Max Resource 20F 2007 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

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

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

For the fiscal year ended

December 31, 2007

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

For the transition period from ___________________ to ____________________

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

Date of the event requiring this shell company report ________________________

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, Canada 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

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:

Not Applicable

(Title of Class)

Indicate the number of outstanding shares of each of the Registrant’s classes of capital of common stock as of December 31, 2007: 21,549,229 Common Shares

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

__ Yes X No

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

__ Yes X No

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 __ No

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

Large accelerated filer __

Accelerated filer __

Non-accelerated filer X

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

X Item 17 __ Item 18

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

__ Yes X No

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

102

Item 19.

Exhibits

102

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are usually, but not always, identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates” or “intends” or by discussions of strategy or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, among others, our history of operating losses and uncertainty of future profitability; our lack of working capital and uncertainty regarding our ability to continue as a going concern; uncertainty of access to additional capital; risks inherent in mineral exploration; environmental liability claims and insurance as well as those factors discussed in the sections entitled “Risk Factors”, “Information On The Company” and “Operating And Financial Review And Prospects”.

If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Forward looking statements in this document are not a prediction of future events or circumstances, and those future events or circumstances may not occur. Given these uncertainties, users of the information included herein, including investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. We do not assume responsibility for the accuracy and completeness of these statements.

The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Information contained in this annual report related to mineralization may be strictly prohibited in SEC filings for U.S. registered companies under the SEC guidelines. The Company is an exploration stage company and its properties have no known body of ore. U.S. investors are cautioned not to assume that the Company has any mineralization that is economically or legally mineable.

All references in this Report on Form 20-F to the terms “we”, “our”, “us”, “the Company” and “MAX” refer to MAX Resource Corp. and its subsidiary.

Conversion Table

In this Annual Report a combination of Imperial and metric measures are used. Conversions from Imperial measure to metric and from metric to Imperial are provided below:


Imperial Measure =	Metric Unit	Metric Measure =	Imperial Unit
2.47 acres	1 hectare	0.4047 hectares	1 acre
3.28 feet	1 meter	0.3048 meters	1 foot
0.62 miles	1 kilometer	1.609 kilometers	1 mile
0.032 ounces (troy)	1 gram	31.1 grams	1 ounce (troy)
1.102 tons (short)	1 tonne	0.907 tonnes	1 ton
0.029 ounces (troy)/ton	1 gram/tonne	34.28 grams/tonne	1 ounce (troy/ton)

CURRENCY AND EXCHANGE RATES

Canadian Dollars Per U.S. Dollar

The following table sets out the exchange rates for one United States dollar (“US$”) expressed in terms of Canadian dollar (“Cdn$”) in effect at the end of the following periods, and the average exchange rates (based on the average of the exchange rates on the last day of each month in such periods) and the range of high and low exchange rates for such periods.


	Canadian Dollar Per U.S. Dollars
	Year Ended December 31,					3-Month Period Ended December 31,
	2007	2006	2005	2004	2003	2007	2006
End of period	0.9881	1.1652	1.1656	1.2034	1.2923	0.9881	1.1652
Average for the period	1.0742	1.1340	1.2115	1.3016	1.4007	0.9809	1.1390
High for the period	1.1852	1.1726	1.2703	1.3970	1.5750	1.0216	1.1652
Low for the period	0.9168	1.0989	1.1507	1.1775	1.2923	0.9168	1.1154


	For the month of
	January 2008	February 2008	March 2008	April 2008	May 2008
High for the period	1.0294	1.0188	1.0275	1.0268	1.0187
Low for the period	0.9905	0.9717	0.9841	1.0021	0.9840

Exchange rates are based upon the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The noon rate of exchange on June 20, 2008 as reported by the United States Federal Reserve Bank of New York for the conversion of United States dollars into Canadian dollars was US$1.00 = Cdn$1.0173. Unless otherwise indicated, in this Annual Report on Form 20-F (the “Annual Report” or “Form 20-F”), all references herein are to Canadian Dollars.

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

We were incorporated as Proven Capital Corp. on April 25, 1994 under theBusiness Corporations Actof Alberta (the “Business Corporations Act”). We changed our name to Cedar Capital Corp. on January 10, 1995 and subsequently to Vancan Capital Corp. on February 12, 2002. On May 14, 2004, we changed our name to Max Resource Corp.

We are 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, our ability to obtain necessary financing to complete the development, and future production or proceeds from the disposition thereof. We will depend almost exclusively on outside capital to complete the exploration and development of our 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 us. The issuances of additional stock by the Company may result in a significant dilution in the equity interests of our current stockholders. If we are unable to obtain financing in the amounts and on terms deemed acceptable, our business and future success may be adversely affected. Our ability to continue operations as a going concern is dependent upon our ability to obtain necessary financing. To date, we have not generated any revenues from operations and will require additional funds to meet our obligations and the costs of our operations. As a result, significant losses are anticipated prior to the generation of any profits.

We are a reporting issuer in British Columbia and Alberta and trade in Canada on the TSX Venture Exchange under the symbolMXR. We are quoted in the United States on the OTC Bulletin Board under the symbolMXROF. We were listed on the Frankfurt Stock Exchange on March 2, 2006 under the symbolM1D.

3.A

Selected Financial Data

This data is derived from our audited consolidated financial statements, which were prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”) and reconciled to accounting principles generally accepted in the United States (“U.S. GAAP”). The following selected financial data has been extracted from the more detailed consolidated financial statements included herein (stated in Canadian Dollars, being the foreign currency our financial statements are denominated in, see “Currency and Exchange Rates”) and is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and notes thereto included elsewhere herein. The following information should be read in conjunction with “Item 5. Operating and Financial Review and Prospects”.

Selected Financial Data

(CDN$ in 000, except per share data)


	Year Ended 12/31/07	Year Ended 12/31/06	Year Ended 12/31/05	Year Ended 12/31/04	Year Ended 12/31/03


Revenue	Nil	Nil	Nil	Nil	Nil
Net Income(Loss)Cdn. GAAP	($1,094)	($722)	($464)	($209)	($157)
Earnings(Loss) Per Share Cdn GAAP	($0.06)	($0.06)	($0.06)	($0.04)	($0.05)

Net Income(Loss) US GAAP	($2,608)	($788)	($1,088)	($693)	($355)
Earnings (Loss) Per Share US GAAP	($0.15)	($0.07)	($0.14)	($0.13)	($0.10)

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

Working Capital	$7,852	$846	$560	($57)	$199
Mineral Properties Cdn GAAP	$2,886	$1,371	$1,305	$682	$199
Mineral Properties US GAAP	0	0	0	0	0
Long Term Debt Cdn GAAP	0	0	0	0	0

Shareholder’s Equity Cdn GAAP	$10,767	$2,218	$1,865	$625	$397
Shareholders’ Equity US GAAP	$7,881	839	(554)	(63)	$193
Total Assets Cdn GAAP	$10,801	$2,276	$1,895	$687	$476
Total Assets US GAAP	$7,915	$904	$590	$5	$278

There are several material differences between Canadian GAAP and U.S. GAAP that are applicable to the financial information disclosed or summarized herein. Reference is made to Note 9 in the attached financial statements for an explanation of material differences between Canadian GAAP and U.S. GAAP.

See “Currency and Exchange Rates” for disclosure of exchange rates between Canadian dollars and United States dollars. Unless indicated otherwise, all references to dollars in this annual report are to Canadian dollars.

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 historically incurred losses and have no revenue from operations. We incurred losses from operations of $1,093,554for the fiscal year ended December 31, 2007 and losses of $722,158 and $464,981 for the fiscal years ended December 31, 2006 and 2005, respectively. As of December 31, 2007, we had a cumulative deficit of $3,607,852. There can be no assurance that either the Company or our subsidiary will achieve profitability in the future or at all.

We have not identified any commercially viable mineral deposits. We have not commenced development or commercial production on any of our properties. We have no history of earnings or cash flow from operations. We do not have a line of credit and our only present source of funds available may be through the sale of our equity shares or assets. Even if the results of exploration are encouraging, we may not have the ability to raise sufficient funds to conduct further explorations to determine whether a commercially mineable deposit exists on any of our properties. While additional working capital may be generated through the issuance of equity or debt, the sale of properties or possible joint venturing of the properties, we cannot assure you that any such funds will be available for operations on acceptable terms, if at all.

Very few mineral properties are ultimately developed into producing mines.

At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore. 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.

Additional financing may be needed for our business operations.

As at December 31, 2007, we had cash on hand of $7,661,128. We have sufficient working capital to fund our exploration activities on our properties in Alaska, New Mexico, Arizona and the Northwest Territories through

fiscal 2008. Our business plan calls for significant expenses in connection with the acquisition and exploration of mineral claims. While we believe we have sufficient working capital to fund our activities through our 2008 fiscal year, 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 properties 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.

Our business activities are significantly affected by the prices of precious metals and base metals on international markets. The price of minerals affects our ability to raise financing, the commercial feasibility of our properties, the future profitability of our properties should they be developed and our future business prospects. The prices of precious metals and base metals fluctuate widely and are affected by numerous factors beyond our control, including expectations with respect to the rate of inflation, the strength of the U.S. dollar and of other currencies, interest rates, and global or regional political or economic crisis. The demand for and supply of precious metals and base metals may affect precious metals and base metals prices but not necessarily in the same manner as supply and demand affect the prices of other commodities.

The resource industry is very competitive.

