in order to complete our business plan. As at December 31, 2005, we had cash on hand of $565,725. Our business plan calls for significant expenses in connection with the acquisition and exploration of mineral claims. We will require additional financing in order to complete these activities. In addition, we will require additional financing to sustain our business operations if we are not successful in earning revenues once we complete exploration on any mineral property we acquire. We do not currently have any arrangements for financing and we can provide no assurance to investors that we will be able to find such financing if required.

We believe the only realistic source of future funds presently available to us is through the sale of equity capital. Any sale of share capital will result in dilution to existing shareholders.

Mineral exploration involves a high degree of risk against which we are not currently insured.

Unusual or unexpected rock formations, formation pressures, fires, power outages, labour disruptions, flooding, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are risks involved in the operation of mines and the conduct of exploration programs. We have relied on and will continue to rely upon consultants and others for exploration expertise.

It is not always possible to fully insure against such risks and we may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of our common stock.

We may require permits and licenses that we may not be able to obtain.

Our operations may require licenses and permits from various governmental authorities. There can be no assurance that we will be able to obtain all necessary licenses and permits that may be required to conduct exploration, development and mining operations at any projects we acquire.

Our properties may not have been examined in detail by a qualified mining engineer or geologist.

Our properties are in an exploratory stage. As a result, they may not have been examined in detail by a qualified mining engineer or geologist who could quantify exactly what their economic potential or value, if any, is.

Metal prices fluctuate widely.

Factors beyond our control may affect the marketability of any resource we discover. Metal prices have fluctuated widely, particularly in recent years. The effect of these factors cannot accurately be predicted.

The resource industry is very competitive.

The resource industry is intensely competitive in all its phases. We compete with many companies possessing greater financial resources and technical facilities than us for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

Our operations may be adversely affected by environmental regulations.

Our operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, release or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner, which means that standards, enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for us and our directors, officers and consultants. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of our operations. We do not maintain environmental liability insurance.

The trading market for our shares is not always liquid.

Although our shares trade on the TSX Venture Exchange, the Frankfurt Stock Exchange and the NASD OTC Bulletin Board, the volume of shares traded at any one time can be limited, and, as a result, there may not be a liquid trading market for our shares.

Our securities may be subject to penny stock regulation.

Our stock is subject to “penny stock” rules as defined in 1934 Securities and Exchange Act Rules. The Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Our common shares are subject to these penny stock rules. Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities. Penny stocks generally are equity securities with a price of less than U.S. $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common shares in the United States and shareholders may find it more difficult to sell their shares.

Item 4. Information on the Company

4.A

History and Developmentof the Company

We were incorporated pursuant to theBusiness Corporations Act in the Province of Alberta, Canada by registration of our Memorandum and Articles of Association and the issuance by the Registrar of Companies of a Certificate of Incorporation on April 25, 1994.

At the Annual General Meeting of Vancan Capital Corp. held on March 31, 2004 the shareholders approved the change of the Company’s name to its present name with this name change being effected on May 14, 2004.

The trading symbol for the Company on the TSX Venture Exchange is “MXR” with the symbol on the OTC Bulletin Board being “MXROF”. The trading symbol on the Frankfurt Exchange is “M1D”.

We are a reporting issuer in the United States and our annual report and 6K filings can be found on the SEC’s EDGAR system atwww.sec.gov. We are a reporting issuer in certain Canadian jurisdictions and our required disclosure filings for Canada can be found at www.sedar.com.

Our head office is located at 400 Burrard Street, Suite 1400, Vancouver, British Columbia, Canada, V6C 3G2. Our telephone number is (604) 643-1719.

We have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets.

We are engaged in the business of acquiring and exploring resource properties.

The Gold Hill Option Agreement:

On May 17, 2004 we entered into an Option Agreement with Zazu Exploration, Inc. (“Zazu”) to acquire its option to acquire a 90% interest, or “ownership”, in the Gold Hill Property near Cantwell, Alaska. Zazu Exploration, Inc. is a privately-held Texas corporation, which holds a Lease on the Gold Hill Claims from GCO Minerals Company.

Under the terms of the Option Agreement, we paid $63,691 (US$48,200) and issued 100,000 shares valued at $47,000 and 100,000 warrants exercisable at $0.47 per share for a two year period. In order to maintain the Option, the Company issued an additional 200,000 shares by January 1, 2005 (issued at a value of $74,000) and issued a further 200,000 shares January 1, 2006. With the issuance of the 200,000 shares, we have exercised the option to assume Zazu’s interest and have now acquired the option to earn a 90% interest in the Gold Hill Property from GCO Minerals, as described below.

Under the terms of the Option Agreement, we have assumed all of Zazu’s obligations, including the obligation to make annual payments to maintain the claims comprising the Gold Hill Property, under their lease with GCO Minerals Corp. (“GCO”) which include the following minimum work commitments and Advance Royalty Payments (in U.S. funds):

Year

Work Commitment

Advance Royalty

2004

$100,000 (incurred)

$ 5,000 (paid)

2005

150,000

(incurred)

15,000 (paid)

2006

250,000

25,000

2007

250,000

25,000

2008

500,000

50,000

2009

500,000

75,000

2010

500,000

100,000

Assuming we exercise the option, our 90% interest will be subject to a net smelter return (“NSR”) and back-in rights to GCO that would allow GCO to buy back up to a 30% interest in the Gold Hill claims by paying us the lesser of US$5,000,000 or 300% of all costs incurred to completion of a Feasibility Report. The NSR will fluctuate from 1.5% to 4.0% depending on the price of gold. In addition, we will pay to Zazu an additional NSR of 1%.

The Company has fulfilled the work commitment for 2005. No work has been performed to date in 2006 other than filing for drill permits for Gold Hill and core storage, at a total cost of $2,260. We had scheduled to begin drilling on Gold Hill on June 22, 2006 but the drill company that we had contracted with had to terminate the contract due to the break down of their drill rig and their inability to acquire a replacement machine. We are still trying to secure a drill rig so that we may undertake drilling this year, but have not been successful to date.

The Target Claims Agreements:

By agreement dated April 16, 2003, we obtained the right to acquire a 50% interest or “ownership” in a mineral claim comprising 1,781.9 acres located in the Longtom Lake area of the Northwest Territories (the “Target 1 Claim”). We acquired our 50% interest by paying $15,000 and issuing 200,000 common shares at a price of $0.38 per share.

By agreement dated January 15, 2003 we entered into an agreement to acquire a 50% interest or “ownership” in a mineral claim located east of Hottah Lake in the Northwest Territories of Northern Canada (the “Target 2 Claim”). We acquired our 50% interest in the claim by making cash payments totalling $15,000, issuing 200,000 common shares at a price of $0.20 each and agreeing to incur a minimum of $100,000 (since reduced to $50,000, which amount has already been incurred) in exploration expenditures on the Claim in stages by December 31, 2004.

Both of the Target Claims Agreements provide that we will enter into a single purpose joint venture agreement with David G. Lorne, or whoever he assigns his 50% interest to, to further explore and develop the Target Claims once we complete the exploration expenditure of our interest in each claim. Mr. Lorne has sold his 50% interest in the Target 1 and Target 2 claim to Alberta Star Development Corp., a Canadian company which trades on the TSX-Venture Exchange as we do.

During the year ended December 31, 2005, the Company elected to write-off the Target 2 claim as it does not intend to perform further exploration and development work on that claim. The Company has no further obligations under its agreement regarding the Target 2 claim.

MacInnis Lake Uranium Project

The Company, subsequent to the year ended December 31, 2004, entered into an option agreement (the “Option Agreement”) with Alberta Star Development Corp. (“Alberta Star”) to acquire up to a 50% interest or “ownership” in the MacInnis Lake Uranium Property. The Option Agreement was dated April 1, 2005.

The terms of the Option Agreement with Alberta Star, which was closed on April 19, 2005, call for MAX to earn the 50% interest by:

(i)

making cash payments totaling $30,000 (paid);paid

(ii)

issuing to Alberta Star of 200,000 shares of MAX (which have been issued); and

(iii)

performing exploratory work commitments totalling $2,000,000 over a five year period (being $750,000 in the first year; $250,000 in the second year; $250,000 in the third year; $250,000 in the fourth year and $500,000 in the fifth and final year).

The terms of the Option Agreement call for MAX to earn a 25% interest in the MacInnis Lake project upon making the payments in (i) and (ii) above together with the first $1,000,000 in work commitments. MAX earns a further 25% interest when it completes the $2,000,000 in work commitments.

The MacInnis Lake property is subject to a 2% NSR royalty. Upon full exercise of the Option, the parties agree to enter into a joint venture agreement. Alberta Star will act as Operator on the MacInnis Lake project for the term of the Option Agreement.

The Option to earn an interest in the MacInnis Lake project will complement MAX’s current property holdings in the Northwest Territories, the Target 1 Claim, also held jointly with Alberta Star.

As of June 27, 2006, we have spent $243,515 on exploration of the MacInnis Lake project, primarily comprised of an airborne geophysical survey flown over the property in early June, 2005. As a result, no interest has yet been earned in the property.

Diamond Peak Property (Nevada)

On May 9, 2006, we announced that we had entered into an Option Agreement to acquire a 100 % interest in the FMC claims in Eureka County, Nevada, the “Diamond Peak Property”, from The Wendt Family Trust of Reno, Nevada.

The terms of the Option Agreement call for the issuance to the Wendt Family Trust of 100,000 shares of the Company and the following rental payments (in U.S funds):

Date

Payment Amount

Upon execution of this Agreement

$25,000

First anniversary of Effective Date

$35,000

Second anniversary of Effective Date

$45,000

Each anniversary thereafter

$50,000

These rental payments shall not be credited against the Royalty or the Purchase Price of US$300,000. If the Option to Purchase the Property is exercised during the term of the rental payments, no further property rental payments will be due.

The Diamond Peak property is subject to a 3% NSR royalty. Upon full exercise of the Option, the Company will own 100% of the project.

The Wendt Family Trust is controlled by Clancy J. Wendt, the Vice President of Exploration for MAX. Our agreement regarding the Diamond Peak Property is subject to its acceptance for filing with the TSX-Venture Exchange. As of the date of this report on Form 20-F, final regulatory acceptance has not been received.

The Company, on May 15, 2006, entered into a mineral property option agreement with Kokanee Placer Ltd. (“Kokanee”), a British Columbia company, whereby it granted to Kokanee the right to acquire up to a 51% interest in the Diamond Peak Property.

Kokanee Placer Ltd. intends to exchange its shares for shares of a company, to be named “Kokanee Minerals” which will be listed on the TSX-Venture Exchange. There can be no assurance given that Kokanee Placer Ltd. will succeed in such a reverse merger or listing or that “Kokanee Minerals” will secure such a listing.

To maintain this agreement in good standing, Kokanee has agreed to make the following annual payments and

share issuances to the Company:

On the first anniversary date of this Agreement:

(a)

Issue 200,000 shares of Kokanee Minerals to the Company; and

(b)

Either:

-pay US$35,000 to the Company; or

-issue to the Company either 200,000 common shares of Kokanee Minerals or

that number of shares of Kokanee Minerals which are valued at US$35,000

(calculated at the 30 day trading average just prior to issuance), whichever is

greater.

ii)

On the second anniversary date of this Agreement:

(a)

Issue 300,000 shares of Kokanee Minerals to the Company; and

(b)

Either:

-pay US$45,000 to the Company; or

-issue to the Company either 300,000 common shares of Kokanee Minerals or

that number of shares of Kokanee Minerals which are valued at US$45,000

(calculated at the 30 day trading average just prior to issuance), whichever is

greater.

iii)

On the third anniversary date of this Agreement:

Either:

-pay US$100,000 to the Company; or

-issue to the Company either 600,000 common shares of Kokanee Minerals or that

number of shares of Kokanee Minerals which are valued at US$100,000 (calculated at the

30 day trading average just prior to issuance), whichever is greater.

iv)

On commencement of commercial production, issue 1,000,000 shares of Kokanee Minerals to the Company

The Option granted to Kokanee is for a term of three (3) years from the date of this Agreement, subject

to the following yearly mineral exploration commitments on the Diamond Peak Property:

$100,000 to be spent by Kokanee in the first year of the agreement;

ii)

$300,000 in the second year, and

iii)

$600,000 in the third year.

To date, the Company has not made any expenditures on the Diamond Peak Property. However, Kokanee is presently engaged in a program of exploration on the Diamond Peak Property in order to satisfy their first year obligation of $100,000 in expenditures. This initial exploration program began on June 6^th, 2006 and includes an induced polarization survey over 4 kilometers of strike length.

Thomas Mountain Project (Utah)

On August 11, 2005 the Company entered into an Option Agreement with Energex, LLC to acquire a 100 % interest in the PPCO claims at Thomas Mountain in Juab County, Utah. Energex, LLC is a Nevada corporation wholly-owned by Clancy J. Wendt, the Vice President of Exploration for MAX.

The terms of the Option Agreement with Energex call for:

(i)

An initial cash payment to Energex of US$5,000 (which has been paid),

(ii)

Annual maintenance payments to Energex of US$10,000 commencing in the second year and escalating by $10,000 each year thereafter to a maximum of US$50,000 per year; and

(iii)

Work commitments totalling $1,000,000 over a four year period (being $100,000 in the first year; $200,000 in the second year; $300,000 in the third year and $400,000 in the fourth year).

MAX will earn a 100% interest in the PPCO claims by making the initial cash payment of $5,000 (which has been made) and satisfying the work commitment of $1,000,000, subject to a 2% royalty payable to Energex.

The Company may, at any time, purchase the Thomas Mountain Project claims from Energex LLC for a purchase price of $300,000. If it chooses to do so, no further rental payments will be due to Energex LLC.

C de Baca Project (New Mexico)

In September, 2005 MAX announced that it had entered into an agreement with Applied Geological Services, Inc. of Denver, Colorado for the acquisition of a total of 108 uranium exploration claims (the “Dat Claims”) in Socorro County, New Mexico. Consideration for the acquisition of the Dat Claims (known also as the “C de Baca Project”) is an immediate US$10,000 cash payment with annual payments of US$10,000 until production. After production, a royalty of 2% of revenues is payable until such time as a total of US$500,000 (including the initial cash payment and annual payments) has been paid. The obligation to make payments to Applied Geologic Services can be terminated at anytime by the Company by providing notice that it is abandoning the Dat Claims and agreeing to transfer them back to the vendor.

In addition to the cash payment of $11,765 (US$10,000) to Applied Geological Services, the Company incurred additional costs of $10,800 for staking and $22,119 for filing fees on the C de Baca Project to date and the Dat Claims and the agreement with Applied Geological Services, Inc. are in good standing at this time.

Competition

The mineral property exploration business, in general, is intensively competitive and there is not any assurance that even if commercial quantities of ore are discovered, a profitable market will exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of mineral and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may make it difficult for us to receive an adequate return on investment.

We will compete with many companies possessing greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

Management & Employees

We do not have any employees other than our directors and officers.

Our President and Chief Executive Officer, Stuart Rogers devotes approximately 50% of his business time to our affairs. We have a management agreement dated May 8, 2002 with a private company owned by Mr. Rogers whereby he provides management services to us for $5,000 per month. For the period December 1, 2003 to March 31, 2005, Mr. Rogers reduced the monthly fee to $2,500 per month to conserve the Company’s working capital.

Office Space

We utilize about 335 square feet of office space in Vancouver, British Columbia. Our rent and related office expenses total approximately $1,500 per month. This $1,500 per month is included in the amounts paid in management fees to a private company owned by our President, Stuart Rogers.

4.C

Organizational Structure

The Company has only one subsidiary, MAX Resources, Inc., a wholly owned Nevada corporation incorporated in the fiscal year ending December 31, 2005 for the purpose of holding its mineral interests in Utah, New Mexico and Nevada and for the purpose of securing work permits on its properties in those jurisdictions. Throughout this report on Form 20F, MAX Resources, Inc. and its parent company, MAX Resources Corp., are referred to as the Company.

4.D

Property, Plants and Equipment

The disclosure hereunder is that required by the new Form 20F for an extractive enterprise, as that term is defined in the Form 20F.

Gold Hill Property:

Description, Location and Access:

The Gold Hill property is located near Cantwell, Alaska in the Valdez Creek mining district. Cantwell is approximately 212 miles north northeast of Anchorage by paved highway. The property is accessible to within five air miles of the property by the all-weather unpaved Denali Highway (State Highway 8) approximately 53 miles from Cantwell. This road is not normally plowed during the winter months but is accessible by tracked vehicles during the winter. An unimproved dirt road heads westerly from the highway at milepost 80 for approximately 11 miles to the camp site at the Gold Hill property. Access is by All Terrain Vehicle or tracked vehicles along this unimproved dirt road.

Electricity is not available at the property site, with surface water abundant within the property boundaries.