Significant competition exists for the limited number of property acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than our Company, we may be unable to acquire attractive mining properties on terms we consider acceptable. Competition in the precious metals mining industry is primarily for mineral rich

properties which can be developed and exploited economically; the technical expertise to find, develop, and produce such properties; the labor to operate the properties; and the capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals and minerals but conduct refining and marketing operations on a worldwide basis. Such competition may result in our being unable to acquire desired properties, to recruit or retain qualified employees or to acquire the capital necessary to fund our operations and develop our properties. Our inability to compete with other mining companies for these resources may have a material adverse effect on our results of operation and business. There can be no assurance that our exploration and acquisition programs will yield any reserves or result in any commercial mining operation.

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 chang es 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. In addition, trading volumes in our common shares can be volatile and if the trading volume of our common shares experiences significant changes, the price of our common shares could be adversely affected. The price of our common shares could also be significantly affected by factors, many of which are beyond our control.

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.

We will likely be classified as a passive foreign investment company during the current taxable year, which will have significant negative tax consequences for U.S. holders.

We believe we were a “passive foreign investment company” (“PFIC”) during the year ended December 31, 2007, and based on current business plans and financial projections, we expect that we will be classified as a PFIC for the current taxable year. Whether we will be a PFIC for the taxable year ending December 31, 2008 and each subsequent taxable year depends on our assets and income over the course of each such taxable year and, as a result, cannot be predicted with certainty as of the date of this Annual Report. Accordingly, there can be no assurance that the IRS will not challenge the determination made by us concerning our PFIC status for any taxable year. United States income tax legislation contains rules which result in significant negative tax consequences on U.S. Holders of PFICs. A US Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC may mitigate such negative tax consequences by making certain income tax elections. U.S. Holders are urged to consult their tax advisors regarding the acquisition, ownership, and disposition of our Common Shares. See the section below entitled “Taxation – United States Federal Income Tax Consequences”.

We are a foreign corporation and most of our directors and officers are outside of the United States, which may make enforcement of civil liabilities difficult.

We are incorporated under the laws of the Province of Alberta, Canada. All of our directors and officers are residents of Canada, with the exception of Clancy Wendt (who resides in the United States), and part of our assets are located outside of the United States. Consequently, it may be difficult for United States investors to effect service of process within the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgements of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended. A judgement of a US court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the US court in which the judgement was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.

Item 4. Information on the Company

4.A

History and Developmentof the Company

We were incorporated as Proven Capital Corp. on April 25, 1994 under theBusiness Corporations Actof Alberta. We changed our name and consolidated our share capital as set forth below on the following dates:


Date	Name	Consolidation (Old:New)
April 25, 1994	Proven Capital Corp.	Not applicable
January 10, 1995	Cedar Capital Corp.	Not applicable
February 12, 2002	Vancan Capital Corp.	4:1
May 14, 2002	MAX Resource Corp.	Not applicable

We have an authorized capital of an unlimited number of common shares and an unlimited number of preferred shares, none of which preferred shares are issued.

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.

Principal Expenditures And Divestitures

Since the beginning of the last three financial years, our principal capital expenditures and divestitures have been comprised of the following:

The Gold Hill Property (Alaska):

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, we issued an additional 200,000 shares effective December 31, 2004 (issued at a value of $74,000) and issued a further 200,000 shares effective December 31, 2005 (issued at a value of $120,000). 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), as amended effective November 23, 2006:

Year

Work Commitment

Cumulative Work Commitment

Advance Royalty

2004

$100,000 (incurred)

$100,000

$ 5,000 (paid)

2005

150,000

(incurred)

250,000

15,000 (paid)

2006

(deferred to 2007)

250,000

25,000 (paid)

2007

250,000

(incurred)

500,000

25,000 (paid)

2008

250,000

(incurred)

750,000

50,000 (paid)

2009

500,000

1,250,000

75,000

2010

500,000

1,750,000

100,000

2011

500,000

2,250,000

100,000

Upon exercise of 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%.

During the year ended December 31, 2007, we spent a total of $747,221 on exploration of the Gold Hill property. This amount was comprised of $90,900 for geological consulting services, $375,291 for drilling and assaying, $260,680 for field expenses, $6,330 for licensing and $14,020 for travel.

C de Baca Project (New Mexico):

In September 2005, we announced that we 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 us by providing notice that we are abandoning the Dat Claims and agreeing to transfer them back to the vendor.

The C de Baca Project is located approximately 14 miles north of the town of Magdalena and 100 miles south of the city of Albuquerque, New Mexico. The claims have excellent road access by both gravelled and cross county roads.

In April 2008 we staked an additional 83 mineral claims at C de Baca, increasing our holdings to 191 claims.

During the year ended December 31, 2007, we spent $200,689 on exploration of the C de Baca Project. This total was comprised of drilling and assays of $136,683, geological consulting of $49,162, field expenses of $2,967 and filing fee and permitting expense of $11,877.

MacInnis Lake Uranium Project (Northwest Territories):

We entered into an option agreement dated April 1, 2005, as amended April 11, 2006, (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.

We closed the transaction on April 19, 2005. The terms of the Option Agreement with Alberta Star call for us to earn the 50% interest by:

(i)

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

(ii)

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

(iii)

performing exploratory work commitments totalling $2,000,000 over a five year period (being $750,000 on or before October 1, 2008; $250,000 on or before April 30, 2009; $750,000 on or before October 1, 2009 and $250,000 on or before April 1, 2010).

The terms of the Option Agreement call for us 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. We can earn a further 25% interest when we complete 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 our current property holdings in the Northwest Territories, the Target 1 Claim, also held jointly with Alberta Star.

During the year ended December 31, 2007, we spent $125,000 for an airborne geophysical survey on the MacInnis Lake uranium project and $5,792 for geological consulting.

NUSTAR Uranium Project (Colorado Plateau, Arizona):

On April 4, 2007, we entered into an agreement with NUSTAR Exploration LLC, a private Arizona limited liability corporation, for the acquisition of a 100% interest in 427 mineral claims located in the Arizona Strip of the Colorado Plateau in northwest Arizona.

Under the terms of our agreement with NUSTAR, we purchased a 100% interest in the NUSTAR Claims by making a cash payment to NUSTAR of US$128,100 and issuing 200,000 shares of our common stock, subject to a gross royalty of 4% (the “Royalty”) of sales revenue from commercial production of uranium from the NUSTAR Claims. For each breccia pipe identified on the NUSTAR Claims that goes into commercial production, we shall have the right to purchase 3% of the 4% Royalty on that breccia pipe by payment to NUSTAR of $1,000,000.

During the year ended December 31, 2007, we spent $1,963 for geological consulting on the NUSTAR claims.

Ravin Molybdenum/ Tungsten Property (Lander County, Nevada):

On September 10, 2007, we entered into an option agreement to acquire a 100 % interest in the Ravin molybdenum/tungsten property in Lander County, Nevada (the “Ravin Property”) from Energex, LLC, a Nevada corporation wholly-owned by Clancy J. Wendt, our Vice President of Exploration.

The terms of our option agreement with Energex are as follows:

Date

Payment Amount

Upon execution of the option agreement

$5,000 (U.S.)

First anniversary of effective date

$25,000 (U.S.)

Second anniversary of effective date

$35,000 (U.S.)

Each anniversary thereafter

$50,000 (U.S.)

The Ravin Property is subject to a 3% NSR royalty. Upon full exercise of the Option, we will own 100% of the project.

During the year ended December 31, 2007, we spent $65,677 on staking, filing and acquisition costs related to the Ravin property, inclusive of the US$5,000 paid to Energex. A further $11,698 was spent on consulting fees and field expenses.

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 Wendt Family Trust is controlled by Clancy J. Wendt, our Vice President of Exploration.

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 the option agreement

$25,000 (paid)

First anniversary of effective date

$35,000 (paid)

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, we will own 100% of the project.

We entered into a mineral property option agreement on May 15, 2006 with Kokanee Placer Ltd. (“Kokanee”), a British Columbia company, whereby we granted to Kokanee the right to acquire up to a 51% interest in the Diamond Peak Propertyin consideration of a cash payment of US$25,000 (paid) and the issuance of 100,000 shares of Kokanee to the Company upon completion of Kokanee’s public listing.

Kokanee 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 the option 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, we have not made any expenditure on the Diamond Peak Property. However, Kokanee completed an exploration program on the Diamond Peak Property during 2006 in order to satisfy their first year obligation of $100,000 in expenditures. This initial exploration program began on June 6^th, 2006 and included an induced polarization survey over 4 kilometers of strike length. The results of this report have been used to identify drill targets for a drill program to be conducted following its listing on the TSX Venture Exchange, when and if that occurs.

Eat Manhattan Wash gold project (Nye County, Nevada)

In December, 2007, we entered into an option agreement to acquire a 100 % interest in the East Manhattan Wash (“EMW”) claims in the Manhattan Mining District, Nye County, Nevada from MSM LLC, a Nevada corporation. The property is located 40 miles north of the town of Tonopah, Nevada.

The terms of our option agreement with MSM L.L.C. are as follows:

Date

Payment Amount

Upon execution of the option agreement

$28,000 (U.S.) (paid)

First anniversary of effective date

$20,000 (U.S.)

Second anniversary of effective date

$25,000 (U.S.)

Third anniversary of effective date

$40,000 (U.S.)

Fourth anniversary of effective date

$50,000 (U.S.)

Fifth anniversary of effective date

$100,000 (U.S.)

The EMW Property is subject to a 3% NSR royalty. Upon full exercise of the option, we will own 100% of the project.

During the year ended December 31, 2007, we spent a total of $38,073 for acquisition of the EMW claims, inclusive of filing fees.