A map of the location of the Gold Hill property follows:

[max20fdec2005001.jpg]

The claim numbers of the Gold Hill Property are as follows:

Certificate of		Talkeetna
Location Recorded In		Recording			ADL
Date of	Date of	District			Serial	*Location*
Claim Name	Location	Recording	Book	Page(s)	Number	Sec	T.	R.
SUS 447	7/24/1988	10/13/1988	123	201-202	525675	19	21 S	1 W.
SUS 448	7/24/1988	10/13/1988	123	203	525676	19,20	21 S	1 W.
SUS 449	7/24/1988	10/13/1988	123	204	525677	20	21 S	1 W.
SUS 450	7/24/1988	10/13/1988	123	205	525678	20	21 S	1 W.
SUS 451	8/21/1994	11/2/1994	150	155-156	538433	20	21 S	1 W.
SUS 452	8/21/1994	11/2/1994	150	157	538434	20,21	21 S	1 W.
SUS 453	8/21/1994	11/2/1994	150	158	538435	21	21 S	1 W.
SUS 454	8/21/1994	11/2/1994	150	159	538436	21	21 S	1 W.
SUS 547	7/24/1988	10/13/1988	123	206	525679	18,19	21 S	1 W.
SUS 548	7/24/1988	10/13/1988	123	207	525680	17-20	21 S	1 W.
SUS 549	7/24/1988	10/13/1988	123	208	525681	17,20	21 S	1 W.
SUS 550	7/24/1988	10/13/1988	123	209	525682	17,21	21 S	1 W.
SUS 551	8/21/1994	11/2/1994	150	160	538437	17,22	21 S	1 W.
SUS 552	8/21/1994	11/2/1994	150	161	538438	16,17,20,21	21 S	1 W.
SUS 553	8/21/1994	11/2/1994	150	162	538439	16,21	21 S	1 W.
SUS 554	8/21/1994	11/2/1994	150	163	538440	16,22	21 S	1 W.
SUS 555	8/21/1994	11/2/1994	150	164	538441	16,23	21 S	1 W.
SUS 556	8/21/1994	11/2/1994	150	165	538442	15,16,21,22	21 S	1 W.
SUS 647	7/23/1988	10/13/1988	123	210	525683	18	21 S	1 W.
SUS 648	7/24/1988	10/13/1988	123	211	525684	17-20	21 S	1 W.
SUS 649	7/24/1988	10/13/1988	123	212	525685	17	21 S	1 W.
SUS 650	7/24/1988	10/13/1988	123	213	525686	17	21 S	1 W.
SUS 651	8/18/1994	11/2/1994	150	166	538443	17	21 S	1 W.
SUS 652	8/18/1994	11/2/1994	150	167	538444	16,17	21 S	1 W.
SUS 653	8/18/1994	11/2/1994	150	168	538445	16	21 S	1 W.
SUS 654	8/18/1994	11/2/1994	150	169	538446	16	21 S	1 W.
SUS 655	8/18/1994	11/2/1994	150	170	538447	16	21 S	1 W.
SUS 656	8/18/1994	11/2/1994	150	171	538448	15,16	21 S	1 W.
SUS 657	8/18/1994	11/2/1994	150	172	538449	15	21 S	1 W.
SUS 658	8/19/1994	11/2/1994	150	173	538450	15	21 S	1 W.
SUS 747	7/23/1988	10/13/1988	123	214	525687	18	21 S	1 W.
SUS 748	7/25/1988	10/13/1988	123	215	525688	17,18	21 S	1 W.
SUS 749	8/18/1994	11/2/1994	150	174	538451	17	21 S	1 W.
SUS 750	8/18/1994	11/2/1994	150	175	538452	17	21 S	1 W.
SUS 751	8/19/1994	11/2/1994	150	176	538453	17	21 S	1 W.
SUS 752	8/19/1994	11/2/1994	150	177	538454	16,17	21 S	1 W.
SUS 753	8/19/1994	11/2/1994	150	178	538455	16	21 S	1 W.

SUS 754	8/19/1994	11/2/1994	150	179	538456	16	21 S	1 W.
SUS 755	8/19/1994	11/2/1994	150	180	538457	16	21 S	1 W.
SUS 756	8/19/1994	11/2/1994	150	181	538458	15,16	21 S	1 W.
SUS 757	8/19/1994	11/2/1994	150	182	538459	15	21 S	1 W.
SUS 758	8/19/1994	11/2/1994	150	183	538460	15	21 S	1 W.
SUS 759	8/19/1994	11/2/1994	150	184	538461	15	21 S	1 W.
SUS 845	7/25/1988	10/13/1988	123	217	525690	18	21 S	1 W.
SUS 846	7/25/1988	10/13/1988	123	218	525691	18	21 S	1 W.
SUS 847	7/23/1988	10/13/1988	123	219	525692	18	21 S	1 W.
SUS 848	8/19/1994	11/2/1994	150	185	538462	17,18	21 S	1 W.
SUS 849	8/18/1994	11/2/1994	150	186	538463	17	21 S	1 W.
SUS 850	8/18/1994	11/2/1994	150	187	538464	17	21 S	1 W.
SUS 851	8/19/1994	11/2/1994	150	188	538465	17	21 S	1 W.
SUS 852	8/19/1994	11/2/1994	150	189	538466	16,17	21 S	1 W.
SUS 853	8/19/1994	11/2/1994	150	190	538467	16	21 S	1 W.
SUS 854	8/19/1994	11/2/1994	150	191	538468	16	21 S	1 W.
SUS 855	8/19/1994	11/2/1994	150	192	538469	16	21 S	1 W.
SUS 856	8/19/1994	11/2/1994	150	193	538470	15,16	21 S	1 W.
SUS 857	8/19/1994	11/2/1994	150	194	538471	15	21 S	1 W.
SUS 858	8/19/1994	11/2/1994	150	195	538472	15	21 S	1 W.
SUS 859	8/19/1994	11/2/1994	150	196	538473	15	21 S	1 W.
SUS 860	8/19/1994	11/2/1994	150	197	538474	14,15	21 S	1 W.
SUS 945	7/25/1988	10/13/1988	123	221	525694	7,18	21 S	1 W.
SUS 946	7/25/1988	10/13/1988	123	222	525695	7,18	21 S	1 W.
SUS 947	7/23/1988	10/13/1988	123	223	525696	7,18	21 S	1 W.
SUS 948	8/19/1994	11/2/1994	150	198	538475	7,8,17,18	21 S	1 W.
SUS 949	8/18/1994	11/2/1994	150	199	538476	8,17	21 S	1 W.
SUS 950	8/18/1994	11/2/1994	150	200	538477	8,17	21 S	1 W.
SUS 951	8/20/1994	11/2/1994	150	201	538478	8,17	21 S	1 W.
SUS 952	8/20/1994	11/2/1994	150	202	538479	8,9,16,17	21 S	1 W.
SUS 953	8/20/1994	11/2/1994	150	203	538480	9,16	21 S	1 W.
SUS 954	8/20/1994	11/2/1994	150	204	538481	9,16	21 S	1 W.
SUS 955	8/20/1994	11/2/1994	150	205	538482	9,16	21 S	1 W.
SUS 956	8/20/1994	11/2/1994	150	206	538483	9,10,15,16	21 S	1 W.
SUS 957	8/20/1994	11/2/1994	150	207	538484	10,15	21 S	1 W.
SUS 958	8/20/1994	11/2/1994	150	208	538485	10,15	21 S	1 W.
SUS 959	8/20/1994	11/2/1994	150	209	538486	10,15	21 S	1 W.
SUS 960	8/20/1994	11/2/1994	150	210	538487	10,11,14,15	21 S	1 W.
SUS 1045	7/25/1988	10/13/1988	123	225	525698	7	21 S	1 W.
SUS 1046	7/25/1988	10/13/1988	123	226	525699	7	21 S	1 W.
SUS 1047	7/23/1988	10/13/1988	123	227	525700	7	21 S	1 W.
SUS 1048	7/26/1988	10/13/1988	123	228	525701	7,8	21 S	1 W.
SUS 1049	8/18/1994	11/2/1994	150	211	538488	8	21 S	1 W.
SUS 1050	8/18/1994	11/2/1994	150	212	538489	8	21 S	1 W.

SUS 1051	8/20/1994	11/2/1994	150	213	538490	8	21 S	1 W.
SUS 1052	8/20/1994	11/2/1994	150	214	538491	8,9	21 S	1 W.
SUS 1053	8/20/1994	11/2/1994	150	215	538492	9	21 S	1 W.
SUS 1054	8/20/1994	11/2/1994	150	216	538493	9	21 S	1 W.
SUS 1055	8/20/1994	11/2/1994	150	217	538494	9	21 S	1 W.
SUS 1056	8/20/1994	11/2/1994	150	218	538495	9,10	21 S	1 W.
SUS 1057	8/20/1994	11/2/1994	150	219	538496	10	21 S	1 W.
SUS 1058	8/20/1994	11/2/1994	150	220	538497	10	21 S	1 W.
SUS 1059	8/20/1994	11/2/1994	150	221	538498	10	21 S	1 W.
SUS 1145	7/23/1988	10/13/1988	123	229	525702	7	21 S	1 W.
SUS 1146	7/23/1988	10/13/1988	123	230	525703	7	21 S	1 W.
SUS 1147	7/23/1988	10/13/1988	123	231	525704	7	21 S	1 W.
SUS 1148	7/23/1988	10/13/1988	123	232	525705	7,8	21 S	1 W.
SUS 1149	7/23/1988	10/13/1988	123	233	525706	8	21 S	1 W.
SUS 1150	7/23/1988	10/13/1988	123	234	525707	8	21 S	1 W.
SUS 1151	7/23/1988	10/13/1988	123	235	525708	8	21 S	1 W.
SUS 1152	7/23/1988	10/13/1988	123	236	525709	8,9	21 S	1 W.
SUS 1153	7/23/1988	10/13/1988	123	237	525710	9	21 S	1 W.
SUS 1154	8/20/1994	11/2/1994	150	222	538499	9	21 S	1 W.
SUS 1155	8/20/1994	11/2/1994	150	223	538500	9	21 S	1 W.
SUS 1156	8/20/1994	11/2/1994	150	224	538501	9,10	21 S	1 W.
SUS 1157	8/20/1994	11/2/1994	150	225	538502	10	21 S	1 W.
SUS 1158	8/20/1994	11/2/1994	150	226	538503	10	21 S	1 W.
SUS 1159	8/20/1994	11/2/1994	150	227	538504	10	21 S	1 W.
SUS 1249	7/26/1988	10/13/1988	123	238	525711	8	21 S	1 W.
SUS 1250	7/26/1988	10/13/1988	123	239	525712	8	21 S	1 W.
SUS 1251	7/26/1988	10/13/1988	123	240	525713	8	21 S	1 W.
SUS 1252	7/26/1988	10/13/1988	123	241	525714	8,9	21 S	1 W.
SUS 1253	7/26/1988	10/13/1988	123	242	525715	9	21 S	1 W.
SUS 1254	7/26/1988	10/13/1988	123	243	525716	9	21 S	1 W.
SUS 1255	8/20/1994	11/2/1994	150	228	538505	9	21 S	1 W.
SUS 1256	8/20/1994	11/2/1994	150	229	538506	9,10	21 S	1 W.
SUS 1257	8/20/1994	11/2/1994	150	230	538507	10	21 S	1 W.
SUS 1258	8/20/1994	11/2/1994	150	231	538508	10	21 S	1 W.
SUS 1350	7/26/1988	10/13/1988	123	244	525717	8	21 S	1 W.
SUS 1351	7/26/1988	10/13/1988	123	245	525718	8	21 S	1 W.
SUS 1352	7/26/1988	10/13/1988	123	246	525719	8,9	21 S	1 W.
SUS 1353	7/26/1988	10/13/1988	123	247	525720	9	21 S	1 W.
SUS 1354	7/26/1988	10/13/1988	123	248	525721	9	21 S	1 W.
SUS 1355	7/26/1988	10/13/1988	123	249	525722	9	21 S	1 W.
SUS 1356	8/21/1994	11/2/1994	150	232	538509	9,10	21 S	1 W.
SUS 1357	8/21/1994	11/2/1994	150	233	538510	10	21 S	1 W.
SUS 1358	8/21/1994	11/2/1994	150	234	538511	10	21 S	1 W.

		State of Alaska MTRSC Claims

			Claim	ADL
			Size (Acres)	Serial Number
GH 01	6/11/04		160	645098	23	21 S	2 W.
GH 02	6/11/04		160	645099	24	21 S	2 W.
GH 03	6/11/04		160	645100	24	21 S	2 W.
GH 04	6/11/04		160	645101	19	21 S	1 W
GH 05	6/11/04		40	645102	19	21 S	1 W
GH 06	6/11/04		40	645103	19	21 S	1 W
GH 07	6/11/04		40	645104	18	21 S	1 W
GH 08	6/11/04		40	645105	18	21 S	1 W
GH 09	6/11/04		160	645106	18	21 S	1 W
GH 10	6/11/04		160	645107	13	21 S	2 W.
GH 11	6/11/04		160	645108	13	21 S	2 W.
GH 12	6/11/04		160	645109	14	21 S	2 W.
GH 13	6/11/04		160	645110	14	21 S	2 W.
GH 14	6/11/04		160	645111	13	21 S	2 W.
GH 15	6/11/04		160	645112	14	21 S	2 W.
GH 16	6/11/04		40	645113	18	21 S	1 W
GH 17	6/11/04		40	645114	18	21 S	1 W
GH 18	6/11/04		40	645115	18	21 S	1 W
GH 19	6/11/04		40	645116	18	21 S	1 W
GH 20	6/11/04		40	645117	7	21 S	1 W
GH 21	6/11/04		40	645118	7	21 S	1 W
GH 22	6/11/04		160	645119	12	21 S	2 W.
GH 23	6/11/04		160	645120	7	21 S	1 W
GH 24	6/11/04		160	645121	7	21 S	1 W
GH 25	6/11/04		40	645122	8	21 S	1 W
GH 26	6/11/04		40	645123	8	21 S	1 W
GH 27	6/11/04		40	645124	8	21 S	1 W
GH 28	6/11/04		160	645125	33	20 S.	1 W
GH 29	6/11/04		160	645126	32	20 S.	1 W
GH 30	6/11/04		160	645127	32	20 S.	1 W
GH 31	6/11/04		160	645128	31	20 S.	1 W
GH 32	6/11/04		160	645129	31	20 S.	1W

The original Gold Hill claims optioned from Zazu encompass 124 state select mining claims (4,960 acres). An additional 32 claims totaling 3,560 acres were staked in June, 2004. The claims, both in the GH and the SUS series, are state, not federal, unpatented lode claims. The claims are unpatented and, as a result, an annual maintenance fee is required to be paid to maintain them.

Maintaining the claims in good standing in the State of Alaska:

Under the State of Alaska’s Annual Rental Law (Alaska Statute 38.05.211, enacted 1989) all locators and holders of State mining locations must pay to the state an annual cash rental in order to keep the claims in good standing. For all traditional mining claims and ¼ - ¼ section locations (about 40 acres) the annual rental amount is $25/year for the first five years, $55/year for the second five years and $130/year thereafter. For all ¼ section locations (about 160 acres), the annual rental amount is $100/year for the first five years, $220/year for the second five years and $520/year thereafter.

The dates of the Company’s claims are disclosed in the claims table above. They vary from 1988 to 2004 and are primarily either 40 acres or 160 acres.

The payment for each rental year is due September 1 of any given year and is payable no later than November 30 in that year. For 2006, the Company must pay a total of approximately $3,100 to maintain its Alaska claims in good standing. The claims do not have an expiration date so long as these annual rent payments are made.

History of Exploration and Status:

The property was first drilled as a joint venture between Dome Exploration and Cities Service Company in 1972. They were exploring for molybdenum and did not find an economic deposit so they left the property. General Crude Oil (“GCO”) acquired the property in 1983 and explored the property for gold. They did geologic mapping, soil geochemistry, a VLF-EM survey and drilled five diamond drill holes. The best intersection from this drilling was 11.5 feet which averaged 0.668 ounces per ton.

In 1988, Amax Gold entered into a joint venture with GCO. They completed geologic mapping, rock sampling, soil geochemical surveys and VLF-EM geophysical surveys, select metallic screen fire assays and preliminary cyanide bottle roll metallurgical tests and 5,885 feet of reverse circulation drilling in 21 drill holes. The target was to find a bulk tonnage open pittable deposit. Amax did not find significant thick intervals of low grade mineralization and dropped the property. High grade gold intervals were encountered in drill holes AUH 7, 16, and 17. Hole 7 contained five feet of 0.18 opt Au, Hole 16 contained five feet of 0.46 opt Au, five feet of 0.23 opt Au and five feet of 0.66 opt Au, and Hole 17 contained five feet of 0.19 opt Au. These holes are open along strike and, since they were drilled with a reverse circulation drill rig which encountered large quantities of water, they should be re-examined to see if loss of gold might have occurred.

Gold Hill is an intrusion related gold system which has many of the characteristics of a Tintina Gold Belt system. The dominate rock types consist of argillite, metasiltstone, greywacke, carbonaceous schist and a small wedge-shaped fault block of tuffaceous metasedimentay and metavolcaniclastic rocks. Early to mid-Teritary monzonite and diorite stocks, plugs and dikes intrude the metasiltstone units on Gold Hill and the tuffaceous metasedimentary sequences on West Hill located in the western part of the property.

Hydrothermal alteration is pervasive throughout the property. Quartz-sericite-pyrite alteration is particularly evident around the summit of Gold Hill and to a lesser extent in the vicinity of the Swale area, a low saddle located just east of West Hill.

The gold mineralization is thought to be related to the intrusions and pyrite, arsenopyrite, pyrrhotite, chalcopyrite, molybdenum, and gold are found in veins and as disseminations in the host rocks. The mineralization occurs as disseminations and on fractures and appears to be structurally-controlled. The alteration and mineralization occur over an area of at least two square miles. All of the creeks contain placer gold and have been worked in the past.

Interpretation of the geophysics indicates that there are a number of buried intrusives present on the property which have not been explored.

On acceptance for filing of this Option Agreement, the two principals of Zazu joined our team on June 23, 2004, with Gil Atzmon joining our Board of Directors and Clarence J. Wendt agreeing to oversee our exploration as well as search for additional properties.

On June 29, 2004 we announced that drilling had begun on the Gold Hill project, with the initial phase of the diamond drilling designed to test previous high grade mineralization encountered in prior drilling by Amax and General Crude Oil. The program consisted of 7 diamond drill holes planned to intersect previously found values that included 1.5 meters of 15.0 grams per ton (“gpt”), 1.5 meters of 8 gpt, 1.5 meters of 22.9 gpt, 1.2 meters of 15.6 gpt, and 1.10 meters of 54.3 gpt. Values of 8.6 ppm were found by the United States Bureau of Mines in a regional sampling program of the surface. This area will be sampled and mapped to find the extent of these high grade surface samples.

In addition, we staked a 1,659 hectare area west of the Gold Hill property. This encompasses areas of high grade outcrops that were explored during the drill program.

Significant values of gold (2.5 feet of 0.25 ounces per ton) were found in a sample from the Gold Creek Area. This sample also contained 0.57% copper. Within the same creek, values of tungsten (0.19% WO₃) were also found. This area will be tested during the next phase of exploration.

In addition, confirmation assays to verify the previous work done by Amax Exploration were completed. Drill holes 7, 13, and 16 contained significant values of gold. The assays confirm the previous assays and show the variation in gold numbers within the same sample.

Prior Sample No./ Hole + Footage	Type	Amax Assay		Examination Sample No.	Check Assay
Prior Sample No./ Hole + Footage	Type	Au ppm	Au oz/t	Examination Sample No.	Au ppm	Au oz/t
AUH-7 100’-105’	Pulp	6.35	0.1842	106027	3.999	0.117
AUG-7 200’-205’	Pulp	2.473	0.0717	106028	2.396	0.070
AUH-13 250’-255’	Pulp	3.928	0.1139	106029	3.463	0.101
AUH-13 255’-260’	Pulp	2.738	0.0794	106030	2.535	0.074
AUH-16 35’-40’	Pulp	15.94	0.4623	106031	9.864	0.288
AUH-16 170’-175’	Pulp	22.90	0.6641	106032	18.813	0.549

The original assay sheets of the work done by AMAX are not available. The Company believes that its review of the original pulps from AMAX shows that AMAX did work to industry standards.

The drilling at Gold Hill was completed by July 21, 2004, with the core being split at Alaskan Earth Sciences in Anchorage, Alaska and then shipped to American Assay Laboratories of Reno, Nevada for analysis. The results of this first phase drilling were released on September 14, 2004. The results are as follows:

HQ Core Drill hole #	From	To	Intersection True Width (ft)	AU g/t	Cu %

O4-1	29	35	6	1.87
	125	130	5	5.24
	179	175	5		0.33
	715	180	5	1.6	0.47
04-2	No significant	gold values
04-3	180	185	5	1.02
04-4	No significant	gold values
04-5	50	55	5	1.34
04-6	90	95	5	1.09
	130	145	15	2.88
Includes	130	135	5	5.28
Includes	140	145	5	1.75
04-7	40	45	5	2.47
	80	85	5	1.66

Because of the disseminated nature of the mineralization found in the drill core, a standard 5 – foot sampling interval was chosen for sampling. After logging the core, the core was marked and split using a standard hydraulic core splitter. The core was then split, half of the sample was put into the core box for future work and the other half was put into a bag and sent to the geochemical laboratory.

American Assay Labs of Reno Nevada was chosen to do the assay work. American Assay Labs follows Mineral Exploration Best Practices Guidelines in their batch sizes, sample preparation, fire assay procedures, geochemical analyses, quality control and reporting procedures. The lab is certified under ISO17025 certification for their QA/QC protocols. The lab inserts for quality control four (4) duplicate samples, two (2) certificate standards and one reagent blank. If problems are encountered they rerun the entire batch. Control samples are submitted as part of the assay work process which helps to create a series of checks on the process and an audit trail.

The drilling on the property was conducted under the supervision of Clarence J. (Clancy) Wendt, P. Geo., the Company’s Vice-President, Exploration.

The new zones identified include a major structure with approximately one meter of mineralization grading 14.4 gpt gold and 0.18% copper, and a sheeted zone where values of 7.9 gpt gold and 1.1% copper were found in the fractures.

Petrographic work indicated that the drill core is almost all diorite to intermediate composition intrusive rocks. Polished section work showed that gold is found in a free state and is related to the intrusions. Pyrite, arsenopyrite, pyrrhotite, chalcopyrite, molybdenum, native copper, and gold are found in veins and as disseminations in the host rocks.

During the year ended December 31, 2004 the Company spent a total of $279,409 on drilling, assaying and field expenses related to exploration of the Gold Hill Property. During the year ended December 31, 2005, the Company spent a total of $54,005 on exploration of the Gold Hill Property, being primarily field expenses, geological consulting and lease payments. Subsequent to the December 31, 2005 period end we spent $2,260 for core storage and the filing of drill permits in anticipation of drilling on the property during the summer exploration season, subject to availability of a drill rig.

The property is without known reserves and any program of work undertaken would be exploratory in nature. There is no plant or equipment or other infrastructure on the property.

The Company has not yet finalized its exploration plans for the Gold Hill Property for 2005.

The Target Claims

The Target Claims (the Target 1 and Target 2 claims) together comprise the Longtom Lake project or Longtom Project. References in this Form 20F to the Longtom Lake project should be interpreted as being references to the Target Claims and vice versa.

The Company is no longer pursuing exploration of the Target 2 claim but intends to maintain its interest in the Target 1 claim.

Description, Location and Access:

The Target 1 claim is located on the east side of Longtom Lake and covers 1,781.9 acres. The Target 2 claim is located at the north end of Longtom Lake and covers 2,530.8 acres. The area is known as the Great Bear Magmatic Zone, a north-trending belt measuring 350 kilometres long and 120 kilometres wide.

The Claims have not been prospected in detail and have no known mineralization. The claims have no known mineral zones, mineral resources or mineral reserves.

The climate in the vicinity of the Longtom Lake area is severe with long, cold winters and short, warm summers. Exploration is best conducted during the summer or in late winter. Access to the Target Claims is entirely by aircraft: by float airplane in summer and ski-equipped airplanes in winter. The sufficiency of surface rights for mining operations, and the availability of power, water, tailings storage areas, waste disposal areas, heap leach pad sites and potential processing plant sites has not been addressed. Territorial mining operations rely to a large extent upon the nearby city of Yellowknife, which lies 350 km southeast of the claim area, and southern Canada as a source of skilled miners, tradespersons and labor.

There is no electricity available at the property site, with surface water abundant within the property boundaries.

The following map shows the location of the Longtom Project:

[max20fdec2005002.jpg]

The following is a map of the Longtom Property claim blocks and their location:

[max20fdec2005003.jpg]

The claim numbers are as follows:

Claim Name

Date Recorded

Record No.

Acreage

Target 1

October 28, 2002

F71013

1,756.10

Target 2

October 28, 2002

F71014

2,530.80

Maintaining the claims in good standing in the Canadian Northwest Territories:

Title to the claims conveys conditional mineral rights without surface rights. The claims are valid (they are maintained and do not expire) until the second anniversary and thereafter if, in each year, the sum of $4.00 per acre has been expended in exploration work on the claim.. To maintain the claims in good standing, the work must be reported to the Office of the Mining Recorder on Form 9, and this form must be forwarded along with applicable fees (currently $0.10/acre). Work in excess of the minimum requirement was completed during the summer of 2003 and reported to the Mining Recorder on March 22, 2005.

In June 2005, we received notice of the lapse date for the Target 2 Claim of October 10, 2005. We elected to let the permit lapse, as evidenced by the Notice of Lapsing received November 29, 2005 from Indian and Northern Affairs’ Mining Recorder’s Office and pursuant to subsection 45(1) and section 80 and 82 of the Canadian Mining Regulations. We chose to abandon the property and this has been reflected in our financial statements for the year ended December 31, 2005.

The Target 1 claim is in good standing as of the date of this report. Representation work and/or cash payments can be applied to maintain the claim only until its tenth anniversary (i.e. October 28, 2012) by which time the claim must be surveyed by a legal surveyor and the survey submitted for registration as a mining lease in accordance with Canada Mining Regulations. The claims do not have an expiration date as long as these exploration work requirements are met.

History of Exploration and Status:

The potential of the Target Claims is based upon significant exploration work that Alberta Star Development Corp. (TSX-V:ASX; OTC BB: ASXSF) (“Alberta Star”) has completed on adjacent claims up to 2004. In October 2002,Alberta Star conducted a gravity survey of the Longtom property to detect potential anomalies caused by the presence of iron oxide, copper and gold mineralization. The ground-helicopter supported gravity survey was conducted over selected portions of the 19,642-acre Longtom claim-block. The data obtained from the survey is complimented by gravity data collected for Hudson’s Bay Exploration and Development Co. Ltd. in 2000 along the shores of Longtom Lake, and by a comprehensive regional gravity survey completed by the Geological Survey of Canada. The objective of the survey was to map the distribution of large masses of variable density.

A total of 243 detailed gravity stations were recorded at 500-meter intervals with some detail infill stations at 250 meters. The gravity survey confirmed the extent of what may be economic mineralization along a large structurally controlled faulting system. The results show two significant 2.5-3.0 milligal gravity anomalies. These two gravity anomalies are coincident with the strong magnetic anomalies. The gravity anomalies occur along a 7.5 kilometre long trend and are up to 1.5 kilometres in width. Combined gravity, magnetic and radiometric anomalies are a common targeting criterion for iron-oxide/copper/gold mineralization and necessary in identifying an economic ore body. Alberta Star conducted a 20-hole drill program on these adjoining claims during 2003.

The terrain of the Longtom claim block appears to have an abundance of outcropping bedrock exposures and is known to comprise crystalline plutons with compositions apparently ranging from granitic to monzonitic. Volcanic rocks of rhyodacitic, andesitic and basaltic compositions have been mapped in the northeastmost part of the claims.

In mid-September, 2004 MAX was advised by Alberta Star that Fronteer Development Group (TSX:FRG) (“Fronteer”), as operator, had intersected high-grade uranium mineralization on Alberta Star’s Longtom Lake property during drilling that it had conducted during the summer of 2004. The Longtom Lake property is immediately adjacent to our Target 1 and Target 2 Claims jointly held with Alberta Star.

Drilling conducted by Fronteer intersected 1.68 per cent U3O8 over one metre at a downhole depth of 80 metres, which was part of a broader interval that returned 0.56 per cent U3O8 over three metres, and 0.16 per cent U3O8 over one metre that was intersected at a depth of 51 metres in the same hole.

Drill programs conducted by other operators on the Longtom Lake property had previously intersected anomalous to high-grade uranium. Within a 300-metre radius of the new discovery, eight historic drill holes had intersected uranium mineralization with indicated values ranging between 0.21 per cent U3O8 over 0.6 metre at a downhole depth of 44.5 metres, and 0.48 per cent U3O8 over 1.5 metres at a downhole depth of 59 metres.

No funds were expended on the Target Claims during the fiscal period ended December 31, 2004.

A total of $7,060 was expended during the year ended December 31, 2005 on the Target Claims.

The Company elected to write-off the Target 2 claim during the year ended December 31, 2005 and this resulted in a write down of $55,000 in acquisition costs and $2,000 in deferred exploration costs. The Company intends to maintain the Target 1 claim.

The total value of the work completed on the Target 1 and 2 Claims to December 31, 2004 by the Company was $52,038 and an additional $7,060 was expended in the current financial year. No expenditures have been made during fiscal year 2006 to date and none are currently planned.

The property is without known reserves and any program of work undertaken would be exploratory in nature. There is no plant or equipment or other infrastructure on the property.

Thomas Mountain Project (Utah)

Description, Location and Access:

The PPCO claims comprising the Thomas Mountain Project are located approximately 150 miles southwest of Salt Lake City, about 20 miles west of the town of Delta, Utah and east of the Brushman Wellman beryllium mine. The claims have excellent road access by both gravelled and cross county roads. The PPCO claims originally comprised 27 claims totaling 540 acres.

There is no water or electricity available at the property site, with no surface water available within the property boundaries.

In September of 2005 the Company staked additional claims around the original 27 PPCO uranium claims, bringing the total to 195 lode claims comprising 3,900 acres at a total staking cost of $62,298.

The Thomas Mountain claims are approximately 20 acres each and are comprised of claims PPCO 1 to 195, filed on September 27, 1995 with the Bureau of Land Management in the State of Utah under Record numbers UMC UMC379322 to UMC379516.

The following map shows the location of the Thomas Mountain Project:

[max20fdec2005004.jpg]

Maintaining the claims in good standing in Utah:

Under Bureau of Land Management rules for the State of Utah Office, all locators and holders of State mining locations must pay an annual maintenance fee of US$125 per claim or site.

For 2006, the Company must pay a total of US$24,375 to the Bureau of Land Management maintain the PPCO claims in good standing. The Company must also pay nominal fees to the county recorder to maintain the claims in good standing.

History of Exploration and Status:

The PPCO claims were explored during the early 1980’s by Phillips Uranium, a wholly-owned subsidiary of Phillips Petroleum. Phillips encountered uranium grades of approximately 0.05% U3O8, over a 100 foot thickness at a depth of 900 feet within a small caldera. The uranium host rock was identical to the host rock found in a nearby structurally controlled uranium system that produced approximately 500,000 pounds of uranium before mining was terminated when the ore zone was found to be faulted off to the east. The zone found by Phillips on the PPCO claims is thought to be an extension of this original mineralization. The mineralization is contained within the mote sediments of a smaller caldera within a major caldera system. The mineralization appears to be structurally controlled along the edge of this caldera and planned exploration will follow up on previous work. Due to the geological formations in the area, the property may be amenable to “in-situ leaching “(“ISL”), subject to further exploration.

Exploration drilling on the PPCO claims by Phillips was originally supervised by Mr. Clancy J. Wendt, M.S.,C.P.G., Reg. Az. and B.C., the Vice-President of Exploration for MAX, who was employed by Phillips at that time. Mr. Wendt has a Masters of Science in geology and more than 35 years of relevant experience focused on uranium, base and precious metals and industrial minerals in the US, Mexico, and Latin America. He is a certified Professional Geologist (CPG 4966) by the American Institute of Professional Geologists, an Arizona Registered Geologist (ARG 18283) and a Registered Professional Geoscientist in the Province of British Columbia (P. Geo. 125039).

In early March, 2006 the Company retained DeLong Construction and Drilling of Nevada as the drilling contractor for its Thomas Mountain project. Drilling was conducted using a reverse-circulation drill, with the first drill hole completed by March 21, 2006 when the Company was forced to put the balance of the drill program on hold due to heavy snowfall. Drill holes PPCO#2 and PPCO#3 were subsequently completed when weather improved.

Drill hole PPCO # 1 was drilled to a target depth of 1,157 feet to intersect the previous mineralization found during drilling conducted by Phillips Uranium Company in the early 80’s. The PPCO #1 drill hole was positioned approximately 100 feet south of the estimated position of this prior drill hole, where Phillips encountered uranium grades of approximately 0.05% U3O8 over a 100 foot thickness at a depth of 900 feet.

On completion of drilling, Century Geophysical Company probed the drill hole using a Gamma-SP probe. Results indicated that the zone of previous mineralization was anomalous but not ore grade. It appears that the beryllium tuff unit, which is the host rock for the nearby Yellow Chief mine, either thins to the south or is faulted off.

Previous drilling conducted by Phillips concentrated to the north of the PPCO #1 drill and these historic results have not been available.

The results from PPCO#1, PPCO#2 and PPCO#3 were not encouraging and the Company suspended further drilling pending further review and study of the geology of the project area. While gamma logs indicated values of radioactivity in drill hole PPCO#2 as high as 900 CPS in two zones, assays revealed only anomalous values.

During the year ended December 31, 2005 the Company spent a total of $18,455 on the Thomas Mountain project, these expenditures being comprised of geological consulting costs and field expenses.

Subsequent to the December 31, 2005 year end, the Company has spent a further $132,314 on exploration of the Thomas Mountain project, which included $66,277 for drilling and assays, $6,170 for down hole probing services, $10,392 for travel to the property, $26,737 for field expenses, $4,132 for permitting and $18,606 for geological consulting services.

The property is without known reserves and any program of work undertaken would be exploratory in nature. There is no plant or equipment or other infrastructure on the property. No further work is currently planned on this project at this time.

There has been no Canadian NI 43-101 Geological Report or other recent geological report completed on the Thomas Mountain project. The historic information provided is for reference only and the reader should not infer or assert that the information is correct, reliable, relevant or accurate and should not be relied upon.

Diamond Peak Property (Nevada)

Description, Location and Access:

The property comprises 38 inclusive, unpatented lode mining claims located 32 miles north of the town of Eureka, Nevada and the Archimedes gold deposit owned by Barrick Gold Corporation. It is accessible by 50 miles of improved dirt road and partial pavement north from Eureka, Nevada, and from Elko south by 40 miles of pavement and 22 miles of dirt road. The area supports a strong horse population; many trails crisscross the project area.

There is no water or electricity available at the property site. Some surface water is available, as streams flow year round through canyons which traverse the property in the center and southern portions of the claim block.

The property is comprised the FMC 31-39, 40-49, 69-75, and 57-68 unpatented lode mining claims represented by Bureau of Land Management Nevada Mining Claim numbers NMC 887137-887155 and NMC 887156-887174 inclusive. These claims were recorded on December30, 2004.