Indata Gold/Copper Project (British Columbia):

On June 9, 2008, we entered into an option agreement with Eastfield Resources Ltd. (“Eastfield”) whereby we can earn up to a 60% interest in the Indata Gold/Copper Property in Northern British Columbia, Canada over a three year period by making cash payments totaling $120,000 ($10,000 on signing), issuing up to 300,000 shares (50,000 shares in the first year) and by completing exploration expenditures of $1.15 million over the three year period. The agreement is subject to acceptance for filing by the TSX Venture Exchange and availability of drilling permits and a drilling contractor.

Howell Gold Project (British Columbia):

In June 9, 2008, we entered into anoption agreement with Eastfield whereby we can also earn up to a 60% interest in theHowell Gold Project in Southeast B.C. Eastfield has the right to earn a 100% interest in the Howell property through an amended 1999 option agreement with Teck Cominco Metals Limited (“TCML”) and Goldcorp Inc.

(“GI”) whereby outstanding commitments include a final exploration expenditure totaling $423,759 and cash payments of $100,000 to each of TCML and GI due by August 31, 2010.

We can earn a 60% interest in the Howell project over a three year period by making cash payments totaling $120,000 to Eastfield ($10,000 on signing), issuing 250,000 shares (50,000 shares in the first year) and by completing exploration expenditures of $1.25 million. In addition, in order to maintain the option, we will also be responsible for our portion of the $200,000 payment due to GI and TCML by August 31, 2010 pursuant to Eastfield’s underlying agreement with them. The agreement is subject to acceptance for filing by the TSX Venture Exchange, Max delivering certain covenants to GI and TCML and availability of drill permits and a drilling contractor.

Management & Employees

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

Our President and Chief Executive Officer, Stuart Rogers devotes approximately 80% 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. On July 1, 2007, this amount was increased to $10,000 per month to reflect a substantial increase in the amount of time that Mr. Rogers has been required to devote to the Company’s affairs over the past year.

Office Space

We do not own our office. We rent about 335 square feet of office space in Vancouver, British Columbia as our executive office on a month to month basis. Our rent and related office expenses total approximately $2,500 per month. This $2,500 per month is included in the $10,000 per month paid in management fees to a private company owned by our President, Stuart Rogers.

4.B

Business Overview

During the fiscal year ended December 31, 2007, we completed a fourteen hole rotary drill program at its C de Baca uranium project in Socorro County, New Mexico and completed a five hole diamond drill program at the Gold Hill project in Alaska. We also completed the acquisition of a 100% interest in 427 uranium exploration claims in the Colorado Plateau of Arizona, entered into an option agreement to acquire a 100 % interest in the Ravin molybdenum/tungsten property in Lander County, Nevada and entered into an agreement to acquire a 100 % interest in the East Manhattan Wash gold property in the Manhattan Mining District, Nye County, Nevada. See “Principal Expenditures and Divestitures”.

LOOKING FORWARD FOR 2008, we anticipate that we will be able to fund our ongoing general operations through the next year from funds on hand. We have planned drill programs at Gold Hill in Alaska (budgeted at US$1,000,000), Ravin in Nevada (budgeted at US$800,000) and at Indata and Howell in British Columbia (budgeted at $700,000). We also received permits for a five hole diamond drill program at or C de Baca uranium project in New Mexico budgeted at $300,000. In addition, we plan to conduct initial exploration work on our NuStar Uranium project in Arizona and our East Manhattan Wash gold project in Nevada in order to develop exploration programs to be conducted in late 2008 or early 2009. No exploration budgets have yet been determined for these projects.

As of June 20, 2008, we have funds on hand of approximately $7 Million which is expected to provide sufficient working capital to fund our exploration activities on our properties in Alaska, Nevada, New Mexico, Arizona and British Columbia through fiscal 2008, as outlined above. See “Special Note Regarding Forward Looking Statements”.

Organizational Structure

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

4.D

Property, Plants and Equipment

WE ARE AN EXPLORATION STAGE COMPANY AND HAVE NO MINERAL PRODUCING PROPERTIES AT THIS TIME. ALL OF OUR PROPERTIES ARE EXPLORATION PROJECTS, AND WE RECEIVE NO REVENUES FROM PRODUCTION. ALL WORK PRESENTLY PLANNED BY US IS DIRECTED AT DEFINING MINERALIZATION AND INCREASING UNDERSTANDING OF THE CHARACTERISTICS AND ECONOMICS OF THAT MINERALIZATION. THERE IS NO ASSURANCE THAT A COMMERCIALLY VIABLE MINERAL DEPOSIT EXISTS IN ANY OF OUR PROPERTIES NOR DO WE ANTICIPATE SAME UNTIL AFTER COMPLETION OF FURTHER EXPLORATION WORK AND A COMPREHENSIVE EVALUATION BASED UPON UNIT COST, GRADE, RECOVERIES AND OTHER FACTORS CONCLUDE ECONOMIC FEASIBILITY. THE INFORMATION CONTAINED HEREIN RESPECTING OUR MINERAL PROPERTIES IS BASED UPON INFORMATION PREPARED BY OR THE PREPARATION OF WHICH WAS SUPERVISED BY PROFESSIONAL GEOLOGIST, CLANCY J. WENDT, OUR VICE-PRESIDENT OF EXPLORATION. MR. WENDT IS A “QUALIFIED PERSON” PURS UANT TO CANADIAN SECURITIES NATIONAL INSTRUMENT 43-101 CONCERNING STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS.

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. See “Principal Expenditures and Divestitures”.

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

[f20f2007001.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 our 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 2008, we must pay approximately US$6,050 in lease payments to maintain our 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 dominant 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 by the TSX Venture Exchange, 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. 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. We believe that our 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 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.

On July 30^th 2007, we began a five hole diamond drill program to test molybdenum exploration targets at Gold Hill in Alaska. The drill campaign was designed to test a broad Molybdenum/Copper/Gold geochemistry and geophysical magnetic anomaly covering a 700m by 800m area.

We planned this drill program to confirm the reliability and relevance of original data collected and contained in internal reports by Dome Mines Ltd., Cities Services Minerals, GCO Minerals of Houston, Texas, Amax Exploration Inc. and Hemlo Gold Mines (USA). At least 2,550 soil samples, 239 rock samples, 1,905 drill samples and an unknown number of channel samples from 2,900 feet of trenches have been taken on the property. Ground

and airborne geophysical surveys have been conducted over the property which had identified magnetic highs which were then targeted for base metal and molybdenum mineralization.

On August 29, 2007, we announced assays received from the top half of drill hole DH-07-1 on the Gold Hill Molybdenum Property in Alaska. Assays for the top 540 feet returned 0.054% MoS₂and included a 250 foot intercept of 0.08%MoS₂. This hole was drilled to a depth of 965 feet, with the results form the remainder of the hole available in early October and returning 0.041% MoS2 over a core length of 425 feet. Together with the previously reported intersection, Hole DH-07-01 assayed a total of 0.048% MoS2 over the entire core length of 965 feet. The best interval occurs as 250 feet of 0.080% MoS2 beginning at 260 feet down hole. Further, Hole DH-07-01 ended in molybdenum mineralization grading 0.054% MoS2.

Anomalous and dispersed values in copper were also reported. Copper mineralization occurs in core as chalcopyrite. These intervals are located at various areas throughout the drill hole, as indicated in the following table:

Drill Hole

Interval (feet)

Width (feet)

Mineralization

Molybdenum Results

DH 07-1

0-965 feet

965 feet

0.048% MoS2 (0.029% Mo)

540-965

425 feet

0.041% MoS2 (0.025% Mo)

Including

0-540

540 feet

0.054% MoS2(0.033% Mo)

260-510

250 feet

0.080% MoS2(0.048% Mo)

855-915

60 feet

0.058% MoS2 (0.035% Mo)

Copper Results

0-250 feet

250 feet

0.0266 % Cu

Including

130-200

70 feet

0.043% Cu

755-815

60 feet

0.026% Cu

845-965

120 feet

0.028% Cu

On October 17, 2007, we announced assays from a further two diamond drill holes on the Gold Hill Molybdenum Property in Alaska. Drill hole DH-07-03 returned 0.058% MoS₂ over a core length of 1,000 feet, which included a higher grade intercept of 0.18% MoS₂ (0.107% Mo) over 45 feet. Anomalous and dispersed values in copper were also reported; these intervals are located at various depths throughout the drill hole (see table below).

The results for DH 07-03 are as follows:

Drill Hole

Depth (feet)

Interval (feet)

Mineralization

Molybdenum Results

DH 07-03

0-1000

1000 feet

0.058% MoS₂ (0.035% Mo)

Including

0-750

750 feet

0.0734% MoS₂(0.044% Mo)

Including

135-180

45 feet

0.18% MoS₂ (0.107% Mo)

Including

445-485

40 feet

0.135% MoS₂ (0.081% Mo)

Copper Results

0-320

320 feet

0.0226 % Cu

500-1000

500 feet

0.045% Cu

Drill Hole DH-07-02 also had moderately lower molybdenum values over the entire length of the drill hole but slightly better copper values, which is indicative of a typical zoning pattern usually found in a porphyry system. The results for DH 07-02 are as follows:

Drill Hole

Depth (feet)

Interval (feet)

Mineralization

Molybdenum Results

DH 07-02

0-1000

1000 feet

0.030% MoS₂ (0.0167%Mo)

Copper Results

0-430

430 feet

0.054% Cu

430-605

175 feet

0.0215% Cu

On November 19, 2007, we announced assays from the final two diamond drill holes on the Gold Hill Molybdenum Property in Alaska. Drill hole DH-07-05 returned 0.0466% MoS₂ over a core length of 822feet, which included a higher grade intercept of 352 feet of .0706%MoS₂.