The following map shows the location of the Diamond Peak Project:

[max20fdec2005005.jpg]

History of Exploration and Status

The Diamond Peak Property is a historic MK Gold Gold/Base Metal property that was explored during the late 1990’s and is located at the southern end of the prolific Carlin trend, which contains numerous gold deposits. The property comprises 38 claims located 32 miles north of the town of Eureka, Nevada. Strong surface mineralization occurs in a 2 mile long band of intensely clay altered rocks, 200 to 300 feet wide, on the hanging wall side of a major north striking normal fault, called the West Fault.

During the work done by MK Gold in 1999, which included 17 holes and 10,085 feet of drilling, MK Gold encountered significant values of gold and base metals that included:

5 feet of 0.067 oz/st Au in hole DV 99-4 and 5 feet of 0.062 oz/st Au in hole DV 99-5; and

11.6 % of Zinc over 5 feet within 60 feet of surface along the West Fault in the Chainman formation in hole DV 99-15.

Although no extensive intervals of mineralization were encountered, the drilling did indicate that more work was needed to find an economic mineralized system. The recommendations by MK Gold were to continue exploration and drill deep (>2,000 foot) diamond drill holes to the Web and Joana formations.

At the time, the base metal values were not considered as important and were not part of further considerations. Current prices of zinc, silver, and lead make this a very important target for further exploration. There are three intrusives that contain significant base and precious metal signatures along their edges. These have not been drilled and could contain skarn mineralization that may be economic. Future exploration would include conducting geophysical surveys to better define the intrusive contacts and define drill targets for future work.

To maintain this agreement in good standing, Kokanee has agreed to annual payments and share issuances to the Company, as more fully described in Item 4. of this Annual Report, and must satisfy the following yearly mineral exploration commitments on the Diamond Peak Property:

$100,000 to be spent by Kokanee in the first year of the agreement;

ii)

$300,000 in the second year, and

iii)

$600,000 in the third year.

There has been no Canadian NI 43-101 Geological Report, or other recent geological report completed on the Diamond Peak project. The historic information provided is for reference only and the reader should not infer or assert that the information is correct, reliable, relevant or accurate and should not be relied upon.

Maintaining the claims in good standing in Nevada:

Under Bureau of Land Management rules for the State of Nevada, all holders of State mining locations must pay an annual maintenance fee of US$125 per claim or site by August 31 of the calendar year.

For 2006, the Company must pay a total of US$4,750 to the Bureau of Land Management maintain the Diamond Peak claims in good standing. The Company must also pay approximately $8.50 per claim to the county recorder to maintain the claims in good standing.

C de Baca Project (New Mexico)

Description, Location and Access:

The C de Baca Project is located approximately 14 miles north of the town of Magdalena and 100 miles south of the town of Albuquerque, New Mexico. The claims have excellent road access by both gravel and cross county roads. All of the claims are located on U.S. Forest Service Lands.

There is no water or electricity available at the property site, with no surface water available within the property boundaries.

The C de Baca Project is comprised of 108 unpatented lode mining claims, the DAT 1 to DAT 108 claims, represented by Bureau of Land Management New Mexico Mining Claim numbers NMC 887137-887155 and NMC 887156-887174 inclusive. These claims were recorded on October 6, 2005..

The following map shows the location of the C de Baca Project:

[max20fdec2005006.jpg]

Maintaining the claims in good standing in New Mexico:

Under Bureau of Land Management rules for the State of New Mexico Office, all locators and holders of State mining locations must pay an annual maintenance fee of US$125 per claim or site by August 31 of each calendar year.

For 2006, the Company must pay a total of US$13,500 to maintain the DAT claims in good standing. The Company must also pay nominal fees to the county recorder to maintain the claims in good standing.

History of Exploration and Status:

The C de Baca Project was explored during the early 1980’s by OxyMin, a wholly-owned subsidiary of Occidental Petroleum. The uranium host is a 3500+ foot wide south-trending sequence of strongly reduced braided stream deposits grading into a system of alluvial fan and flood plain sediments. This geochemically well-defined depositional trend favors uranium deposition along the margins of the system where the reduced (altered) sands range in thickness from 150-200 feet. During the exploration, 216 drill holes were drilled in specific areas of the claim block and roughly defined the eastern limits of the favourable system. The best drill hole had 7.5 feet of 0.20 U3O8 at a depth of 291 feet. Due to the geological formations in the area, OxyMin felt that the property may be amenable to “in-situ leaching “(“ISL”), subject to further exploration.

There has been no Canadian NI 43-101 Geological Report, or other recent geological report, completed on the C de Baca project. The historic information provided is for reference only and the reader should not infer or assert that the information is correct, reliable, relevant or accurate and should not be relied upon.

To date, we have not spent any money on exploration of the C de Baca project. In June, 2006 we began preparing drill permit applications for filing with the U.S. Forest Service and Bureau of Land Management with a view to drilling in late fall, 2006.

The property is without known reserves and any program of work undertaken would be exploratory in nature. There is no plant or equipment or other infrastructure on the property.

MacInnis Lake Uranium Project

Description, Location and Access:

The MacInnis Lake uranium claim block is comprised of 15 mineral claims totaling 26,204.15 acres and is located in the Nonacho Basin 150 km northeast of Fort Smith, Northwest Territories and 275 km southeast of the city of Yellowknife, Northwest Territories. The claim block is located south of the Great Slave Lake, immediately east of the Taltson River, in an area of subdued terrain, poorly developed drainages and poor quality timber resources. Access for the purpose of mineral exploration is entirely dependent upon aircraft, float equipped in summer and ski-equipped in winter, or by helicopter all year round, particularly during the freeze-up and break-up periods. The climate of the MacInnis Lake Uranium Project is similar to that of the Longtom Lake / Target claims described above.

There is no electricity available at the property site. Surface water is abundant within the property boundaries.

The following is a map of the location of the MacInnis Lake uranium claim block:

[max20fdec2005007.jpg]

The claim numbers of the MacInnis Lake uranium claim block are as follows:

Claim Name	Date Recorded (1)	Record Number	Acreage
KULT 2	March 10, 2005	F90257	2,582.50
KULT 3	March 10, 2005	F90258	2,582.50
KULT 4	March 10, 2005	F70809	2,066.00
KULT 5	April 1, 2005	F90260	2,582.50
INN 2	May 27, 2005	F79832	413.20
INN 3	May 27, 2005	F79833	619.60
INN 4	May 27, 2005	F79834	2,324.50
INN 5	July 5, 2005	F79810	2,324.25
INN 6	May 27, 2005	F79836	1,613.55
INN 7	May 27, 2005	F79837	2,530.85
INN 8	May 27, 2005	F79838	2,479.20
INN 9	May 27, 2005	F79839	104.28
INN 10	May 27, 2005	F79840	581.75
INN 11	May 27, 2005	F79808	2,530.85
INN 12	May 27, 2005	F79809	849.36

(1)

dates given for recording represent the dates the claims were transferred to the registered name of Alberta Star Development Corp. Original staking dates are not available.

Maintaining the claims in good standing in the Canadian Northwest Territories:

Title to the claims conveys conditional mineral rights without surface rights. The claims are valid (they are maintained and do not expire) until the second anniversary and thereafter if, in each year,the sum of $4.00 per acre has been expended in exploration work on the claims. To maintain the claims in good standing, the work must be reported to the Office of the Mining Recorder by Form 9, and this form must be forwarded along with applicable fees (currently $0.10/acre).

The claims are in good standing as of the date of this report. As work in excess of the minimum requirement was completed during the summer of 2005, sufficient work will have been completed to report to the Office of the Mining Recorder when due in 2007. Representation work and/or cash payments can be applied to maintain the claim only until its tenth anniversary by which time the claim must be surveyed by a legal surveyor and the survey submitted for registration as a mining lease in accordance with Canada Mining Regulations. So long as the minimum exploration work is performed on the claims, the claims do not have an expiration date.

History of Exploration and Status:

The MacInnis Lake area is known to have widespread surface uranium mineralization, and contains 28 known high grade uranium showings that were discovered between 1954 and 1988. Uranium exploration on the MacInnis Lake properties was commenced in 1954 with the discovery of large uranium outcrops and widespread surface uranium mineralization. Exploration continued extensively until 1988 and the results have been reported by the Geological Survey of Canada. Uranium exploration involved companies such as Cominco, Shell, PNC, and Uranerz. The MacIinnis Lake uranium properties are located in the Nonacho Basin, a sandstone terrane of Proterozoic age that rests unconformably on Archean basement formations. This setting is geologically analogous to the Athabasca Sandstone Basin of Northern Saskatchewan.

The MacInnis Lake uranium occurrences are characterized as an Unconformity Type Uranium system. The MacInnis lake area is situated 280 km north of Saskatchewan’s Athabasca Uranium Basin, and is considered one of the Northwest Territories most prospective uranium bearing regions. Alberta Star has commenced plans to explore and expand uranium drill targets at MacInnis Lake, with preparations underway for a spring and summer exploration season consisting of regional mapping, trenching, reviewing archived drill data and completing a comprehensive regional airborne magnetic and radiometric survey. Drill targeting will focus on expanding known uranium showings.

An airborne Time Domain EM and Magnetic survey was completed at MacInnis Lake in June, 2005 with processing of the data expected to be completed by early August. The airborne survey was conducted by Fugro Airborne Surveys using a Fugro’s MEGATEM and GEOTEM systems. This survey was focused on the search for uranium deposits with emphasis on unconformity related deposits like in the Athabasca basin of Saskatchewan. The deposits in the Athabasca basin are associated with graphitic shear zones in the basement, which display themselves as good to strong conductors.

The surveys covered a total of approximately 950 line kilometers along east-west oriented lines, with 200 meter spacings. Mr. Jan Klein, M.Sc., P. Eng., P. Geo., consulting geophysicist, is currently reviewing and compiling all of the data generated from the geophysical survey. Results from the geophysical survey will be combined with archived historical drill results to assist the company in its drill targeting during subsequent exploration.

Summer exploration activities are planned that include regional mapping, trenching, reviewing archived drill data, trenching, and follow-up ground geophysics, to be followed by diamond drilling in the fall.

To date, we have spent $229,536 on exploration of the MacInnis Lake project, which included $213,475 for the airborne survey, travel to the property for $9,245 and geological consulting services of $6,816.

The property is without known reserves and any program of work undertaken would be exploratory in nature. There is no plant or equipment or other infrastructure on the property.

Item 5. Operating and Financial Review and Prospects

The information in this section summarizes the Company’s financial condition and results of operations for the periods specified, including the causes for material changes to provide an understanding of the Company’s business as a whole. The discussion provided herein should be read in conjunction with the Company’s financial statements and related notes.

5.A

Operating Results

We are in the business of acquiring and exploring mineral properties with the aim of developing them to a stage where they can be exploited at a profit. At that stage, our operations would, to some extent be dependent on the world market prices of any minerals mined.

During the fiscal year ended December 31, 2005 we investigated various mineral property acquisition opportunities, which ultimately led to our Option Agreement for the MacInnis Lake project in the Northwest Territories of Canada and the acquisition and staking of uranium exploration properties in Utah and New Mexico, the Thomas Mountain and C de Baca projects. During the fiscal year ended December 31, 2004, we entered into an Option Agreement to acquire an interest in the Gold Hill Property near Cantwell, Alaska. As all of these properties are in the exploration stage, we do not have current operating income or cash flow.

During the year ended December 31, 2005, we incurred operating expenses of $409,785 as compared to operating expenses of $210,50 for the year ended December 31, 2004. The significant changes during the current fiscal period compared to the year ended December 31, 2004 are as follows:

Consulting expense of $3,998 was incurred during the year ended December 31, 2005 for property review. This compares to $50,383 spent during the year ended December 31, 2004 to retain the services of professional geologists to review potential mineral acquisitions and oversee exploration of the Gold Hill property in Alaska.

Stock based compensation expense, a non-cash item, increased to $155,266 during the current fiscal period from the $60,224 incurred during the year ended December 31, 2004 due to the granting of more stock options during the current period than in the same period a year prior.

Management fees of $52,500 incurred during the year ended December 31, 2005 were increased from the $30,000 incurred during the same year a year prior due to an increase in the monthly fee paid to our President due to the additional project acquisition activity undertaken during the current period. .

During the year ended December 31, 2005, office and general expense increased slightly to $8,618 from the $5,179 incurred during the same period a year prior.

Professional fees for accounting and legal services for the year ended December 31, 2005 were $41,870 as compared to the 13,054 that we incurred during the same period a year prior, with the increase due to additional accounting and legal fees incurred during the current year for completion of U.S. regulatory filings.

Transfer agent, filing fees and shareholder relations expenses increased to $122,631 during the year ended December 31, 2005 from the $49,931 incurred during the prior fiscal year due to additional fees paid during the current period for investor relations services, web site development, advertising and dissemination of news releases reporting exploration results.

During the current fiscal period, we incurred travel costs of $24,754 for attendance at trade shows and review of projects. This compares to $1,548 incurred during the year ended December 31, 2004 for facilitating the attendance of out-of-town Directors at Board meetings.

Interest income of $1,804 earned during the year ended December 31, 2005 was increased from the $872 earned during the same period a year prior. The increase was due to the increased cash balances we maintained during the current fiscal period.

As we abandoned the Target 2 Claim in the Northwest Territories in January, 2006 we wrote this property off during the year ended December 31, 2005, resulting in a write-down of mineral properties of $57,000. There were no write-downs during the prior fiscal year.

As a result of the foregoing, our net loss for the year ended December 31, 2005 was $464,981 as compared to a net loss from operations of $209,632 for the year ended December 31, 2004.

5.B

Liquidity and Capital Resources

Since our incorporation, we have financed our operations almost exclusively through the sale of our common shares to investors. We expect to finance operations through the sale of equity in the foreseeable future as we have no source of revenue from our business operations. There is no guarantee that we will be successful in arranging financing on acceptable terms. As it is uncertain when we will generate revenues sufficient to fund our operating activities, if ever, we are dependent on raising additional equity or debt capital.

In April, 2005 we completed a private placement of 1,135,000 units at $0.40 per unit for gross proceeds of $454,000. This financing will provide sufficient working capital to cover our general and administrative expenses for the balance of the year and allow us to conduct limited exploration on our properties in the Northwest Territories and Alaska.

At December 31, 2005, we had cash on hand of $565,725 and a taxes recoverable and prepaids of $24,105. We also own office equipment recorded at $590. Liabilities consisted of accounts payables of $30,171.

In May, 2006, we completed a private placement of 1,140,000 units at $0.75 per unit for gross proceeds of $855,000. This financing will provide sufficient working capital to cover our general and administrative expenses for the balance of the year and allow us to conduct limited exploration on our properties in Utah, New Mexico Alaska and the Northwest Territories of Canada. The financing was comprised of two tranches, the first of which closed on April 28, 2006 with the balance completed on May 29, 2006.

In April 2005, we completed a non-brokered private placement of 1,135,000 Units at $0.40 per Unit, with each Unit consisting of one common share and ½ of a non-transferable share purchase warrant. Each full warrant will entitle the holder to purchase one additional common share for $0.50 per share for a two year period from closing.

We paid finders fees of $9,300 with respect to this placement and issued 25,000 agents warrants to Research Capital Corp., with each warrant exercisable to purchase one share at a price of $0.40 per share for a period of two years from closing.

In November, 2005 we completed a non-brokered private placement of 615,116 units at $0.47 per unit. Each unit consisted of one common share and ½ of a non-transferable share purchase warrant exercisable for a two year period from closing. Each full warrant will entitle the holder to purchase one additional common share for $0.57 per share in the first year, increasing to $0.70 in the second year. There were no finder’s fees paid.

To a significant extent, our ability to raise capital is affected by trends and uncertainties beyond our control. These include the market prices for base and precious metals and results from our exploration programs. Our ability to attain our business objectives may be significantly impaired if prices for metals fall or if results from exploration programs on properties we acquire are unsuccessful.

5.C

Research and Development, Patents and Licenses, etc.

Our methods of exploration, development and extraction are not unique to our Company but are common in our industry.

We do not rely on patents, technological licenses or intellectual property licenses in our operations.

We did not have any research and development expenditures in the year ended December 31, 2004.

5.D

Trend Information

Our Gold Hill Property claims are primarily prospective for gold and molybdenum while our Diamond Peak Project is primarily prospective for gold and zinc.

The overall trend for mineral resources, including for the gold, zinc, and molybdenum that the Company’s properties are prospective for, has been upwards in price for the last three years although some depreciation has occurred in commodities, both base and precious metals, in the last three months.

We cannot predict with certainty where the price of molybdenum, zinc or gold will move.

The markets for zinc and gold are homogeneous, integrated commodities markets with a large number of both suppliers and buyers. These markets are not ones which are particularly susceptible to the influence of one or more large suppliers or buyers.

There are a smaller number of producers of molybdenum than there are for commodities such as gold. Molybdenum prices have increased from US$7.60/lb in 2000 to US$34/lb in 2004. The average molybdenum price in 2005 was US$33/lb. At June 23, 2006, the most recent date for which we could find a quote for the sale of molybdenum oxide, the price was US$26.00/lb.

Our Target 1 (Longtom Lake), MacInnis Lake, C de Baca and Thomas Mountain mineral properties are prospective for uranium.

There are fewer producers of uranium in the world than there are for some other commodities such as copper and gold. The market for uranium is a homogeneous, integrated commodities market. The market is not one which is particularly susceptible to the influence of one or more large suppliers or buyers. The world average grade from producing uranium mines is 0.15 per cent U3O8, with spot uranium prices having risen from a cyclical low of US$7.10 per pound in late 2000 to a spot price of US$45.00 per pound on June 19, 2006.

5.E

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

5.F

Tabular Disclosure of Contractual Obligations

Not Applicable

Item 6. Directors, Senior Management and Employees

6.A

Directors and Senior Management

The following is a list of the current directors and senior officers of the Company, their municipalities of residence, their current position with the Company and their principal occupations:

Name of Director

Age

Principal Occupation

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

-----

Stuart Rogers

President of the Company,

Vancouver, BC

President of West Oak Capital Group, Inc.

Paul John

General Manager, Franchises

Penticton, BC

Mark’s Work Warehouse Ltd.

David Pearce

President of Palmer Beach Properties Inc.

West Vancouver, BC

Gil Atzmon

VP Corporate Development for Gold Summit Corp.

San Antonio, Texas

Daniel T. MacInnis

President, MAG Silver Corp.

Reno, Nevada

Executive Officers:

Name of Officer

Age

Office

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

-----

-------

Stuart Rogers

President, Chief Executive Officer

David Pearce

Chief Financial Officer, Secretary

The following describes the business experience of our directors and executive officers, including other directorships held in reporting companies:

Stuart Rogers

Mr. Rogers has been involved in the venture capital community since 1987. He is currently the President of West Oak Capital Group, Inc., a privately held investment banking firm specializing in the early stage finance of technology projects through the junior capital markets in Canada and the United States, and has served as a director of client companies listed on the TSX Venture Exchange, the Toronto Stock Exchange, NASDAQ Small Capital Market and NASD OTC Bulletin Board. Currently, Mr. Rogers acts as a director or officer of the following companies which are reporting issuers in Canada: Consolidated Global Cable Systems, Inc., Randsburg International Gold Corp., and Mexivada Mining Corp.

Paul John

Mr. John graduated from the University of Victoria, B.C. with a Bachelor of Arts degree, majoring in Economics and Political Science. From 1971 to 1979, he worked with the Hudson Bay Company, a national Canadian department store chain, rising to the senior executive level. In 1980, he acquired a WorkWear World franchise in the interior of British Columbia, developing this initial location into 19 stores in B.C. and the Yukon Territories, with annual sales of $18 million in 1999.

In 1999, Mr. John sold his chain of WorkWear World stores to Mark’s Work Warehouse, a publicly traded company listed on the Toronto Stock Exchange, and was appointed as General Manager for Western Canada for their “Work World” franchised locations. He held this position until 2001, when he was appointed General Manager, Franchises for Work World.

Mr. John served as a Director of Leopardus Resources, an oil and gas company listed on the Vancouver Stock Exchange (the predecessor of the TSX-Venture Exchange) and NASD OTC Bulletin Board, from May 1993 to December 2001; as a director of Canadian Venture Exchange-listed Tearlach Resources Ltd., a mineral exploration company, from May 1991 to March 2001 (the Canadian Venture Exchange was another predecessor of the TSX-Venture Exchange); and as a director of Strathclair Ventures Ltd., an oil and gas exploration company listed on the TSX Venture Exchange from February 2002 to November 2002. He is not currently a Director of any other reporting issuers.

David Pearce

Mr. Pearce is President of Palmer Beach Properties Inc., a private real estate development and investment company with real estate, retail and equity holdings in Canada. Since June 1995, Mr. Pearce has been President of Function Gate Hardware Ltd., which owns and operates a Home Hardware store in Whistler, British Columbia, and Function Gate Holdings Ltd., a real estate development company operating in Whistler and Pemberton, British Columbia. Mr. Pearce is also a director of Kruger Capital Corp. since December 1992 and a director and officer of MAG Silver Corp. since June 1999. Both companies trade on the TSX Venture Exchange and are Canadian reporting issuers.

Gil Atzmon

Mr. Atzmon has 20 years experience in the financing of global mineral exploration projects, having held senior positions in asset management firms, mining companies, and investment banking. Mr. Atzmon holds a bachelors degree in Geology and Geography from Columbia University in New York, and a Master in Energy & Mineral Resources form The University of Texas at Austin. Mr. Atzmon is also a director of Columbus Gold Corp., a mineral exploration company that listed on the TSX Venture Exchange in May, 2006.

Daniel T. MacInnis

Mr. MacInnis is the President and CEO of MAG Silver Corp. He has over 30 years of experience in mineral exploration and experience with mineral property acquisitions and joint venture negotiations. Mr. MacInnis is a registered Professional Geologist (P.Geo.) in British Columbia and obtained a B.Sc. in Geology from Saint Francis Xavier University (Nova Scotia) in 1974.

There are no arrangements or understandings between any of our directors or executive officers, pursuant to which they were selected to be a director or executive officer, nor are there any family relationships among any of our directors and officers.

6.B.

Compensation of Directors

We are required, under applicable securities legislation in Canada, to disclose to our shareholders details of compensation paid to our directors. The following fairly reflects all material information regarding compensation paid to our directors in our fiscal year ended December 31, 2005.

Summary Compensation Table

NAME AND PRINCIPAL POSITION	YEAR	ANNUAL COMPENSATION			LONG-TERM COMPENSATION
		Salary	Bonus	Other Annual Compensation	Awards		LTIP payouts	All Other Compensation
		Salary	Bonus	Other Annual Compensation	Restricted Stock Awards	Securities Underlying Options/ SAR’s	LTIP payouts	All Other Compensation
Stuart Rogers President and Director	2005	52,500 (1)	Nil	Nil	Nil	150,000	Nil	Nil
Paul John Director	2005	Nil	Nil	Nil	Nil	NIl	Nil	Nil
David Pearce Secretary and Director	2005	Nil	Nil	Nil	Nil	150,000	Nil	Nil
Gil Atzmon Director	2005	Nil	Nil	Nil	Nil	25,000	Nil	Nil
George S. Young Former Director	2005	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Daniel T. MacInnis Director	2005	Nil	Nil	Nil	Nil	50,000	Nil	Nil

(1) the $52,500 represents a management fee paid to a company controlled by Stuart Rogers. In addition to management services, this company provides office space to the Company.

6.C

Board Practices

Stuart Rogers, Paul John, David Pearce, Gil Atzmon and Daniel T. MacInnis have acted as our directors since May 8, 2002, June 18, 2002, December 15, 2003, June 23, 2004 and December 7, 2005 respectively.

Daniel T. MacInnis was appointed to the Board of Directors in December of 2005 concurrently with the resignation of George Young from the Board of Directors.

All of the directors were reappointed at our recent annual general meeting of the shareholders held on May 2, 2006. The directors will, unless they choose to resign, hold office until the next annual general meeting of the shareholders at which time they may stand for re-election. We are required to hold an annual general meeting once in every calendar year and not longer than thirteen months from the last annual general meeting.

We are a party to a management contract with a private company owned by Stuart Rogers whereby he is entitled to be paid $5,000 per month for his management services. No other directors have service contracts with us, nor are they entitled to any termination benefits.

There are no service contracts with the Company for the directors providing for benefits upon termination of their service.

The Company does not have an executive committee.

Our audit committee is comprised of Gil Atzmon, Paul John and David Pearce. We have not appointed a remuneration committee.

6.D

Employees

We do not have any employees other than our directors and officers.

6.E

Share Ownership

Our directors and officers own beneficially the following shares as of the date of this annual report:

Name	Number of Shares Owned	Percentage of Outstanding Common Shares
Stuart Rogers	307,750	2.76%
Paul John	398,750	3.58%
David Pearce	559,500	5.02%
Gil Atzmon(1)	240,000	2.15%
Daniel MacInnis	Nil	Nil
Clancy Wendt(1)	480,000	4.30%

(1)

240,000 of the 480,000 shares owned by Clancy Wendt and all of the 240,000 shares owned by Gil Atzmon (being a total of 480,000 shares) are registered in the name of Zazu Exploration, Inc., Zazu Exploration, Inc. is a private company which is owned by Gil Atzmon and Clancy Wendt as to 50% each

The above percentages are based on the number of common shares issued and outstanding in our capital stock as of the date of this annual report, which is 11,145,741.

The following incentive stock options are outstanding to our directors and officers:

Name

Shares that may be Purchased Upon Exercise of Option

Exercise Price

Expiry Date

Stuart Rogers

25,000

100,000

50,000

$0.40

$0.30

$0.70

June 30, 2006

February 23, 2007

February 7, 2008

Paul John

25,000

$0.40

June 30, 2006

David Pearce

43,000

50,000

$0.40

$0.70

June 30, 2006

February 7, 2008

Gil Atzmon

25,000

$0.40

$0.30

June 30, 2006

February 23, 2007

Daniel MacInnis

50,000

$0.60

$0.70

December 6, 2007

February 7, 2008

Clancy Wendt

50,000

46,000

50,000

$0.40

$0.30

$0.70

June 30, 2006

February 23, 2007

February 7, 2008

The Company has an incentive stock option plan. This Stock Option Plan provides for equity participation in the Company by its directors, officers, employees and consultants through the acquisition of common shares pursuant to the grant of options to purchase common shares. The exercise price for options granted under the Stock Option Plan is determined by the closing trading price on the day immediately preceding the date of grant, less any discounts permitted by the TSX Venture Exchange or such other stock exchange on which the common shares are listed. The Company has reserved and authorized 10% of the issued treasury shares of the Company for issuance under the Stock Option Plan to directors and key employees.

Under the stock option plan, the aggregate number of optioned common shares granted to any one optionee in a 12-month period must not exceed 5% of the issued and outstanding common shares. The number of optioned common shares granted to any one consultant in a 12-month period must not exceed 2% of the issued and outstanding common shares. The aggregate number of optioned common shares granted to an optionee who is employed to provide investor relations activities must not exceed 2% of the issued and outstanding common shares of the Company in any 12-month period.

Options will be exercisable for a term of up to five years, subject to earlier termination in the event of death or the optionee’s cessation of services to the Company; and options granted under the stock option plan are non-assignable, except by will or the laws of descent and distribution.

The policies of the TSX-Venture Exchange limited the granting of stock options to directors, officers, employees and consultants of the Company and provided limits on the length, number and exercise price of such options. The Company is required to file its Stock Option Plan on an annual basis with the TSX-Venture Exchange for review of its terms.

Item 7.

Major Shareholders and Related Party Transactions

7.A

Major Shareholders

As used in this section, the term "beneficial ownership" with respect to a security is defined by Regulation 228.403 under the Securities Exchange Act of 1934, as amended, as consisting of: (1) any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares voting power (which includes the power to vote, or to direct the voting of such security) or investment power (which includes the power to dispose, or to direct the disposition of, such security); and (2) any person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting such person of beneficial ownership of a security or preventing the vesting of such beneficial ownership.

As of the date of this annual report, there are 11,145,741 common shares issued and outstanding in our capital stock. We are authorized to issue an unlimited number of common shares and preferred shares. We have not issued any preferred shares since our incorporation.

As of the date of this annual report, the following persons known to us were the beneficial owner of more than five percent of our outstanding common shares:

Name	Number of Shares	Percentage of Total
Dave Pearce	559,500	5.02%
Eric Carlson(1)	730,000	6.54%

(1)

Mr. Carlson’s shares are held by a private company which he controls.

Of our 63 registered shareholders, 35 are Canadian residents representing 9,250,728 common shares or 83.00% of our issued and outstanding common shares. We have 23 registered US shareholders holding 1,515,791 common shares or 13.60% of our issued and outstanding common shares. There are 4 registered shareholders from places other than the US and Canada holding a total of 379,223 common shares or 3.40% of our common stock. The remaining common shares of the Company are held by brokerages and other intermediaries and the Company cannot determine the residency of the beneficial holders of those shares.

Each of our issued common shares entitles the holder to one vote in general meeting. There are no disproportionate or weighted voting privileges.

We are not controlled directly or indirectly by any other corporation or any other foreign government or by any other natural or legal person, severally or jointly.

There are no arrangements the operation of which at a subsequent date may result in a change in our control.

Our trust and transfer agent is Pacific Corporate Trust Company of Canada, which is located at 3^rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada Tel: (604) 689-9853.

7.B

Related Party Transactions

Fiscal Year Ended December 31, 2003:

In the fiscal year ended December 31, 2003, there were no transactions that materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 10% of our outstanding common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest except as follows:

•

We paid or accrued $55,000 to a private company controlled by Stuart Rogers, our President, for management fees; and

•

We paid rent and office expenses totalling $19,000 to the same private company controlled by Stuart Rogers. As at December 31, 2003, $48,400 was owing to this company for unpaid management fees and rent.

Fiscal Year ended December 31, 2004:

In the fiscal year ended December 31, 2004, there were no transactions that materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 10% of our outstanding common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest except as follows:

•

We paid or accrued $30,000 to a private company controlled by Stuart Rogers, our President, for management fees; and

•

In previous years, we have paid rent and office expenses to a private company controlled by Stuart Rogers. No rent or office expenses were paid to this private company in the year ended December 31, 2004. As at December 31, 2004 $27,080 was owing to this company for unpaid management fees and rent, these amounts having been incurred in previous fiscal years.

Fiscal Year ended December 31, 2005:

In the fiscal year ended December 31, 2005, there were no transactions that materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 10% of our outstanding common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest except as follows:

•

We paid $52,500 to a private company controlled by Stuart Rogers, our President, for management fees; and

•

In previous years, we have paid rent and office expenses to a private company controlled by Stuart Rogers. No rent or office expenses were paid to this private company in the year ended December 31, 2005. As at December 31, 2005 $Nil was owing to this company for unpaid management fees and rent, these amounts having been incurred in previous fiscal years.

Our directors or officers must disclose in writing to us the nature and extent of any interest they have in a material contract, or proposed material contract, with us. Such disclosure must be made immediately after the director or officer becomes aware of the contract or proposed contract. A director who is required to disclose an interest in a material contract or proposed material contract may not vote on any resolution to approve the contract except in very limited circumstances.

Stock option compensation to our directors and officers is disclosed elsewhere in this Form 20F.

7.C

Interests of Experts and Counsel

Our principal accountants, experts and legal counsel have no interest in our shareholdings. The other items of this instruction are not applicable to Annual Filings on Form 20F.

Item 8.

Financial Information

8.A

Consolidated Statements and other Financial Information

The following financial statements for the year ended December 31, 2005 with comparatives for December 31, 2004, have been audited by an independent auditor, are accompanied by an audit report and are attached and incorporated herein:

(a)

balance sheet;

(b)

income statement;

(c)

statement showing changes in equity;

(d)

cash flow statement;

(e)

related notes and schedules required by the comprehensive body of accounting standards pursuant to

which the financial statements are prepared; and

(f)

a note analyzing the changes in each caption of shareholders’ equity presented in the balance sheet.

Incorporated herewith are the comparative financial statements covering the latest two financial years, audited in accordance with a comprehensive body of auditing standards.

Export Sales

The Company had no export sales in its latest financial year ended December 31, 2005 and, as a result, the percentage of export sales for the Company was zero.

Legal Proceedings

There are no material pending legal proceedings to which the Company is a party or of which any of its properties are subject. Management is not aware of any material proceedings in which any director, any member of management or any of the Company’s affiliates are a party adverse to, or have a material interest advserse to, the Company.

Dividend Policy

The Company has not paid dividends on the common shares in any of its last five fiscal years. The directors of the Company will determine if and when dividends should be declared and paid in the future based on the Company’s financial position at the relevant time. All of the common shares of the Company are entitled to an equal shares in any dividends declared and paid.

8.B

Significant Changes

There have been no significant changes, as that term is defined in the rules and policies governing the use of the Form 20F, since the date of the audited financial statements included herein.

Item 9.

The Offer and Listing

9.A

Offer and Listing Details

Our common shares trade on the TSX Venture Exchange under symbol “MXR” and on the NASD Over The Counter Bulletin Board under symbol “MXROF”. On March 2, 2006, we announced that the Company’s shares had been accepted for listing with the Frankfurt Stock Exchange under the trading symbol “M1D”.

Our principal trading market in volume is the TSX Venture Exchange. The following table sets forth the high and low closing prices in Canadian funds of our common shares traded on this Canadian exchange:

Annual Periods

High

Low

January 1, 2001 to December 31, 2001

$1.05

$0.10

January 1, 2002 to December 31, 2002

$0.39

$0.21

January 1, 2003 to December 31, 2003

$0.68

$0.23

January 1, 2004 to December 31, 2004

$0.55

$0.22

January 1, 2005 to December 31, 2005

$0.70

$0.265

Quarterly Periods

January 2005 to March 2005

$0.445

$0.265

April 2005 to June 2005

$0.47

$0.345

July 2005 to September 2005

$0.56

$0.33

October 2005 to December 2005

$0.70

$0.51

Monthly Periods

December 2005

$0.65

$0.58

January 2006

$0.75

$0.65

February 2006

$0.85

$0.65

March 2006

$0.98

$0.77

April 2006

$0.81

$0.61

May 2006

$0.83

$0.67

9.B.

Plan of Distribution

Not Applicable.

9.C.

Markets

The common shares of the Company were listed for trading on the predecessor of the TSX-Venture Exchange the 15^th day of June, 1994.

Our common shares have been quoted for trading on the NASD OTC Bulletin Board since November 8, 2000.

Our common shares were listed on the Frankfurt Stock Exchange on March 2, 2006 with the symbol “M1D”.

Item 10.

Additional Information

10.A

Share Capital

Not applicable.

10.B

Memorandum and Articles of Association

The Company incorporates by reference its Report on Form 20F filed on May 3, 2004 and the disclosure in subsequent filings by way of Report on Form 6K.

We were incorporated under theBusiness Corporations Act of Alberta by registration of our articles of incorporation and bylaws. Pursuant to the provisions of theBusiness Corporations Act, a company may conduct any business that it is not restricted by the terms of its articles or bylaws from conducting. Our articles and bylaws contain no such restrictions.