Drill hole DH-07-05 was an angled drill hole designed to test across the mineralization that was intersected in drill holes DH-07-02 and DH-07-03. The drill hole did not cut the entire interval and mineralization was visibly increasing at the bottom of the drill hole as it neared the projection of the main zone. This hole will be continued during drilling next season. Anomalous and dispersed values in copper were also reported. Copper mineralization occurs in core as chalcopyrite. These intervals are located at various depths throughout the drill hole.

Drill Hole DH-07-04 was a vertical hole. This hole reports good molybdenum values over the entire core length of 1000 feet, which included a 250 foot interval of 0.0603% MoS₂. This hole also reported better copper values. Again, this is a typical zoning pattern usually found in many porphyry style systems.

Drill Hole

Depth (feet)

Interval (feet)

Mineralization

Molybdenum Results

DH-07-05

15-837

822 feet

0.0466% MoS₂ (0.0279% Mo)

15-465

450 feet

0.0284% MoS₂ (0.0170% Mo)

485-837

352 feet

0.0706% MoS₂ (0.0423% Mo)

Includes

560-630

70 feet

0.0855% MoS₂ (0.0512% Mo)

780-837

57 feet

0.0912% MoS₂ (0.0546% Mo)

Molybdenum Results

DH 07-04

0-1000

1000 feet

0.0408% MoS₂ (0.0244% Mo)

Including

450-700

250 feet

0.0603% MoS₂ (0.0362% Mo)

Including

900-1000

100 feet

0.0533% MoS₂ (0.0334% Mo)

Copper Results

0-1000

1000 feet

0.0416 % Cu

including

0-200

200 feet

0.0809% Cu

Core material was collected at the drill site and placed in core boxes under the supervision of an experienced geologist. It was logged for rock type, alteration, structure, and recorded with detailed descriptions. Core was split using a hydraulic core splitter and one-half was sent to the Alaska Assay Laboratories. The other half is kept at our core storage facility in Anchorage. Drill holes were sampled at five foot sample intervals. Samples were delivered in sealed bags to the Alaska Assay Labs facility in Fairbanks, Alaska for sample preparation. Alaska Labs is using a 2 acid digestion and a 30 Element AES ICP Scan.

Sample Preparation quality control at Alaska Assay Labs includes strict chain of custody documentation, careful logging of samples documentation, careful cleaning of all equipment documentation, and careful monitoring of crush and grind particle size documentation, and careful protocol documentation following ISO9002/17025 guidelines.

We have retained a drill contractor for a minimum 12 hole, 12,000 foot drill program that is scheduled to begin in June 2008 and is aimed at expanding the known area of intrusive mineralization. A secondary target that emerged from the 2007 program was mineralization identified in sediments to the east that indicate a skarn system may be present as well; this are will also be tested during the 2008 drill campaign.

The Target Claims

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 provided that we would 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.

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 has abandoned its interest in 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 boundariesThe following map shows the location of the Longtom Project:

[f20f2007002.jpg]

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

[f20f2007003.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 northeast most part of the claims.

In mid-September 2004, we were 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 Claim 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.

We elected to abandon 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. We intend to maintain the Target 1 claim.

No funds were expended on the Target Claims during the fiscal period ended December 31, 2006. During the year ended December 31, 2007, we recorded an impairment charge of $148,097 on the Target 1 Claim as we have not done any work on the property since 2004 and have no immediate plans to do so.

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 December 30, 2004. See “Principal Expenditures and Divestitures”.

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

[f20f2007004.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.

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 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; (completed)

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 has completed 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. The results of this survey are pending.

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. During 2007, these payments were made to the Bureau of Land Management on our behalf by Kokanee pursuant to the terms of their option agreement.

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 was originally 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 NMMC 887137-887155 and NMMC 887156-887174 inclusive. These claims were recorded on October 6, 2005. The project size was expanded in 2008 through our staking of an additional 83 unpatented lode mining mineral claims along the northern and southern boundaries of our current claim block at C de Baca, bringing our total holdings to 191 claims. The additional 83 claims, the DAT 109 to 191, were recorded on March 18, 2008 and are represented by Bureau of Land Management New Mexico Mining Claim numbers NMMC184704 to NMMC184786 inclusive. See “Principal Expenditures and Divestitures”.

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

[f20f2007005.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. This amount was paid in August, 2007.

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.

On May 21, 2007, we commenced a 14 hole rotary drill program at C de Baca project and, on June 5, 2007, we announced the results from the first drill hole, CDB-1. These results confirmed a historic drill result achieved by Oxymin of 5.5 feet of 0.043% eU308 at 300 feet and a second mineralized zone of 4 feet of 0.024% eU3O8 at 317 feet down hole.

The results reported by us at CDB-1 were through gamma ray probe readings by Jet West Geophysical Services LLC of Farmington, New Mexico and include:

Hole #

Total Depth

Interval

Mineralization

CDB-1

378.0 feet

300-305.5

0.043% eU3O8

Containing

301.0-301.5

0.06% eU3O8

Containing

301.5-302.0

0.10% eU3O8

Containing

302.0-302.5

0.09% eU3O8

Containing

302.5-303.0

0.05% eU3O8

Second Zone

317.5-321.5

0.024% eU3O8

On June 19, 2007, we announced the results from a further six drill holes, CDB-2 to CDB-7, of whichHole CDB-6 returned 6.5 feet of 0.136% eU3O8 beginning at a depth of 155.5 feet (including 0.368% eU3O8 from 157.5-159.0 feet) and 5 feet of 0.167% eU3O8 from 170 -175 feet. Results include the following:

Hole #

Total Depth

Interval

Mineralization

CDB-2

347 feet

270.0-282.0

0.0226 % eU₃0₈

CDB-3

347 feet

261.5-264.5

0.031 % eU₃0₈

293.0-297.0

0.014 % eU₃0₈

CDB-4

181 feet

160.5-164.0

0.036% eU₃0₈

Including

162.0-162.5

0.07% eU₃0₈

CDB-5

210 feet

180-182.0

0.019% eU₃0₈

184.5-190.0

0.074% eU₃0₈

Including

186.5-189.0

0.173% eU₃0₈

CDB-6

200 feet

155.5-162.0

0.136% eU₃0₈

170.0-175.0

0.167% eU₃0₈

Including

157.5-159.0

0.368% eU₃0₈

Including

173.0-173.5

0.76% eU₃0₈

CDB-7

235 feet

201.0-208.0

0.052% eU₃0₈

Including

205.0-207.0

0.094% eU₃0₈

On July 9, 2007, we announced the results from the final seven drill holes at C de Baca. Highlights included drill hole CDB-10A, which contained2.0 feet of 0.065% eU₃0₈ at a depth of 295.5 feet.

Results from these drill holes at C de Baca, CDB 8 to CDB-14, along with the first seven holes announced earlier, continue to confirm historic drill results reported by Oxymin in the early 1980’s. Results are tabulated as follows:

Hole #

Total Depth

Interval

Mineralization

CDB-8

248 feet

184.5-194.5

0.0159% eU₃0₈

CDB-9

346 feet

306.5-310.0

0.034 % eU₃0₈

328.5-330.0

0.015% eU₃0₈

CDB-10

311 feet

Anomalous

CDB-10A

309 feet

295.5-297.5

0.065% eU₃0₈

CDB-11

319 feet

286.5-294.0

0.037% eU₃0₈

CDB-12

336 feet

202.0-203.5

0.0.012% eU₃0₈

CDB-13

229 feet

176.5-180.5

0.0162% eU₃0₈

i.a-202.0

0.015% eU₃0₈

CBD-14

238 feet

199.5-200.0

0.026% eU₃0₈

217.0-217.5

0.025% eU₃0₈

This initial 14 hole mud rotary drill program was designed to confirm historic drill results reported by Oxymin duringexploration of the C de Baca Uranium property during the 1980’s. While the results of these drill holes were within expectations, the results from drill hole CDB-10 were affected by the intersection of an unknown basaltic dike. We drilled an offset hole, CDB-10a, to avoid intersecting the basaltic dike and to better test the main zone of uranium mineralization. This hole successfully encountered 2.0 feet of 0.065% eU₃0₈ at a depth of 295.5 feet.

Our future plans for C de Baca include the initiation of various geological, lithological, structural and mineralogical studies to better aid in our understanding of the geology at C de Baca. We have received drill permits for a five hole diamond drill program budgeted at $300,000 to test the lithological and structural controls of the higher grade mineralized zones identified during the 2007 exploration program, including the area of Oxymin’s drill hole BR-57 (which returned 7.5 feet of 0.20% eU₃0₈ beginning at a depth of 297 feet). This area is also coincident to our drill hole CDB-6, which returned6.5 feet of 0.136% eU₃0₈ beginning at a depth of 155.5 feet, inclusive of0.368% eU₃0₈ from 157.5-159.0 feet, and a further 5 feet of 0.167% eU₃0₈ from 170 -175 feet. The drill program will co nsist of five close-spaced diamond drill holes designed to evaluate the nature of the uranium mineralization and alteration around the mineralization, investigate possible stratigraphic controls on mineralization, evaluate the chemical equilibrium factor, and determine the porosity and permeability of the Baca Formation in the mineralized section.

Gamma, Spontaneous Potential (SP), and Resistivity values were logged by Jet West Geophysical Services LLC of Farmington, New Mexico. The Gamma portion of the downhole logging tool was calibrated by uranium-industry standard values located in mines at Grants, New Mexico. In situ uranium grades, expressed as equivalent U3O8 (“eU3O8”) are calculated using the digital gamma ray values acquired by the downhole logging tool and uranium industry standard techniques for gamma log interpretation. Downhole gamma log interpretation has historically

been found to be an accurate representation of in situ grades for uranium mineralization in the Magdelana District. Chemical assays of samples will be done and used to determine relative trace element concentrations as a guide to future drilling.