Our directors are required to disclose to the board of directors the nature and extent of their interest in any proposed transaction or contract and must thereafter refrain from voting in respect thereof. An interested director may be counted in the quorum when a determination as to such director’s remuneration is being considered but may not vote in respect thereof. The directors have an unlimited power to borrow money, issue debt obligations and mortgage or charge our assets provided such actions are conducted bona fide and in our best interests. There are no mandatory retirement ages for directors or any required shareholdings.

All holders of common shares are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as the board of directors may from time to time determine. All holders of common shares will share equally on a per share basis in any dividend declared by the board of directors. The dividend entitlement time limit will be fixed by the board of directors at the time any such dividend is declared. Each outstanding common share is entitled to one vote on all matters submitted to a vote of our shareholders in general meeting. There are no cumulative voting rights attached to any of our shares and, accordingly, the holders of more than half of the shares represented at a general meeting can elect all of the directors to be elected in a general meeting. All directors stand for re-election annually. Upon any liquidation, dissolution or winding up, all common sharehold ers are entitled to share ratably in all net assets available for distribution after payment to creditors. The common shares are not convertible or redeemable and have no preemptive, subscription or conversion rights. In the event of a merger or consolidation, all common shareholders will be entitled to receive the same per share consideration.

The rights of shareholders may only be altered by the shareholders passing a special resolution at a general meeting. A special resolution may only be passed when it has been circulated to all shareholders by way of an information circular and then must be passed by seventy-five percent of the votes cast at the general meeting.

The board of directors may call annual and extraordinary general meetings when required. One or more shareholders holding in aggregate five percent or more of our issued shares may requisition an extraordinary meeting and the directors are required to hold such meeting within four months of such requisition. Only registered shareholders or persons duly appointed by proxy may be admitted to meetings unless otherwise permitted by the chairman of the meeting.

There are no federal Canadian limitations or restrictions on the right to own our common shares.

Some regulatory restrictions, and disclosure obligations, would apply to persons purchasing 5% or more of our issued and outstanding common shares. Persons resident outside of Canada might be subject to foreign investment review regulations if they were to purchase a controlling interest in the Company.

There are no provisions in our bylaws or articles of association that would have the effect of delaying, deferring or preventing a change in control.

There are no provisions in our bylaws or articles of association that establish any threshold for disclosure of ownership. However, the Alberta and British Columbia Securities Commission requires that persons that are the registered owners of, and/or have voting control over 10% or more of our common shares must file insider reports disclosing securities holdings and must disclose any plans to acquire additional securities above that 10%.

10.C

Material Contracts

In the previous two fiscal years ended December 31, the Company has entered into the following material contracts:

Option Agreement dated May 17, 2004 between Zazu Exploration, Inc. and us to acquire an interest in the Gold Hill Project near Cantwell, Alaska as summarized on page 9.

Mineral Property Option Agreement dated April 1, 2005 between us and Alberta Star Development Corp. respecting certain claims as summarized on page 11

Mineral Property Option Agreement between the Wendt Family Trust and the Company dated May 9, 2006 as summarized on page 11

Mineral Property Option Agreement between Kokanee Placer Ltd. and the Company dated May 15, 2006 granting Kokanee Place Ltd. the right to acquire up to a 51% interest in the Diamond Peak Property as summarized on page 12

Mineral Property Option Agreement between Energex LLC and the Company dated August 11, 2005 optioning 100% of the Thomas Mountain Property to the Company as summarized on page 13.

Agreement dated September 22, 2005 between the Company and Applied Geological Services, Inc. regarding the acquisition by the Company of the C de Baca Project claims as summarized on page 13

The Company has not entered into any other material agreements other than in the ordinary course of its business.

We have excluded management and public relations agreements, geological data access agreements, geological consulting agreements, professional services and other generic agreements as being in the ordinary course of the Company’s business.

10.D

Exchange Controls

There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements. See "Item 10.ETaxation".

There is no limitation imposed by Canadian law or by our constituent documents on the right of a non-resident to hold or vote common shares, other than are provided in the Investment Canada Act (Canada). The following summarizes the principal features of the Investment Canada Act (Canada).

The Investment Canada Act (Canada) requires certain "non-Canadian" individuals, governments, corporation or other entities who wish to acquire a "Canadian business" (as defined in the Investment Canada Act), or establish a "new Canadian business" (as defined in the Investment Canada Act) to file either a notification or an application for review with a governmental agency known as "Investment Canada". The Investment Canada Act requires that certain acquisition of control of Canadian business by a "non-Canadian" must be reviewed and approved by the Minister responsible for the Investment Canada Act on the basis that the Minister is satisfied that the acquisition is "likely to be of net benefit to Canada", having regard to criteria set forth in the Investment Canada Act. Only acquisitions of control are reviewable under the Investment Canada Act; however , the Investment Canada Act provides detailed rules for the determination of whether control has been acquired and, pursuant to those rules, the acquisition of one-third or more of the voting shares of a corporation may, in some circumstances, be considered to constitute an acquisition of control. Certain reviewable acquisitions of control may not be implemented before being approved by the Minister; if the Minister does not ultimately approve a reviewable acquisition, which has been completed, the acquired Canadian business must be divested. Failure to comply with the review provisions of the Investment Canada Act could result in, amongst other things, an injunction or a court order directing disposition of assets of shares.

10.E

Taxation

Certain US Federal Income Tax Consequences

The following is a general discussion of the material United States Federal income tax law for U.S. holders that hold such common shares as a capital asset, as defined under United States Federal income tax law and is limited to discussion of U.S. Holders that own less than 10% of the common stock. This discussion does not address all potentially relevant Federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any future legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The following 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 holder or prospectiv e holder of common shares of the Company and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of common shares of the Company should consult their own tax advisors about the Federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company.

U.S. Holders

As used herein, a "U.S. Holder" is a holder of common shares of the Company who or which is a citizen or individual resident (or is treated as a citizen or individual resident) of the United States for federal income tax purposes, a corporation or partnership created or organized (or treated as created or organized for federal income tax purposes) in the United States, including only the States and District of Columbia, or under the law of the United States or any State or Territory or any political subdivision thereof, or a trust or estate the income of which is includable in its gross income for federal income tax purposes without regard to its source, if, (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States trustees have the authorit y to control all substantial decisions of the trust.

For purposes of this discussion, a U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers and Holders who acquired their stock through the exercise of employee stock options or otherwise as compensation.

Distributions on common shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States Federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company. The availability of this deduction is subject to several complex limitations, which are beyond the scope of this discussion.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations, which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate shares of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its w orld-wide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as "passive income," "high withholding tax interest," "financial services income," "shipping income" and certain other classifications of income. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of common shares of the Company should consult their own tax advisors regarding their individual circumstances.

Disposition of common shares of the Company

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

Certain Canadian Federal Income Tax Consequences

The following discussion summarizes the principal Canadian federal income tax considerations generally applicable to a person who owns one or more common shares of the Company (the "Shareholder"), and who at all material times for the purposes of the Income Tax Act (Canada) (the "Canadian Act") deals at arm's length with the Company, holds all common shares solely as capital property, is a non-resident of Canada, and does not, and is not deemed to, use or hold any Common share in or in the course of carrying on business in Canada. It is assumed that the common shares will at all material times be listed on a stock exchange that is prescribed for the purposes of the Canadian Act.

This summary is based on the current provisions of the Canadian Act, including the regulations thereunder, and the Canada-United States Income Tax Convention (1980) (the "Treaty") as amended. This summary takes into account all specific proposals to amend the Canadian Act and the regulations thereunder publicly announced by the government of Canada to the date hereof and the Company's understanding of the current published administrative and assessing practices of Canada Customs and Revenue Agency. It is assumed that all such amendments will be enacted substantially as currently proposed, and that there will be no other material change to any such law or practice, although no assurances can be given in these respects. Except to the extent otherwise expressly set out herein, this summary does not take into account any provincial, territorial or foreign income tax law or treaty.

This summary is not, and is not to be construed as, tax advice to any particular Shareholder. Each prospective and current Shareholder is urged to obtain independent advice as to the Canadian income tax consequences of an investment in common shares applicable to the Shareholder's particular circumstances.

A Shareholder generally will not be subject to tax pursuant to the Canadian Act on any capital gain realized by the Shareholder on a disposition of a Common share unless the Common share constitutes "taxable Canadian property" to the Shareholder for purposes of the Canadian Act and the Shareholder is not eligible for relief pursuant to an applicable bilateral tax treaty. A Common share that is disposed of by a Shareholder will not constitute taxable Canadian property of the Shareholder provided that the Common share is listed on a stock exchange that is prescribed for the purposes of the Canadian Act (the Toronto Stock Exchange is so prescribed), and that neither the Shareholder, nor one or more persons with whom the Shareholder did not deal at arm's length, alone or toge ther at any time in the five years immediately preceding the disposition owned, or owned any right to acquire, 25% or more of the issued shares of any class of the capital stock of the Company. In addition, the Treaty generally will exempt a Shareholder who is a resident of the United States for the purposes of the Treaty, and who would otherwise be liable to pay Canadian income tax in respect of any capital gain realized by the Shareholder on the disposition of a Common share, from such liability provided that the value of the Common share is not derived principally from real property (including resource property) situated in Canada or that the Shareholder does not have, and has not had within the 12-month period preceding the disposition, a "permanent es tablishment" or "fixed base," as those terms are defined for the purposes of the Treaty, available to the Shareholder in Canada. The Treaty may not be available to a non-resident Shareholder that is a U.S. LLC, which is not subject to tax in the U.S. Any dividend on a Common share, including a stock dividend, paid or credited, or deemed to be paid or credited, by the Company to a Shareholder will be subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend, or such lesser rate as may be available under an applicable income tax treaty. Pursuant to the Treaty, the rate of withholding tax applicable to a dividend paid on a Common share to a Shareholder who is a resident of the United States for the purposes of the Treaty will be reduced to 5% if the beneficial owner of the dividend is a company that owns at least 10% of the voting stock of the Company, and i n any other case will be reduced to 15%, of the gross amount of the dividend. It is Canada Customs and Revenue Agency`s position that the Treaty reductions are not available to a Shareholder that is a "limited liability company" resident in the United States. The Company will be required to withhold any such tax from the dividend, and remit the tax directly to Canada Customs and Revenue Agency for the account of the Shareholder.

ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES.

10.F Dividends and paying agents

Not Applicable to Annual Reports on Form 20F.

10.G

Statement by experts

Not Applicable to Annual Reports on Form 20F.

10.H

Documents on Display

The documents concerning the Company which are referred to in this Report on Form 20F are located at its principal executive offices at the address on the face page of this Report.

10.I Subsidiary Information

The Company does not have any subsidiaries.

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

The Company does not have market portfolios and does not engage in trading risk sensitive instruments or financial instruments. The Company is an extractive enterprise.

Item 12.

Description of Securities Other than Equity Securities

Not applicable.

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

The Company has had no material defaults in payment of principal, interest or sinking or purchase fund instalments. The Company is an extractive enterprise.

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable

Item 15.

Controls and Procedures

Our Chief Executive Officer and President, Stuart Rogers and our Chief Financial Officer, David Pearce, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in US Exchange Act Rule 13(a)-14(c) within 90 days of the date of this Form 20-F, and within 90 days of the date of the Company’s year ended December 31, 2005, have concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level to ensure that material information relating to the Company was made known to them by others within the Company particularly during the period in which this Form 20-F was being prepared.

Under US Exchange Act Rule 13a-15(e) the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the US Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the US Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

15.D

Changes in Internal Control over financial reporting

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date our Chief Executive Officer and our Chief Accounting Officer completed their evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls requiring corrective actions.

Item 16.

[reserved]

16A.

Audit Committee Financial Expert

We do not have an audit committee financial expert serving on our audit committee.

16.B

Code of Ethics

The Company does not have a written Code of Ethics. No Code of Ethics is presently required under the Company’s incorporating jurisdiction, its Canadian reporting jurisdictions or the rules of the TSX Venture Exchange.

16.C

Principal Accountant Fees and Services

(a)

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company’s principal accountant for the audit of the Company’s annual financial statements, together with services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were approximately $13,208 for the year ending December 31, 2005 and $8,200 for the year ending December 31, 2004.

(b)

Audit-Related Fees

The aggregate fees billed for each of the last two fiscal years for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of the Company’s financial statements but are not reported under paragraph (a) of this Item were $1,200 for the year ending December 31, 2005 and zero ($nil) for the year ending December 31, 2004.

(c)

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $200 for the year ended December 31, 2004 and $400 for the year ended December 31, 2005 for preparation of the Company’s tax returns.

(d)

All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant other than services disclosed in paragraphs (a) through (c) of this Item were $nil in the year ending December 31, 2004 and $nil in the year ending December 31, 2005.

16.D

Exemptions from the Listing Standards for Audit Committees

The disclosure required under Exchange Act Rule 10A-3(d) is not applicable to the Company.

16.E

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The Company made no issuer repurchases, including any made pursuant to a publicly announced plan or program or made pursuant to a plan or program that was not announced publicly, in the last two fiscal years. The Company made no open market issuer repurchases.

PART III

Item 17.

Financial Statements

Our financial statements are attached hereto immediately after the signatures section. Our audited financial statements include:

•

our balance sheets as at December 31, 2005 and December 31, 2004;

•

statements of loss and deficit for the periods ended December 31, 2005, December 31, 2004 and December 31, 2003;

•

statements of cash flows for the periods ended December 31, 2005, December 31, 2004 and December 31, 2003; and

•

notes to the financial statements.

All of these were reviewed and audited by our auditor, Dale Matheson Carr-Hilton LaBonte, Independent Chartered Accountants. Their audit report thereon is included in this report on Form 20F.

The financial statements are prepared in accordance with generally accepted accounting principles in Canada and are reconciled to United States generally accepted accounting principles in Note 9. All figures are expressed in Canadian dollars.

Item 18.

Financial Statements

See "Item 17Financial Statements"

Item 19.

Exhibits

Certificate of Incorporation and Certificate of Amendment and Registration of Restated Articles and Bylaws *

Material Contracts

(a)

Management Agreement dated May 8, 2002 between Vancan Capital Corp. and West Oak Capital Group Ltd.**

(b)

Mineral Property Purchase Agreement dated January 15, 2003 between Vancan Capital Corp. and David G. Lorne respecting the Target 2 Claim. ***

(c)

Mineral Property Purchase Agreement dated April 15, 2003 between Vancan Capital Corp. and David G. Lorne respecting the Target 1 Claim. ***

(d)

Option Agreement dated May 17, 2004 between MAX Resource Corp. and Zazu Exploration, Inc. to acquire an interest in the Gold Hill Project near Cantwell, Alaska.****

(e)

Mineral Property Option Agreement with Alberta Star Development Corp. to acquire up to a 50% interest in the MacInnis Lake Uranium Property dated April 1, 2005.****

(f)

Mineral Property Option Agreement between the Wendt Family Trust and the Company dated May 9, 2006 optioning 100% of the Diamond Peak Property to the Company.

(g)

Mineral Property Option Agreement between Kokanee Placer Ltd. and the Company dated May 15, 2006 granting Kokanee Place Ltd. the right to acquire up to a 51% interest in the Diamond Peak Property.

(h)

Mineral Property Option Agreement between Energex LLC and the Company dated August 11, 2005 optioning 100% of the Thomas Mountain Property to the Company

(i)

Agreement dated September 22, 2005 between the Company and Applied Geological Services, Inc. regarding the acquisition by the Company of the C de Baca Project claims.

Section 302 Certifications

Section 906 Certifications

* incorporated by reference from our Form 20-F that was originally filed with the commission on June 8, 2001.

** incorporated by reference from our Form 20-F that was originally filed with the commission on June 28, 2002.

*** incorporated by reference from our Form 20-F that was originally filed with the commission on June 27, 2003.

**** incorporated by reference from our Form 20-F that was originally filed with the commission on June 29, 2005.

SIGNATURES

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

MAX RESOURCE CORP.

Dated: June 29, 2006

By: /s/ Stuart Rogers

Stuart Rogers, President

MAX RESOURCE CORP.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005

INDEPENDENT AUDITORS’ REPORT

BALANCE SHEETS

STATEMENTS OF OPERATIONS AND DEFICIT

STATEMENTS OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Max Resource Corp.

We have audited the consolidated balance sheets of Max Resource Corp. as at December 31, 2005 and 2004 and the consolidated statements of operations and deficit and cash flows for the years ended December 31, 2005, 2004 and 2003. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2005 and 2004 and the results of its operations and its cash flows for the years ended December 31, 2005, 2004 and 2003 in accordance with Canadian generally accepted accounting principles.

“Dale Matheson Carr-Hilton LaBonte”

CHARTERED ACCOUNTANTS

Vancouver, B.C.

February 14, 2006

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING DIFFERENCES

In the United States, reporting standards for independent registered public accountants would require the addition of an explanatory paragraph following the opinion paragraph when the financial statements are affected by a significant uncertainty such as referred to in Note 1 regarding the Company’s ability to continue as a going concern. Our report to the shareholders dated February 14, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such uncertainties in the auditors’ report when the uncertainties are adequately disclosed in the financial statements.

“Dale Matheson Carr-Hilton LaBonte”

CHARTERED ACCOUNTANTS

Vancouver, B.C.

February 14, 2006

MAX RESOURCE CORP.
CONSOLIDATED BALANCE SHEETS
(Expressed In Canadian Dollars)

				December 31,		December 31,
				2005		2004

ASSETS

CURRENT
Cash		$		565,725	$	2,010
Taxes recoverable and prepaids				24,105		3,137
				589,830		5,147

MINERAL PROPERTIES (Note 3)				1,305,173		681,862
EQUIPMENT, net of accumulated amortization of $3,699				590		738

		$		1,895,593	$	687,747

LIABILITIES

CURRENT
Accounts payable and accrued liabilities		$		30,171	$	35,334
Due to related parties (Note 4)				-		27,080

				30,171		62,414

SHAREHOLDERS’ EQUITY

SHARE CAPITAL (Note 5)
Authorized:	Unlimited number of voting common shares without par value
	Unlimited number of preferred shares without par value
Issued and outstanding:	9,943,241 common shares (2004: 5,948,125 common shares)			3,367,520		1,823,544
SHARE PURCHASE WARRANTS (Note 5)				5,828		-
CONTRIBUTED SURPLUS (Note 5)				284,214		128,948
DEFICIT				(1,792,140)		(1,327,159)

				1,865,422		625,333

			$	1,895,593	$	687,747

NATURE OF OPERATIONS (Note 1)

APPROVED BY THE DIRECTORS:

“Paul John”		“Stuart Rogers”
Paul John – Director		Stuart Rogers – Director

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

MAX RESOURCE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed In Canadian Dollars)
		Year ended December 31, 2005	Year ended December 31, 2004	Year ended December 31, 2003

EXPENSES
Amortization	$	148	$ 185	$ 231
Consulting		3,998	50,383	1,035
Consulting - stock-based compensation (Note 5)		46,562	-	8,000
Investor relations - stock-based compensation (Note 5)		31,826	19,153	-
Management fees (Note 4)		52,500	30,000	55,000
Officers and directors fees - stock-based compensation (Note 5)		76,878	41,071	41,000
Office and general		8,618	5,179	4,682
Professional fees		41,870	13,054	8,933
Rent		-	-	19,000
Transfer agent, filing fees and shareholder relations		122,631	49,931	16,326
Travel and promotion		24,754	1,548	3,642

LOSS BEFORE THE FOLLOWING		(409,785)	(210,504)	(157,849)

Interest income		1,804	872	643
Write-down of mineral properties (Note 3)		(57,000)	-	-

NET LOSS FOR THE YEAR		(464,981)	(209,632)	(157,206)

DEFICIT, BEGINNING OF YEAR		(1,327,159)	(1,117,527)	(960,321)

DEFICIT, END OF YEAR	$	(1,792,140)	$ (1,327,159)	$ (1,117,527)



BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.06)	$ (0.04)	$ (0.05)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		7,633,101	5,402,255	3,405,611

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

MAX RESOURCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed In Canadian Dollars)

		Year ended December 31, 2005	Year ended December 31, 2004	Year ended December 31, 2003

CASH PROVIDED BY (USED IN):

OPERATING ACTIVITIES
Net loss for the year	$	(464,981)	$ (209,632)	$ (157,206)
Adjust for items not involving cash:
Amortization		148	185	231
Non-cash consulting, management and investor relations expense – stock-based compensation		155,266	60,224	49,000
Write-down of mineral properties		57,000	-	-

		(252,567)	(149,223)	(107,975)
Changes in non-cash working capital items:
(Increase) decrease in taxes recoverable and prepaids		(20,968)	4,831	(7,008)
Increase (decrease) in accounts payable		(5,163)	5,201	43,503

CASH USED IN OPERATING ACTIVITIES		(278,698)	(139,191)	(71,480)

FINANCING ACTIVITIES
Repayments to related parties		(27,080)	(21,320)	(6,467)
Issuance of common shares		1,349,804	236,425	376,700

CASH PROVIDED BY FINANCING ACTIVITIES		1,322,724	215,105	370,233

INVESTING ACTIVITIES
Mineral property acquisition and exploration costs		(480,311)	(343,100)	(82,038)

CASH USED IN INVESTING ACTIVITIES		(480,311)	(343,100)	(82,038)

INCREASE (DECREASE) IN CASH		563,715	(267,186)	216,715

CASH, BEGINNING OF YEAR		2,010	269,196	52,481

CASH, END OF YEAR	$	565,725	$ 2,010	$ 269,196

SUPPLEMENTARY CASH FLOW DISCLOSURE: Note 7

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

MAX RESOURCE CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ENDED DECEMBER 31, 2005

(Expressed In Canadian Dollars)

NOTE 1.

NATURE OF OPERATIONS

The Company was incorporated under the Business Corporations Act (Alberta) on April 25, 1994 as Proven Capital Corp. By Articles of Amendment dated January 10, 1995, the Company’s name was changed to Cedar Capital Corp. and then to Vancan Capital Corp. on February 12, 2002 concurrent with the consolidation of outstanding common share capital on a four for one basis. The Company’s name was changed to Max Resource Corp. on May 14, 2004. The Company is in the business of mineral property exploration and development. The recoverability of amounts recorded for mineral properties and related deferred costs is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development, and future production or proceeds from the disposition thereof. The financial statements have been prepared under the assumption that the Company is a going con cern. The ability of the Company to continue operations as a going concern is dependent upon attaining profitable operations from its mineral property activities. To date, the Company has not generated any revenues from operations and will require additional funds to meet its obligations and the costs of its operations. As a result, significant losses are anticipated prior to the generation of any revenues.

The Company's future capital requirements will depend on many factors, including costs of exploration of the properties, cash flow from operations, and competition and global market conditions. The Company's anticipated recurring operating losses and growing working capital needs will require that it obtain additional capital to operate its business.

The Company will depend almost exclusively on outside capital to complete the exploration and development of its mineral properties. Such outside capital will include the sale of additional stock. There can be no assurance that capital will be available as necessary to meet these continuing exploration and development costs or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional stock by the Company may result in a significant dilution in the equity interests of its current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, its business and future success may be adversely affected.

Given the Company's limited operating history, lack of sales, and its operating losses, there can be no assurance that it will be able to achieve or maintain profitability. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with accounting principles generally accepted in Canada. Except as indicated in Note 9, they also comply, in all material respects, with accounting principles generally accepted in the United States.

Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Max Resource, Inc., a Nevada company, which was incorporated on August 24, 2005. All significant inter-company balances and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant areas requiring the use of management estimates relate to the determination of impairment of mineral property interests and the determination of fair value for stock based transactions. Where estimates have been used financial results as determined by actual events could differ from those estimates.

NOTE 2

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Mineral Properties

The Company records its interests in mineral properties at the lower of cost or estimated recoverable value. Where specific exploration programs are planned and budgeted by management, the cost of mineral properties and related exploration expenditures are capitalized until the properties are placed into commercial production, sold, abandoned or determined by management to be impaired in value. These costs will be amortized over the estimated useful lives of the properties following the commencement of production or written off if the properties are sold or abandoned.

The costs include the cash or other consideration and the assigned value of shares issued, if any, on the acquisition of mineral properties. Costs related to properties acquired under option agreements or joint ventures, whereby payments are made at the sole discretion of the Company, are recorded in the accounts at such time as the payments are made. For properties held jointly with other parties the Company only records its proportionate share of acquisition and exploration costs. The proceeds from options granted are deducted from the cost of the related property and any excess is deducted from other remaining capitalized property costs. The Company does not accrue estimated future costs of maintaining its mineral properties in good standing.

Capitalized costs as reported on the balance sheet represent costs incurred to date and may not reflect actual, present, or future values. Recovery of carrying value is dependent upon future commercial success or proceeds from disposition of the mineral interests.

Management evaluates each mineral interest on a reporting period basis or as events and circumstances warrant, and makes a determination based on exploration activity and results, estimated future cash flows and availability of funding as to whether costs are capitalized or charged to operations.

Mineral property interests, where future cash flows are not reasonably determinable, are evaluated for impairment based on management’s intentions and determination of the extent to which future exploration programs are warranted and likely to be funded.

General exploration costs not related to specific properties and general administrative expenses are charged to operations in the year in which they are incurred.

The Company does not have any producing mineral properties and all of its efforts to date have been exploratory in nature. Upon the establishment of commercial production, carrying values of deferred acquisition and exploration costs will be amortized over the estimated life of the mine using the units of production method.

Equipment

Equipment is recorded at cost with amortization being provided annually using the declining balance basis at 20% per annum.

Loss per Share

The Company is using the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments. The treasury stock method assumes that proceeds received from in-the-money stock options are used to repurchase common shares at the prevailing market rate.

Basic loss per share figures have been calculated using the weighted average number of shares outstanding during the respective periods. Diluted loss per share figures are equal to those of basic loss per share for each year since the effects of the share purchase warrants and stock options have been excluded as they are anti-dilutive.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-based Compensation

The Company has granted stock options to directors and employees as described in Note 5. Effective January 1, 2003 the Company adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook, Section 3870,Stock-based compensation and other stock-based payments, released in November 2003, whereby it expenses all stock-based compensation awards, made or altered on or after January 1, 2003, on a prospective basis. The standard requires that all new or altered stock based awards provided to employees and non-employees are measured and recognized using a fair value based method. Fair values are determined using the Black-Scholes option pricing model. Any consideration paid by employees on the exercise of the options is credited to share capital.

Financial Instruments

The Company’s financial instruments consist of cash, taxes recoverable and prepaids, accounts payable and accrued liabilities and amounts due to related parties. The fair value of the Company’s financial instruments are estimated by management to approximate their carrying values due to their immediate or short-term maturity.

Income Taxes

Future income taxes are recognized for the future income tax consequences attributable to differences between financial statement carrying values and their corresponding tax values (temporary differences). Future income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in years in which temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period in which the change occurs. The amount of future income tax assets recognized is limited to the amount that, in the opinion of management, is more likely than not to be realized.

Risk Management

The Company is engaged primarily in mineral exploration and manages related industry risk issues directly. The Company may be at risk for environmental issues and fluctuations in commodity pricing. Management is not aware of and does not anticipate any significant environmental remediation costs or liabilities in respect of its current operations; however it is not possible to be certain that all aspects of environmental issues affecting the Company, if any, have been fully determined or resolved. The Company is not exposed to significant credit concentration or interest rate risk.

Translation of Foreign Currency

Balances denominated in foreign currencies are translated into Canadian dollar equivalents as follows:

Monetary assets and liabilities at year end rates;

ii.

All other assets and liabilities at historical rates;

iii.

Revenue and expense transactions at the average rate of exchange prevailing during the year.

The Company's subsidiary is an integrated foreign operation and is translated into Canadian dollars using the temporal method. Monetary items are translated at the exchange rate in effect at the balance sheet date; non-monetary items are translated at historical exchange rates. Income and expense items are translated at the average exchange rate for the period. Translation gains and losses are reflected in loss for the year..

Asset Retirement Obligations

The Company has adopted the CICA Handbook section 3110,Asset Retirement Obligations. This standard focuses on the recognition and measurement of liabilities related to legal obligations associated with the retirement of property, plant and equipment. Under this standard, these obligations are initially measured at fair value and subsequently adjusted for any changes resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. The asset retirement cost is to be capitalized to the related asset and amortized into earnings over time. This section was effective on January 1, 2004. The adoption of this standard did not have a material impact on the financial position and results of operations.

Mineral property related retirement obligations are capitalized as part of deferred exploration and development costs and amortized over the estimated useful lives of the corresponding mineral properties.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comparative Figures

Certain of the comparative figures have been reclassified to conform to the current year’s presentation.

NOTE 3.

MINERAL PROPERTIES

	December 31,2003	Additions	December 31, 2004	Additions	Write-down	December 31, 2005
Acquisition costs:
Target Claims, NWT	$ 146,000	$ -	$ 146,000	$ -	$ (55,000)	$ 91,000
Gold Hill, Alaska	-	204,415	204,415	149,412	-	353,827
MacInnis Lake, NWT	-	-	-	95,000	-	95,000
Thomas Mountain, Utah	-	-	-	68,180	-	68,180
C de Baca, New Mexico	-	-	-	44,684	-	44,684

	146,000	204,415	350,415	357,276	(55,000)	652,691

Exploration costs:
Target Claims, NWT	52,038	-	52,038	7,060	(2,000)	57,098
Gold Hill, Alaska	-	279,409	279,409	54,005	-	333,414
MacInnis Lake, NWT	-	-	-	243,515	-	243,515
Thomas Mountain, Utah				18,455		18,455
C de Baca, New Mexico	-	-	-	-	-	-

	52,038	279,409	331,447	323,035	(2,000)	652,482

	$ 198,038	$ 483,824	$ 681,862	$ 680,311	$ (57,000)	$ 1,305,173

Target Claims, Northwest Territories, Canada

Effective January 15, 2003 the Company entered into an agreement to acquire a 50% interest in a mineral claim located east of Hottah Lake in the Northwest Territories of Northern Canada (the “Target 2 Claim”). During 2003, the Company acquired its interest in the Claim by making cash payments totalling $15,000, issuing 200,000 common shares at a price of $0.20 each and agreeing to incurring a minimum of $100,000 (subsequently revised to $50,000) in exploration expenditures on the Claim, which were required to be made on or before December 31, 2004.

By agreement dated April 16, 2003, the Company obtained the right to acquire a 50% interest in a mineral claim comprising 1,781.9 acres located in the Longtom Lake area of the Northwest Territories (the “Target 1 Claim”). To earn its interest during 2003, the Company paid $15,000 and issued 200,000 common shares at a price of $0.38 per share.

During the fiscal year ended December 31, 2005 the Company elected to write-off the Target 2 Claim as it does not intend to do any further work on that property. This resulted in the write-down of $55,000 in acquisition costs and $2,000 in deferred exploration charges. The Company intends to maintain the Target 1 Claim.

During the years ended December 31, 2005 and 2004 the following exploration costs were incurred related to the Target Claims in the Northwest Territories as follows:

	2005	2004
Geological consulting	$ 5,060	$ -

NOTE 3.

MINERAL PROPERTIES (continued)

Gold Hill Property, Alaska

During 2004 the Company entered into an option agreement to acquire an interest in the Gold Hill Property near Cantwell, Alaska. Under the terms of the option agreement, the Company paid $45,173 (US$33,200) in acquisition costs and a further $18,518 (US$15,000) in advance royalties and issued 100,000 common shares valued at $47,000 and 100,000 warrants valued at $19,724 (refer to Note 5) exercisable at $0.47 per share for a two year period. In order to maintain the Option, the Company must issue an additional 200,000 common shares by January 1, 2005 (issued effective December 31, 2004 at a value of $74,000) and a further 200,000 common shares by January 1, 2006 (issued during the year ended December 31, 2005 at a value of $120,000).

The Company will assume all of the optionor’s obligations under their lease with GCO Minerals Corp. (“GCO”) which include the following minimum work commitments and Advance Royalty Payments (in U.S. funds):

Year Work Commitment Advance Royalty

2004 $100,000 (incurred) $5,000 (paid)

2005 150,000 (incurred) 15,000 (paid effective December 31, 2004)

2006 250,000 25,000

2007 250,000 25,000

2008 500,000 50,000

2009 500,000 75,000

2010 500,000 100,000

Upon exercise of the option, the Company can earn up to a 90% interest in the Gold Hill claims, subject to a net smelter return (“NSR”) and back-in rights to GCO that would allow GCO to buy back up to a 30% interest in the Gold Hill claims by paying the Company the lesser of US$5,000,000 or 300% of all costs incurred to completion of a Feasibility Report. The NSR will fluctuate from 1.5% to 4.0% depending on the price of gold. In addition, the Company will pay to the optionor an additional NSR of 1%.

During the years ended December 31, 2005 and 2004, the Company incurred the following exploration expenses on the Gold Hill Property:

	2005	2004
Drilling	$ -	$ 64,913
Field expenses	36,757	111,028
Geological consulting	13,440	83,089
Lease payments	3,691	9,567
Staking	117	10,812
	$ 54,005	$ 279,409

NOTE 3.

MINERAL PROPERTIES (continued)

MacInnis Lake, Northwest Territories, Canada

The Company entered into an option agreement dated April 1, 2005 with Alberta Star Development Corp. (“Alberta Star”) whereby the Company can earn an interest in the MacInnis Lake Uranium Project in the Northwest Territories, subject to acceptance for filing by the TSX Venture Exchange (the “Exchange”). The terms of the option agreement call for payments as follows:

(i)

cash payments totalling $30,000 ($15,000 upon acceptance of the option agreement by the Exchange (paid) and $15,000 one year from the date of acceptance);

(ii)

the issuance to Alberta Star of 200,000 common shares of the Company upon Exchange acceptance for filing (paid) and

(iii)

work commitments totalling $2,000,000 over a five year period ($750,000 in the first year; $250,000 in the second year; $250,000 in the third year; $250,000 in the fourth year and $500,000 in the fifth and final year).

The terms of the option agreement call for the Company to earn a 25% interest in the MacInnis Lake project upon making the payments in (i) and (ii) above together with the first $1,000,000 in work commitments. The Company may earn a further 25% interest when it completes the $2,000,000 in work commitments. The MacInnis Lake property is subject to a 2% NSR royalty. Upon full exercise of the option, the parties agree to enter into a joint venture agreement. Alberta Star will act as operator on the MacInnis Lake project for the term of the option agreement.

During the year ended December 31, 2005, the Company incurred the following exploration expenses on the MacInnis Lake project:

	2005	2004
Geological consulting	$ 20,795	$ -
Geophysical surveys	213,475	-
Field expenses	9,245	-
	$ 243,515	$ -

Thomas Mountain, Utah, United States

On August 11, 2005 the Company entered into an option agreement with Energex, LLC (“Energex”) to acquire a 100% interest in 27 mineral claims (the “PPCO” claims) in Juab County, Utah.