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. See “Principal Expenditures and Divestitures”.

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:

[f20f2007006.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. Results from the geophysical survey will be combined with archived historical drill results to assist us in our drill targeting during subsequent exploration.

In September, 2007, we were advised that a High Resolution Aeromagnetic Gradiometer-Radiometric Survey (the “Survey”) had been completed on the MacInnis Lake uranium project. The Survey consisted of 2,093 line-kilometers at 100 meter line spacings and was flown by Fugro Airborne Surveys.

We believe that the Survey will provide valuable information which will further enhance our uranium exploration capabilities by clearly showing high definition conductive uranium targets at the MacInnis Lake Uranium Project. The results from the Survey will be combined with archived historical drill results to assist us in identifying exploration drill targets. Drilling will be subject to receiving the required regulatory permits.

The MacInnis Lake Uranium Project and claim-block is known to have widespread surface uranium mineralization, and contains 28 high grade uranium outcrops that were drilled extensively by Shell Oil, Uranerz and PNC Exploration between 1954 and 1988. All uranium exploration and drilling datasets have been archived and recorded by the Geological Survey of Canada and include;

theDUSSAULT, which has a non-compliant drill indicated inferred resource of 37,000 tons grading 0.17% U₃0₈ (the occurrence appears to be open down dip and along strike), values of 0.84% U₃0₈intersected over 2 feet and high-grade samples recovered up to 28% U₃0₈.

theCOLE,with numerous trench sampleswith U₃0₈ values reported as high as 3.16%, 5.13% and 20%; and

the KULT, which has a surface showing 300m x 500m wide with surface uranium and copper mineralization that returned grades up to 3.5% Copper and 3.3% U₃0_8.

NUSTAR Uranium Project, Colorado Plateau, Arizona

Description, Location and Access:

The NUSTAR uranium claim block is comprised of 427 mineral claims totaling 8,540 acres and is located in the Arizona Strip in Mohave County, Arizona. The targets are uranium-bearing solution-collapse “breccia pipes” that were mined during the early 1980’s.

The NuStar Project is accessible by 20 miles of improved dirt road and partial pavement south from Colorado City, Arizona. The claims have excellent road access by both gravel and cross county roads.

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

The property is comprised of the ANT 1-170, ANT 171-185, ANT 192-335, ANT 340-367, ANT 369, and ANT 371-439 unpatented lode mining claims represented by Bureau of Land Management Arizona Mining Claim numbers AMC 382332-382502, AMC 382502-382516, AMC 382517-382660, AMC 382661-382668, AMC 382689, and AMC 382690-382758 inclusive. These claims were recorded on May 2, 2007. See “Principal Expenditures and Divestitures”.

The following is a map of the location of the Nustar Uranium Project:

[f20f2007007.jpg]

History of Exploration and Status:

The claims in the NUSTAR prospect area are located on the northwestern trend of uranium deposits in this area of Arizona. This trend contains the high-grade past producing Hacks Canyon mines, the Arizona 1 mine (currently on standby) and the EZ-1 and EZ-2 breccia pipes recently purchased by Denison Mines Corp. (DML:TSX) from Pathfinder Mines. The average grade of the uranium ore that has been mined in the Arizona Strip is high compared to the other deposits in the Colorado Plateau and ranges from 0.40% to 0.80% U3O8. The size of the deposits has historically varied from 400,000 kg (880,000 lbs) to 2,000,000 kg (4,400,000 lbs) of recovered U3O8. Uranium exploration on the Arizona Strip started in the 1950’s with the discovery of uranium outcrops and surface uranium mineralization. Exploration continued periodically, depending on the price of uranium, until the middle 1980’s when essentially all uranium exploratio n in the U.S. stopped. Results on much of the work done on this area of the Colorado Plateau are reported in various publications by the USGS and State agencies in Arizona. Uranium

exploration involved companies such as Energy Fuels, Pathfinder Mines, Western Mines (a division of Phelps Dodge), Uranerz, and others.

The NUSTAR uranium occurrences are characterized as a breccia pipe which is thought to be caused by the movement of water through strata creating “rubble” zones and solution collapses. The uranium is precipitated within these zones at a reduction/oxidation interface due to changes of the ground water chemistry and/or pressure gradients. The mineralogy of the breccia pipes is, generally, pyrite, copper, molybdenum, lead, zinc and pitchblende. The NUSTAR project area is located about 8-10 miles from the EZ pipes and about 20 miles from the Hacks Canyon Mines. We have initiated plans to explore and expand known uranium drill targets, with preparations underway for a spring and summer exploration season consisting of regional mapping, soil gas acquisition, reviewing archived geologic data and completing a comprehensive regional geologic survey. Drill targeting will focus on testing known geologic t argets and uranium showings.

To date, thirty-four circular or collapsed structures indicative of breccia pipes have been identified on the NUSTAR claims. We intend to undertake a proprietary radon probe test of these 34 target areas during 2008 in order to identify and prioritize drill targets for later in the year.

Ravin Molybdenum/ Tungsten Property (Lander County, Nevada)

Description, Location and Access:

The Ravin Property is a historic Freeport/Huston Oil and Minerals Metal property that was explored during the late 1970’s and early 1980’s. The property is comprised of the MOLY 1-162 unpatented lode mining claims represented by Bureau of Land Management Nevada Mining Claim numbers NMC 964190-964289 and NMC 964290 – 964351 inclusive. These claims were recorded on September 7, 2007.

The Ravin Property is located 20 miles north of the town of Austin, Nevada and is accessible by paved road to within 5 miles of the property and by gravel road to the property itself.

There is no water or electricity available at the property site, with no surface water available within the property boundaries. See “Principal Expenditures and Divestitures”.

The following is a map of the location of the Ravin molybdenum/tungsten project:

[f20f2007009.gif]

History of Exploration and Status:

Strong surface molybdenum and tungsten mineralization occurs within Cambrian sediments which have been intruded by two separate Cretaceous granitic to quartz monzonite plutons. The Raven Pluton is the largest and crops out over an area of about 2 square miles. The smaller Cadro Pluton crops out over a ½ square mile area in the northwest part of the project. The Cadro Pluton appears to be responsible for a majority of the hydrothermal alteration and molybdenum mineralization seen on the project.

Historically, the property had been explored by Union Carbide, Houston Oil and Minerals and Freeport Exploration. Union Carbide drilled three core holes with the deepest hole drilled to a depth of 500 feet. Houston Oil subsequently acquired the property in 1978 and drilled six core holes in the Reward tungsten pit. As part of a regional rock and soil geochemistry program, Houston Oil identified a coherent molybdenum soil anomaly. They drilled two diamond drill holes and the best intercept encountered was40 feet of 0.66% Mo.

Freeport optioned the property in 1981 and drilled 17 rotary and core drill holes to test a molybdenum-copper-fluorine anomaly found within the Cambrian sedimentary units. The anomalous zone showed strong structural control and is thought to be associated with the contact zone of the Cadro Pluton. Some of the historic drill holes

exist in the form of reports and summaries of the drilling, exploration, drill logs and assays but none of he original assay sheets are available. All but 4 drill holes encountered molybdenum mineralization and highlights included:

Drill Hole

Interval

Width

Grade

Rw 80-2, 81-2c

600-650 feet

50 feet

0.053% MoS2

800-900 feet

100 feet

0.047% MoS2

Rw 80-7

100-350 feet

250 feet

0.105% MoS2

Rw 81-11c

150-350 feet

200 feet

0.052% MoS2

Rw 81-13c

550-800 feet

250 feet

0.052% MoS2

1650-1700 feet

50 feet

0.055% MoS2

Rw 81-14c

600-650 feet

50 feet

0.051% MoS2

The terms of our option agreement with Energex are as follows:

Date

Payment Amount

Upon execution of this Agreement

$5,000 (U.S.)

First anniversary of Effective Date

$25,000 (U.S.)

Second anniversary of Effective Date

$35,000 (U.S.)

Each anniversary thereafter

$50,000 (U.S.)

The Ravin Property is subject to a 3% NSR royalty. Upon full exercise of the Option, we will own 100% of the project.

We plan to conduct an initial 11 hole diamond drill program to follow up on the previous drilling report by Freeport and Houston Oil and Minerals and to further the area of known mineralization. Drill permits have been received with drilling to be conducted during the 2008 exploration season.

East Manhattan Wash gold project (Nye County, Nevada)

Description, Location and Access:

On November 11, 2007 we entered into an option agreement to acquire a 100 % interest in the East Manhattan Wash (“EMW”) claims in the Manhattan Mining District, Nye County, Nevada from MSM LLC, a Nevada corporation. The property is located 40 miles north of the town of Tonopah, Nevada.

The EMW claims are accessible by paved road to within 1 mile of the property and by gravel road to the property itself.

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

The property is comprised of the EMW 37, 39, 41, 43-68, 75, 77, 79, 81-100, 113 and EMW 116, 118, 120, 122, 124, 126, 128, 130, 132-171 unpatented lode mining claims represented by Bureau of Land Management Nevada Mining Claim numbers NMC 977041-977093 and NMC 977094 - 977141 inclusive. These claims were recorded on January 8, 2008. See “Principal Expenditures and Divestitures”.

The following is a map of the location of the East Manhattan Wash gold project:

[f20f2007011.gif]

History of Exploration and Status:

Historically, there has been more than 1,000,000 ounces of gold produced in the Manhattan mining district. Recent production from the Manhattan mine (1974-1990), an open-pit operation, produced 236,000 ounces of gold

at an average grade of 0.08 ounce per ton (“opt”). The Echo Bay East and West Pit deposits operated in the early 1990s, producing 260,000 ounces at an average grade of 0.06 opt. The Round Mountain Mine, situated eight miles to the north, has produced more than 12,000,000 ounces of gold. Recorded placer gold production from the district includes approximately 150,000 ounces from a major dredge operation, with small-scale lode mines having produced another 100,000 ounces.

The current exploration model suggests that deposits that will be found in the Manhattan District are related to the contact of the Manhattan Caldera Margin and structural intersections. Gold is also related to the Cambrian-Ordivician Age sedimentary rocks along the five mile long by one mile wide zone of the Caldera.

Preliminary assays from one of the outcrops sampled on the East Manhattan Wash property have returned values from 0.054 to 1.01 ppm Au. Assays are pending for the remaining samples, with panning of some of the samples having revealed “free gold”. Additional land has been staked along the North and South sides of the original EMW claims. We believe that the EMW claims offer the opportunity to find high grade gold deposits within a well known mineralized province. Underground deposits found here will be in the 0.5 opt gold range and higher. Conversely, open pittable deposits will be in the 0.05 opt gold range, which is currently being mined at Kinross Gold’s nearby Round Mountain deposit.

Item 5. Operating and Financial Review and Prospects

The following discussion of our operating results explains material changes in our consolidated results of operations for the fiscal year ended December 31, 2007 compared to the prior fiscal years ended December 31, 2006 and 2005. The discussion should be read in conjunction with the consolidated financial statements to December 31, 2007 and the related notes included in Item 17 of this report. Management’s discussion and analysis of our operating results in this section is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and notes thereto. This discussion contains forward-looking statements, the accuracy of which involves risks and uncertainties and our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, those risk factors described elsewhere in this report. Ou r consolidated financial statements have been prepared in Canadian dollars and in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"), which differ in significant respects from accounting principles generally accepted in the United States ("U.S. GAAP"). As such, this discussion of our financial condition and results of operations is based on the results prepared in accordance with Canadian GAAP. The significant differences between Canadian GAAP and U.S. GAAP as applicable to our financial statements are summarized in Note 9 to our consolidated financial statements for the fiscal year ended December 31, 2007.

Overview

Our business is exploration for minerals. We do not have any properties that are in development or production. We have no earnings and, therefore, finance these exploration activities by the sale of our equity securities or through joint ventures with other mineral exploration companies. The key determinants of our operating results include the following:

(a)

Our ability to identify and acquire quality mineral exploration properties on favorable terms;

(b)

The cost of our exploration activities;

(c)

our ability to finance our exploration activities and general operations;

(d)

our ability to identify and exploit commercial deposits of mineralization; and

(e)

the write-down and abandonment of mineral properties as exploration results provide further information relating to the underlying value of such properties.

These determinates are affected by a number of factors, most of which are largely out of our control, including the following:

(a)

The competitive demand for quality mineral exploration properties;

(b)

Political and regulatory climate in countries where properties of interest are located;

(c)

Regulatory and other costs associated with maintaining our operations as a public company;

(d)

the costs associated with exploration activities; and

(e)

the cost of acquiring and maintaining our mineral properties.

Our primary capital and liquidity requirements relate to our ability to secure funds, principally through the sale of our securities, to raise sufficient capital to maintain our operations and fund our efforts to acquire mineral properties with attractive exploration targets and conduct successful exploration programs on them. We anticipate this requirement will continue until such time as we have either discovered sufficient mineralization on one or more properties with sufficient grade, tonnage and type of mineralization to support the commencement of sustained profitable mining operations and are thereafter able to place such property or properties into commercial production or until we have obtained sufficient positive exploration results on one or more of our properties to enable us to successfully negotiate a joint venture with a mining company with greater financial resources than us or some other s uitable arrangement sufficient to fund our operations.

Our success in raising equity capital is dependant upon factors which are largely out of our control including:

market prices for gold and other precious metals and minerals;

the market for our securities; and

the results from our exploration activities.

The most significant factors affecting our operations during the past year were related to continued strength in the demand for, and in the prices of precious and base metals and a corresponding favourable market for shares of junior exploration companies. These factors are expected to have a significant effect on our future financial operations during the next fiscal year and thereafter so long as we continue in our present business of mineral exploration. During 2007, the prices of gold, silver, copper and zinc have experienced significant price volatility, however; they all maintained prices substantially higher than the previous five years, which effectively improved the general market for the shares of junior exploration companies. There has also been a significant increase in general mineral exploration activity, resulting in greater competition for mineral properties and the resources em ployed in mineral exploration, and a corresponding increase in the prices demanded for suitable exploration properties and the costs associated with mineral exploration. We anticipate the market for precious and other metals will continue to increase in the short and medium term, resulting in continued favourable outlook for our ability to raise equity capital, but also increased exploration costs and increased costs for acquiring new exploration properties. Accordingly, we anticipate our operating results will be most significantly affected by the results of our exploration activities on our existing properties. See “Special Note Regarding Forward Looking Statements” and “Risk Factors”.

Accounting Policies

We have adopted a number of accounting policies and made a number of assumptions and estimates in preparing our financial reporting, which are described in Note 2 to the attached audited consolidated financial statements. These policies, assumptions and estimates significantly affect how our historical financial performance is reported and also your ability to assess our future financial results. In addition, there are a number of factors which may indicate our historical financial results will not be predictive of anticipated future results. You should carefully review the following disclosure, together with the attached consolidated financial statements and the notes thereto, including, in particular, the statement of significant accounting policies set out in Note 2 to such statements.

Going Concern Assumptions

As described in Note 1 to our consolidated financial statements, our financial statements have been prepared on the assumption that we will continue as a going concern, meaning that we will continue in operation for the foreseeable future and will be able to realize assets and discharge our liabilities in the ordinary course of operations. We do not have any mineral properties in production, and have not yet generated any revenues and have a history of losses. Our continuation as a going concern is uncertain and dependent on our ability to discover commercial mineral deposits on our properties and place them into profitable commercial production and our ability to sustain our operations until such time. This, in turn depends on our ability to continue to fund our operations by the sale of our securities and other factors which are largely out of our control. Although we have been successful in the past in obta ining financing, it cannot be assured that adequate financing or financing on acceptable terms can be obtained in the future. In the event we cannot obtain the necessary funds, it will be necessary to delay, curtail or cancel further exploration on our properties. Our consolidated financial statements do not reflect adjustments to the carrying values and classifications of assets and liabilities that might be necessary should we not be able to continue in our operations, and the amounts recorded for such items may be at amounts significantly different from those contained in our consolidated financial statements.

Treatment of Mineral Property Costs

As we are at the exploration stage, we capitalize the acquisition and exploration costs of our mineral properties under Canadian GAAP. Should any of these properties be placed into production, such costs would be amortized over the life of the properties on a unit-of-production basis. Should exploration results of any of our properties prove unsatisfactory, we would then abandon such property or properties, and write off costs incurred up to that time. The impact on our net loss for the fiscal period would be dependent upon the amount of costs deferred up to the time of the write-off.

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.

Stock-Based Compensation

We have granted stock options to directors and employees as described in Note 5 to the attached audited consolidated financial statements. We adopted the accounting standards of the Canadian Institute of Chartered Accountants (“CICA”) regarding stock-based compensation and other stock-based payments. The standard requires that all stock-based awards be 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.

5.A

Operating Results

Fiscal Year Ended December 31, 2007 compared to the Fiscal Year Ended December 31, 2006

During the year ended December 31, 2007, we incurred operating expenses of $1,167,747 as compared to operating expenses of $523,491 for the year ended December 31, 2006. The significant changes during the current fiscal period compared to the same period a year prior are as follows:

Stock-based compensation expenses totaling $570,388, a non-cash expense, was incurred during the year ended December 31, 2007 for incentive stock options granted to directors, officers and consultants. This compares to a stock based compensation expense for options granted to consultants and management of $129,165 during the same period a year prior.

Management fees increased to $90,000 during the year ended December 31, 2007 from the $60,000 incurred during the same period a year prior due to an increase in the monthly fee paid to our President during the second half of the current period.

Professional fees increased to $51,093 during the year ended December 31, 2007 from the $42,199 incurred during the year ended December 31, 2006 due to additional legal fees incurred during the current period for the drafting of acquisition agreements.

Shareholder relations expenses increased to $339,034 during the year ended December 31, 2007 from the $210,274 incurred during the same period a year prior. This was due to increased expenditures on advertising, trade show attendance and investor relations consulting services during the current period.

During the current fiscal period, we incurred travel costs of $28,370 primarily for attendance at trade shows. This compares to travel expenses of $22,411 incurred during the year ended December 31, 2006 for evaluation of new projects.

Interest income increased to $222,290 during the year ended December 31, 2007 from the $19,458 earned during the same period a year prior due to the Company maintaining a higher cash balance in cash, cash equivalents and short-term investments during the current period.

During the year ended December 31, 2006, we elected to abandon our Thomas Mountain uranium project in Utah, resulting in a write-off of mineral properties of $218,125. During the current fiscal period, we wrote down the Target 1 claims in the NWT by $148,097 as we had not undertaken any exploration work on this property since 2004 and had no immediate plans to do so.

As a result of the foregoing, the net loss for the year ended December 31, 2007 was $1,093,554 as compared to a net loss for the year ended December 31, 2006 of $722,158.