The terms of the Option Agreement call for an initial cash payment to Energex of US$5,000, annual maintenance payments to Energex of US$10,000 commencing in the second year and escalating by US$10,000 each year thereafter to a maximum of US$50,000 per year, and work commitments totalling US$1,000,000 over a four year period (US$100,000 in the first year; US$200,000 in the second year; US$300,000 in the third year and US$400,000 in the fourth and final year). The Company will earn a 100% interest in the PPCO claims by making the initial cash payment of US$5,000 (paid) and satisfying the work commitment of US$1,000,000, subject to a 2% royalty payable to Energex.

In September 2005, the Company staked additional claims around the original PPCO uranium claims, bringing the total to 195 lode claims comprising 3,900 acres at a total staking cost of $62,298.

During the year ended December 31, 2005, the Company incurred the following exploration expenses on the Thomas Mountain project:

	2005	2004
Geological consulting	$ 6,933	$ -
Field expenses	11,522	-
	$ 18,455	$ -

NOTE 3.

MINERAL PROPERTIES (continued):

C de Baca, New Mexico, United States

On September 22, 2005 the Company announced that it is acquiring a total of 108 claims (the “Dat Claims”) in Socorro County, New Mexico, pursuant to an agreement with Applied Geologic Services, Inc. of Denver, Colorado. Consideration for the acquisition of the Claims is US$10,000 cash payment on acceptance for filing by the Exchange (which has been paid), with annual payments of US$10,000 until production. After production, a royalty of 2% of gross revenues is payable until such time as a total of US$500,000 (including the initial cash payment and annual payments) has been paid.

To December 31, 2005, the Company has incurred total acquisition costs of $44,684 with respect to the Dat Claims. This amount is comprised of staking fees of $10,800, filing fees of $22,119 and the purchase price of $11,765 (US$10,000).

NOTE 4.

RELATED PARTY TRANSACTIONS

During 2005, management fees of $52,500 (2004 - $30,000; 2003 - $55,000) were paid or accrued to a private company controlled by a director. In addition, rent of Nil (2004 – Nil; 2003 – $19,000) was paid to this related party. As at December 31, 2005 Nil (2004 - $27,080) was owing to this related party. With the exception of the granting of stock options, these transactions were measured at the exchange amount agreed to by the related parties.

NOTE 5.

SHARE CAPITAL

Authorized:

Unlimited number of voting common shares without par value

Unlimited number of preferred shares without par value

	Shares	Value	Contributed Surplus
Common Shares Issued:
Balance at December 31, 2003	4,530,625	1,466,119	49.000
Shares issued for mineral properties	300,000	121,000	19,724
Exercise of stock options	25,000	7,000	-
Exercise of warrants	1,092,500	229,425	-
Stock-based compensation	-	-	60,224

Balance at December 31, 2004	5,948,125	1,823,544	128,948
Shares issued for mineral properties	400,000	200,000	-
Exercise of stock options	290,000	96,000	-
Exercise of warrants	1,555,000	520,000	-
Private placement	1,750,116	743,104	-
Finders fees	-	(9,300)	-
Fair market value of agent’s warrants	-	(5,828)	-
Stock-based compensation	-	-	155,266

Balance at December 31, 2005	9,943,241	$ 3,367,520	$ 284,214

NOTE 5.

SHARE CAPITAL (continued)

Private Placements

On April 29, 2005 the Company completed a non-brokered private placement of 1,135,000 units at $0.40 per unit, with each unit consisting of one common share and ½ of a non-transferable share purchase warrant. Each full warrant will entitle the holder to purchase one additional common share of the Company for $0.50 per share for a two year period from closing. Finder’s fees of $9,300 were paid with respect to this placement, along with the issuance of 25,000 agent’s warrants, with each warrant exercisable to purchase one common share at a price of $0.40 per share for a period of two years from closing.

On November 7, 2005 the Company completed a non-brokered private placement of 615,116 units at $0.47 per unit, with each unit consisting of one common share and ½ of a non-transferable share purchase warrant. Each full warrant will entitle the holder to purchase one additional common share of the Company for a two year period, exercisable at $0.57 per share in the first year and at $0.70 per share in the second year.

Stock Options

In 2003 the Company granted stock options to directors and employees entitling them to purchase 306,000 common shares at a price of $0.28 per share to February 5, 2005The granting of these options resulted in a stock based compensation expense of $49,000 being recorded representing the fair value of the options. In accordance with the new accounting recommendations effective January 1, 2003, the Company has elected to expense the fair value of all stock options granted. The total fair value of $49,000 was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3% and an expected volatility of 112 %

In 2004, the Company granted stock options to directors, employees and consultants entitling them to purchase 283,000 common shares at a price of $0.40 per share to June 30, 2006. The granting of these options resulted in a stock based compensation expense of $60,224 being recorded during 2004. The total fair value of $60,224 was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 2.93% and an expected volatility of 99%.

On February 23, 2005 the Company granted stock options to directors and consultants entitling them to purchase 371,000 common shares at a price of $0.30 per share to February 23, 2007. The granting of these options resulted in a stock based compensation expense of $60,413 being recorded, representing the fair value of the options as estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 2.93% and an expected volatility of 102%.

On May 27, 2005 the Company granted stock options to directors and consultants entitling them to purchase 50,000 common shares at a price of $0.40 per share to May 27, 2007. The granting of these options resulted in a stock based compensation expense of $9,602 being recorded, representing the fair value of the options. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 2.78% and an expected volatility of 88%.

On August 31, 2005 the Company granted stock options to a consultant entitling him to purchase 150,000 common shares at a price of $0.40 per share to August 31, 2007. The granting of these options resulted in a stock based compensation expense of $28,455 being recorded, representing the fair value of the options. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 2.97% and an expected volatility of 86%.

On September 30, 2005 the Company granted stock options to a consultant entitling him to purchase 44,000 common shares at a price of $0.52 per share to September 30, 2007. The granting of these options resulted in a stock based compensation expense of $11,014 being recorded, representing the fair value of the options. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3.35% and an expected volatility of 87%.

NOTE 5.

SHARE CAPITAL (continued)

On October 7, 2005 the Company granted stock options to a consultant entitling him to purchase 110,000 common shares at a price of $0.60 per share to October 7, 2007. The granting of these options resulted in a stock based compensation expense of $31,826 being recorded, representing the fair value of the options. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3.41% and an expected volatility of 88%.

On December 7, 2005 the Company granted stock options to a director entitling him to purchase 50,000 common shares at a price of $0.60 per share to December 7, 2007. The granting of these options resulted in a stock based compensation expense of $13,956 being recorded, representing the fair value of the options. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3.77% and an expected volatility of 83%.

The following table summarizes information about stock option transactions:

	Outstanding Options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
Balance, December 31, 2002	524,200	$0.56	0.02 years
Options granted	306,000	0.28	-
Options exercised	-	-	-
Options cancelled and expired	(524,200)	0.56	-

Balance, December 31, 2003	306,000	$0.28	1.16 years
Options granted	283,000	0.40	-
Options exercised	(25,000)	0.28	-
Options cancelled and expired	-	-	-

Balance, December 31, 2004	564,000	0.34	0.33 years
Options granted	775,000	0.40	-
Options exercised	(290,000)	0.28	-
Options cancelled and expired	(281,000)	0.33	-

Balance, December 31, 2005	768,000	$0.42	1.28 years

The following incentive stock options were outstanding at December 31, 2005:

Number of Shares	Exercise Price	Expiry Date

193,000	$0.40	June 30, 2006
171,000	$0.30	February 23, 2007
50,000	$0.40	May 27, 2007
150,000	$0.40	August 31, 2007
44,000	$0.52	September 30, 2007
110,000	$0.60	October 7, 2007
50,000	$0.60	December 7, 2007
768,000

Warrants

The following table summarizes information about warrant transactions:

	Outstanding Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
Balance, December 31, 2002	-	-	-
Warrants issued	2,762,500	$0.28	-
Warrants exercised	(70,000)	0.21	-
Warrants cancelled and expired	-	-	-

Balance, December 31, 2003	2,692,500	0.29	1.11 years
Warrants issued	100,000	0.47	-
Warrants exercised	(1,092,500)	0.21	-
Warrants cancelled and expired	-	-	-

Balance, December 31, 2004	1,700,000	0.34	0.67 years
Warrants issued	900,058	0.54	-
Warrants exercised	(1,555,000)	0.33	-
Warrants cancelled and expired	(45,000)	0.45	-

Balance, December 31, 2005	1,000,058	$0.52	1.40 years

In 2004 the Company issued 100,000 warrants in connection with the Gold Hill Property (refer to Note 3). The fair value of these warrants was estimated to be $19,724 and was capitalized as a mineral property acquisition cost. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 2.93% and an expected volatility of 99%.

In 2005 the Company issued 25,000 warrants to the agents in connection with a private placement of 1,135,000 units. The fair value of these agents warrants was estimated to be $5,828 and charged to share capital as a share issuance cost. The total fair value was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3.99% and an expected volatility of 88 %

The following warrants to acquire common shares were outstanding at December 31, 2005:

	Number of Shares	Exercise Price	Expiry Date

Warrants	100,000	$0.47	June 15, 2006
	567,500	$0.50	April 26, 2007
	307,558	$0.57/0.70	November 6, 2007
Agents Warrants	25,000	$0.40	April 26, 2007

	1,000,058

NOTE 6.

INCOME TAXES

The Company has non-capital losses of approximately $1,140,000 which may be available to offset future income for Canadian income tax purposes which expire over the next ten years. In addition, there are resource-related expenditures of approximately $1,415,000 which may be used to offset future taxable Canadian resource income indefinitely, subject to annual rates prescribed by the Canadian Income Tax Act. Due to the uncertainty of realization of these loss carryforwards and resource pools, the benefits have not been reflected in the financial statements as the Company has provided a full valuation allowance for the potential future tax assets resulting from these loss carryforwards and resource pools.

The significant components of the Company’s future income tax assets and liabilities are as follows:

	2005	2004
Tax value of mineral properties in excess of book value	$ 57,000	$ -
Non-capital losses from prior years	1,140,000	983,000
	1,197,000	983,000

Estimated corporate income tax rate	35.6%	37.0%

Potential future income tax assets	426,132	363,710
Less: valuation allowance	(426,132)	(363,710)

Net Future Income Tax Asset (Liability)	$ -	$ -

The Company has non-capital losses remaining to be carried forward of approximately $1,140,000 (2004: $983,000) which may be available to offset future income tax but which expire as follows.

Year	Loss ($)

2006	81,000
2007	236,000
2008	169,000
2009	127,000
2010	125,000
2014	149,000
2015	253,000
	1,140,000

NOTE 7 - SUPPLEMENTARY CASH FLOW DISCLOSURE:

Year ended December 31, 2005

Year ended December 31, 2004

Year ended December 31, 2003

Cash paid for:

Interest

$ -

Income taxes

$ -

Other Non-Cash Transactions

During the year ended December 31, 2003 the Company issued 200,000 shares for mineral properties at $0.20 per share, and 200,000 shares for mineral properties at $0.38 per share. Refer to Note 3.

During the year ended December 31, 2004 the Company issued 100,000 shares for mineral properties at $0.47 per share, and 200,000 shares for mineral properties at $0.37 per share. During the year, the Company also issued 100,000 warrants valued at $19,724 for mineral properties. Refer to Note 3.

During the year ended December 31, 2005 the Company issued 200,000 shares for mineral properties at $0.60 per share, and 200,000 shares for mineral properties at $0.40 per share. Refer to Note 3.

NOTE 8.

SUBSEQUENT EVENT

On February 7, 2005, the Company granted 225,000 incentive stock options exercisable at $0.70 for a two year period to officers and directors of the Company.

NOTE 9.

ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES

These financial statements have been prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”) which differ in certain respects with accounting principles generally accepted in the United States and from practices prescribed by the Securities and Exchange Commission (collectively “US GAAP”). Material differences to these financial statements are as follows:

Exploration stage enterprise:

Under US accounting standards, the Company is considered to be an enterprise in the exploration stage as substantially all of its efforts have been directed towards the investigation of business opportunities and exploration of resource properties. Accounting principles for exploration stage enterprises require the specific disclosure of this fact and the presentation of certain cumulative information from the inception of the exploration stage. However, it does not require any changes in the measurement of assets, liabilities, revenues or expenses from that set out in the financial statements prepared in accordance with Canadian GAAP.

Statement of stockholders’ equity:

US accounting standards require a separate Statement of Stockholders’ Equity disclosing historical transactions from inception. The information required in this statement is otherwise presented in the financial statements and in Note 5.

NOTE 9.

UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)

Mineral property costs:

Under Canadian GAAP, mineral property acquisition, exploration and development costs may be deferred and amortized as disclosed in Note 2. Under U.S. GAAP mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are accounted for as tangible assets using the guidance in EITF 04-02 “Whether Mineral Rights are Tangible or Intangible Assets”. Management reviews the carrying value of mineral property costs for impairment whenever circumstances could indicate that the carrying amount may not be recoverable. To date, the Company has impaired all acquisition costs of exploration properties pending results of its exploration work indicating the existence and recoverability of mineral resources.

Stock-based compensation

As described in Note 5, the Company has previously granted stock options to certain directors, employees and consultants. Under previous Canadian GAAP, no compensation expense was recorded in connection with the granting of stock options. Under US GAAP, the Company accounts for stock-based compensation in respect of stock options granted to directors and employees using the intrinsic value based method in accordance with APB Opinion No. 25. Stock options granted to non-employees are accounted for by applying the fair value method using the Black-Scholes option pricing model in accordance with Statement of Financial Accounting Standards No. 123 (“SFAS 123”). Commencing January 1, 2003, under Canadian GAAP the Company expenses the fair value of all stock options granted and under US GAAP has elected to prospectively change its accounting policy to account for all stock options granted in accordance with SFAS 123. ;As a result, effective January 1, 2003, there is no difference between the Company’s accounting for stock options under US GAAP versus Canadian GAAP.

Reporting comprehensive income

Statement of Financial Accounting Standards No. 130 (“SFAS 130”)“Reporting Comprehensive Income”,establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income equals net income (loss) for the year as adjusted for all other non-owner changes in shareholders’ equity. SFAS 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement. For the years ended December 31, 2005, 2004 and 2003, comprehensive loss equals the loss for the year.

Statements of cash flows

The Company has included a subtotal in cash flows from operating activities. Under US GAAP, no such subtotal would be disclosed.

The effect of the accounting differences for exploration costs and stock-based compensation are as follows:

	Year ended December 31,
	2005	2004		2003
	$	$		$
Total assets, Canadian GAAP	1,895,593	687,747		476,125
Mineral property costs	(1,305,173)	(681,862)		(198,038)
Total assets, US GAAP	590,420	5,885		278,087

Deficit, Canadian GAAP	(1,792,140)	(1,327,159)		(1,117,527)
Mineral property costs	(1,305,173)	(681,862)		(198,038)
Stock-based compensation	(6,611)	(6,611)		(6,611)
Deficit, US GAAP	(3,103,924)	(2,015,632)		(1,322,176)

Net loss, Canadian GAAP	(464,981)	(209,632)		(157,206)
Mineral property costs	(623,311)	(483,824)		(198,038)
Net loss, US GAAP	(1,088,292)	(693,456)		(355,244)

Basic net loss per share, US GAAP	(0.14)		(0.13)		(0.10)

	Year ended December 31,
	2005	2004	2003
	$	$	$
Cash used in operating activities, Canadian GAAP	(278,698)	(139,191)	(71,480)
Interest in unproven mineral properties	(480,311)	(343,100)	(82,038)
Cash used in operating activities, US GAAP	(759,009)	(482,291)	(153,518)

Cash used in investing activities, Canadian GAAP	(480,311)	(343,100)	(82,038)
Interest in unproven mineral properties	480,311	343,100	82,038
Cash used in investing activities, US GAAP	-	-	-

Recent accounting pronouncements:

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R, “Share Based Payment”. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Public entities that file as small business issuers will be required to apply SFA S 123R in the first interim or annual reporting period that begins after December 15, 2005. Management is currently evaluating the impact of the adoption of this standard on the Company’s results of operations and financial position.

In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 (“SAB 107”) to give guidance on the implementation of SFAS 123R. The Company will consider SAB 107 during its implementation of SFAS 123R.

NOTE 9.

UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)

In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (FIN 47). Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal operation of a long-lived asset, except for certain obligations of lessees. FIN 47 clarifies that liabilities associated with asset retirement obligations whose timing or settlement method are conditional on future events should be recorded at fair value as soon as fair value is reasonably estimable. FIN 47 also provides guidance on the information required to reasonably estimate the fair value of the liability. FIN 47 is intended to result in more consistent recognition of liabilities relating to AROs among companies, more information about expected future cash outflows associated with those obligations stemming from the retirement of the asset(s) and more information about investments in long-lived assets because additional asset retirement costs will be recognized by increasing the carrying amounts of the assets identified to be retired. FIN 47 is effective for fiscal years ending after December 15, 2005. Management is currently evaluating the impact, which the adoption of this standard will have on the Company’s financial statements.

In July 2005, the Financial Accounting Standards Board issued SFAS No. 154,Accounting for Changes and Error Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3. Under the provisions of SFAS No. 154, a voluntary change in accounting principle requires retrospective application to prior period financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. A change in depreciation, amortization, or depletion method for long-lived, nonfinancial assets must be accounted for as a change in accounting estimate effected by a change in accounting principle. The guidance contained in Opinion 20 for reporting the correction of an error in previously issued financial statements and a change in accounting estimate was not changed. We will implement this new standard beginning January 1, 2006. This standard is not expected to have a significant effect on our reported financial position or earnings.

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Max Resource (MXROF) 20-F2006 FY Annual report (foreign)

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