Fiscal Year Ended December 31, 2006 compared to the Fiscal Year Ended December 31, 2005

During the year ended December 31, 2006, we incurred operating expenses of $523,491 as compared to operating expenses of $409,785 for the year ended December 31, 2005. The significant changes during the current fiscal period compared to the same period a year prior are as follows:

Consulting expense of $29,698 was incurred during the year ended December 31, 2006 for increased review of potential property acquisitions as compared to $3,998 incurred during the year ended December 31, 2005.

Management fees increased to $60,000 during the year ended December 31, 2006 from the $52,500 incurred during fiscal 2005 when ½ of the monthly management fee was paid during the first quarter and subsequently increased as the Company became more active.

Transfer agent, filing fees and shareholder relations expenses increased to a total of $231,444 during the year ended December 31, 2006 from the $122,631 incurred during the same period a year prior due to additional costs incurred during the current fiscal period for attendance at trade shows in Europe, advertising, web site marketing, and news dissemination.

Stock-based compensation expense of $129,165, a non-cash item, was incurred during the year ended December 31, 2006 as the result of the Company granting 550,000 incentive stock options during the period. This is reduced from stock based compensation expense of $155,266 incurred during the year ended December 31, 2005 when the Company granted 775,000 stock options.

During the current fiscal period, the Company incurred travel costs of $22,411 primarily for attendance at trade shows. This compares to travel expenses of $24,754 incurred during the year ended December 31, 2005 for travel related to the review of potential property acquisitions as well as attendance at trade shows.

Professional fees of $42,199 incurred during the year ended December 31, 2006 were comparable to professional fees of $41,870 incurred during the year ended December 31, 2005.

Interest income of $19,458 earned during the year ended December 31, 2006 increased from the $1,804 earned during the same period a year prior due to the Company maintaining a higher cash balance on deposit during the current period.

Due to the abandonment of the Thomas Mountain property in Utah in the fiscal year 2006, the Company incurred a write-off on mineral properties of $218,125 during the year ended December 31, 2006. This compares to a write-down of $57,000 for the Target 2 Claim in the Northwest Territories during the year ended December 31, 2005.

As a result of the foregoing, the net loss for the year ended December 31, 2006 was $722,158 as compared to a net loss for the year ended December 31, 2005 of $464,981.

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.

On May 24, 2007, we completed a brokered private placement offering of 5,000,000 units at a price of $1.00 per unit and 500,000 flow-through units at a price of $1.20 per flow-through unit. We also completed a non-brokered placement of 2,750,000 units at $1.00 per unit and 209,000 flow-through units at $1.20 per unit. The total gross proceeds of $8,600,800 will provide sufficient working capital to fund our exploration activities on our properties in Alaska, New Mexico, Arizona and the Northwest Territories through fiscal 2008. We have no exposure to any asset-backed commercial paper (“ABCP”) investments.

At December 31, 2007, we had working capital of $7,851,871, inclusive of cash and cash equivalents of $7,661,128. This compares to working capital of $845,962 and cash on hand of $880,201 at December 31, 2006.

We have two properties that we need to satisfy certain minimum work commitments during 2008 in order to maintain our interests. These properties are Gold Hill in Alaska and MacInnis Lake in the Northwest Territories. See “Tabular Disclosure of Contractual Obligations”.

In order to maintain our interest in the Gold Hill property, we are required to undertake US$250,000 in exploration work on this property during 2008. We believe that we have satisfied this requirement by our 12 hole diamond drill program budgeted at US$1,000,000 that we commenced on June 16, 2008.

At MacInnis Lake, we must spend US$750,000 by October 1, 2010 in order to maintain our interest, subject to receipt of the necessary drill permits. As these permits have not yet been secured by the vendor, we anticipate that this requirement will be postponed by the vendor until such time as they are successful in securing the drill permits.

During 2008, we have budgeted for drill programs at Gold Hill in Alaska (US$1,000,000), Ravin in Nevada (US$800,000) and at Indata and Howell in British Columbia ($700,000). We have also received a drill permit for a five hole diamond drill program at C de Baca in New Mexico budgeted at $300,000. In addition, we plan to conduct initial exploration work on our NuStar Uranium project in Arizona and our East Manhattan Wash gold project in Nevada in order to define drill targets for drilling later in 2008 or in early 2009. No exploration budgets have yet been determined for these projects.

We intend to pursue both the acquisition of mineral properties which we consider to be highly prospective for molybdenum, gold, uranium and other metals and to aggressively explore our current properties subject to the availability of funds. We will require substantial additional capital to achieve our goal of discovering significant economic mineralization on one or more of our properties. Until such time as we are able to make such a discovery and thereafter place one or more of our properties into commercial production or negotiate one or more joint venture agreements, we will be largely dependant upon our ability to raise capital from the sale of our securities to fund our operations. We believe that our current capital resources will be sufficient to fund our general operations through 2008. We do not anticipate being able to obtain revenue from commercial operations in the short term and anticipate we will be required to raise additional financing in the future to meet our working capital and on-going cash requirements. We intend to raise such financing through sales of our equity securities by way of private placements, and/or the exercise of warrants. We may also secure additional exploration funding through option or joint venture agreements on our mineral properties; or through the sale of our mineral properties, royalty interests or capital assets, or borrow to meet our working capital requirements. While we have in the past been able to raise sufficient funds to sustain our exploration programs, there is no assurance that we will continue to be able to do so. If, for any reason, we are not able to access the capital market, our resources during this period will be limited to cash on hand and any revenues we are able to generate from joint venture or similar arrangements we may hereafter enter into. If we are unable to secure sufficient funds to pursue such proposed acquisitions and e xploration to the level desired, we will adjust our proposed activities to reflect the amount of capital available to us after providing for sufficient working capital to maintain our existing operations. At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore. See “Special Note Regarding Forward Looking Statements” and “Risk Factors”.

5.C

Research and Development, Patents and Licenses, etc.

We are a mineral exploration company and we do not carry on any research and development activities.

5.D

Trend Information

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

The overall trend for mineral resource prices, including for gold, zinc and molybdenum that our properties are prospective for, has been upward over the past year. We anticipate that a continuing strength in metal prices will also make the acquisition of quality exploration prospects more expensive, as well as increase the costs of exploration generally. Metal prices cannot be predicted with accuracy and our plans will be largely dependant upon the timing and outcome of metal markets, particularly the price of gold, zinc and molybdenum which is entirely outside of our control. See “Special Note Regarding Forward Looking Statements”.

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 over US$35/lb in 2007. The average molybdenum price in 2007 was approximately US$31/lb. At June 10, 2008, the most recent date for which we could find a quote for the sale of molybdenum oxide, the price was US$33.15/lb.

Our Target 1 (Longtom Lake), MacInnis Lake, C de Baca and Nustar 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 high of US$138.00 per pound on June 1, 2007. At June 2, 2008, the most recent date for which we could find a quote for the sale of uranium, the price was US$59/lb.

5.E

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our 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

The following table summarizes our contractual obligations at December 31, 2007 and the effect these obligations are expected to have on our liquidity and cash flows in future periods.


Contractual Obligations	Payment Due By Period
	Total	Less than a year	1-3 Years	4-5 Years	After 5 Years
Gold Hill Option⁽¹⁾ Advance Royalty Work Commitment	US$395,000 US$2,250,000	US$50,000 US$250,000	US$225,000 US$1,250,000	US$100,000 Nil	Nil Nil
Diamond Peak⁽²⁾ Option Payments	US$580,000	US$45,000	US$145,000	US$100,000	US$250,000
C de Baca Option⁽³⁾ Option Payments	US$480,000	US$10,000	US$30,000	US$20,000	US$420,000
MacInnis Lake⁽⁴⁾ Work Commitment	US$1,650,000	US$750,000	US$1,650,000	Nil	Nil
East Manhattan Wash⁽⁵⁾ (Option Payments)	US$263,000	US$20,000	US$85,000	US$150,000	Nil
Ravin Project⁽⁶⁾ Option Payments	US$415,000	US$25,000	US$110,000	US$100,000	US$200,000
Capital (Finances) Lease Obligations	NIL
Operating Lease Obligations	NIL
Purchase Obligations Equipment	NIL
Other Long-term Liabilities	NIL
Total Contractual Obligations and Commitments	US$5,713,000	US$1,150,000	US$3,495,000	US$470,000	US$870,000

(1)

These are option and royalty payments pursuant to an option agreement dated May 17, 2004, as amended, between us and Zazu Exploration Inc. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “Gold Hill Property”)

(2)

These are option payments pursuant to an option agreement dated May 9, 2006, as amended, between us and The Wendt Family Trust of Reno, Nevada. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “Diamond Peak Property”)

(3)

These are option payments pursuant to an option agreement dated September, 2005 between us and Applied Geological Services, Inc. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “C de Baca Project”)

(4)

These are annual work commitments pursuant to an option agreement dated April 1, 2005 between us and Alberta Star Development Corp. While we are not obliged to undertake these expenditures on the property, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “MacInnis Lake”)

(5)

These are option payments pursuant to an option agreement dated November 11, 2007 between us and MSM L.L.C. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “East Manhattan Wash”)

(6)

These are option payments pursuant to an option agreement dated September 10, 2007 between us and The Wendt Family Trust. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property. (See Item 4 “Information on the Company” – “Description of Property” - “Ravin Molybdenum/Tungsten Property”)

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

Tim Coupland

President and CEO of Alberta Star Development Corp.

Delta, BC

Daniel T. MacInnis

President, MAG Silver Corp.

Vancouver, B.C.

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., Prophecy Resource Corp., IGC Resource Corp., Alberta Star Development Corp., TerraX Minerals Inc. 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 Work Wear 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 Work Wear World stores to Mark’s Work Warehouse, then 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.

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, which is listed on the TSX Venture Exchange, and was a director of MAG Silver Corp. from its inception in June 2003 to October of 2007. MAG Silver is listed on the TSX in Canada and on the AMEX in the United States.

Tim Coupland

Mr. Coupland is currently the President and CEO of Alberta Star Development Corp. (TSX-V: ASX; OTC BB: ASXSF), our joint venture partner on the Target 1 and MacInnis Lake uranium properties in the Northwest Territories. Mr. Coupland holds a bachelor’s degree from Simon Fraser University and is an accomplished mineral landman and explorer, with over 20 years experience with both public and private companies working in the mineral exploration field in Canada. Mr. Coupland was the lead negotiator who secured drill permits and the access and benefits agreement with the Sahtu Dene First Nations on their traditional territories in the Northwest Territories, where Alberta Star is currently focused on the development of the Eldorado and Contact Lake iron

oxide, copper, gold and uranium projects. Over the past ten years, Mr. Coupland has successfully developed long term business relationships with many Canadian First Nations & Metis Groups living in Canada’s Northwest Territories.

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 with major shareholders, customers, suppliers or others pursuant to which the foregoing individuals 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

The following fairly reflects all material information regarding compensation paid to our directors and officers in our fiscal year ended December 31, 2007.

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	2007	Nil	Nil	$90,000 (1)	Nil	150,000	Nil	Nil
Paul John Director	2007	Nil	Nil	Nil	Nil	75,000	Nil	Nil
David Pearce Secretary and Director	2007	Nil	Nil	Nil	Nil	100,000	Nil	Nil
Tim Coupland Director	2007	Nil	Nil	Nil	Nil	50,000	Nil	Nil
Daniel T. MacInnis Director	2007	Nil	Nil	Nil	Nil	100,000	Nil	Nil

(1) the $90,000 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, Tim Coupland and Daniel T. MacInnis have acted as our directors since May 8, 2002, June 18, 2002, December 15, 2003, September 5, 2006 and December 7, 2005 respectively.

Tim Coupland was appointed to the Board of Directors in September of 2006 concurrently with the resignation of Gil Atzmon from the Board of Directors.

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. Our next annual meeting is scheduled for August 12, 2008. We are required to hold an annual general meeting once in every calendar year and not longer than fifteen 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 $10,000 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. In addition, we do not currently have any retirement, pension, bonus, profit-sharing or similar plans and none are proposed at this time.

The Company does not have an executive committee or a remuneration committee.

Our audit committee is comprised of Tim Coupland, Paul John and David Pearce. The Audit Committee’s primary function is to review the annual audited financial statements with our external auditor (the “Auditor”) prior to presentation to the Board and to make recommendations thereon, together with recommendations to the Board with respect to such financial statements and compensation payable to the Auditor. The audit committee also reviews our interim un-audited quarterly financial statements prior to finalization and publication. The Audit Committee also provides review oversight with respect to pre-approval of all non-audit services to be provided by the Auditor to the Company and a number of other related matters including issues related to a change of auditors and establishing procedures for treatment of complaints regarding accounting, internal accounting controls or auditing matters. The Audit Co mmittee meets as a separate committee of the board as and when needed to carry out its functions and keeps formal minutes of its proceedings.

6.D

Employees

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

6.E

Share Ownership

The following table sets forth the shareholdings, to the best of our knowledge, owned beneficially, directly or indirectly, by our directors and officers as of May 31, 2008. There were 21,549,229 common shares issued and outstanding as of May 31, 2008.


Name	Number of Shares Owned	Percentage of Outstanding Common Shares
Stuart Rogers	507,105	2.35%
Paul John	413,750	1.92%
David Pearce	602,500	2.80%
Tim Coupland	175,000	0.81%
Daniel MacInnis	Nil	Nil
Clancy Wendt	490,000	2.27%

Statements as to securities beneficially owned by directors and officers, or as to securities over which they exercise control or direction, are based upon information obtained from such directors and officers and from records available to the Company.

The following incentive stock options are outstanding to our directors and officers as at May 31, 2008:


Name	Shares that may be Purchased Upon Exercise of Option	Exercise Price	Expiry Date
Stuart Rogers	50,000 150,000	$0.35 $1.05	September 5, 2008 July 27, 2010
Paul John	25,000 75,000	$0.35 $1.05	September 5, 2008 July 27, 2010
David Pearce	50,000 100,000	$0.35 $1.05	September 5, 2008 July 27, 2010
Tim Coupland	150,000 50,000	$0.35 $1.05	September 5, 2008 July 27, 2010
Daniel MacInnis	100,000	$1.05	July 27, 2010
Clancy Wendt	200,000	$1.05	July 27, 2010

We have an incentive stock option plan. This Stock Option Plan provides for equity participation in the Company by our 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. We have reserved and authorized 10% of our issued treasury shares for issuance under the Stock Option Plan to our 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 our issued and outstanding common shares 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 our directors, officers, employees and consultants and provided limits on the length, number and exercise price of such options. We are required to file our Stock Option Plan on an annual basis with the TSX-Venture Exchange for review of its terms.

On July 27, 2007, we granted stock options to our directors, officers and consultants entitling them to purchase 875,000 common shares at a price of $1.05 per share to July 27, 2010. As at December 31, 2007, there were 1,631,250 stock options outstanding and exercisable.

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 as: (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 21,549,229 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
Eric Carlson(1)	1,580,000	7.33%

(1)

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

Of our 51 registered shareholders at May 31 2008, 25 are Canadian residents representing 18,960,605 common shares or 87.99% of our issued and outstanding common shares. We have 23 registered US shareholders holding 2,201,458 common shareholders or 10.22% of our issued and outstanding common shares. There are 3 registered shareholders from places other than the US and Canada holding a total of 387,167 common shares or 1.80% 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 registrar 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

Five month period ended May 31, 2008:

During the five month period ended May 31, 2008, we have not entered into transactions or loans with any (a) enterprises that directly or indirectly control, are controlled by or under common control with us; (b) our associates; (c) individuals directly or indirectly owning voting rights which give them significant influence over us or close members of their respective families, (d) our directors, senior management or close members of their respective families or (e) enterprises in which a substantial interest in the voting power is owned by any of the foregoing individuals (a “Related Party”) or over which such a person is able to exercise significant influence, except as follows:

•

We paid $50,000 to a private company controlled by Stuart Rogers, our President, for management fees.

Fiscal Year ended December 31, 2007:

In the fiscal year ended December 31, 2007, we have not entered into transactions or loans with any (a) enterprises that directly or indirectly control, are controlled by or under common control with us; (b) our associates; (c) individuals directly or indirectly owning voting rights which give them significant influence over us or close members of their respective families, (d) our directors, senior management or close members of their respective families or (e) enterprises in which a substantial interest in the voting power is owned by any of the foregoing

individuals (a “Related Party”) or over which such a person is able to exercise significant influence, except as follows:

•

We paid $90,000 to a private company controlled by Stuart Rogers, our President, for management fees; and

•

We entered into an option agreement to acquire a 100% interest in the Ravin molybdenum/tungsten property in Lander County, Nevada (the “Ravin Property”) from Energex, LLC, a Nevada corporation wholly-owned by Clancy J. Wendt, our Vice President of Exploration.

Fiscal Year ended December 31, 2006:

In the fiscal year ended December 31, 2006, we have not entered into transactions or loans with any (a) enterprises that directly or indirectly control, are controlled by or under common control with us; (b) our associates; (c) individuals directly or indirectly owning voting rights which give them significant influence over us or close members of their respective families, (d) our directors, senior management or close members of their respective families or (e) enterprises in which a substantial interest in the voting power is owned by any of the foregoing individuals (a “Related Party”) or over which such a person is able to exercise significant influence, except as follows:

•

We paid $60,000 to a private company controlled by Stuart Rogers, our President, for management fees; and

•

We 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 Wendt Family Trust is controlled by Clancy J. Wendt, our Vice President of Exploration.

Fiscal Year ended December 31, 2005:

In the fiscal year ended December 31, 2005, we have not entered into transactions or loans with any (a) enterprises that directly or indirectly control, are controlled by or under common control with us; (b) our associates; (c) individuals directly or indirectly owning voting right which give them significant influence over us or close members of their respective families, (d) our directors, senior management or close members of their respective families or (e) enterprises in which a substantial interest in the voting power is owned by any of the foregoing individuals (a “Related Party”) or over which such a person is able to exercise significant influence, 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, we no longer owed this company for unpaid management fees and rent which had 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. See Item 6.E “Share Ownership”.

7.C

Interests of Experts and Counsel

Not Applicable.

Item 8.

Financial Information

8.A

Consolidated Statements and other Financial Information

The following financial statements for the year ended December 31, 2007 have been audited by an independent auditor and are accompanied by an audit report, 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 three 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, 2007 and, as a result, the percentage of export sales for the Company was zero.

Legal Proceedings

To the best of our knowledge, there are no currently pending or threatened legal proceedings that could have a material effect on our business, results of operations or financial condition.

Dividend Policy

We have never declared or paid any cash dividends on our common shares. As we do not have any earnings, we do not anticipate paying cash dividends on the common shares for the foreseeable future. Future dividends on the commons shares will be determined by the Board of Directors in light of circumstances existing at the time, including our earnings and financial condition. There is no assurance that dividends will ever be paid. See “Special Note Regarding Forward Looking Statements”.

8.B

Significant Changes

There have been no significant changes 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, our shares were listed with the Frankfurt Stock Exchange under the trading symbol “M1D”.

Our principal trading market in volume is the TSX Venture Exchange. The closing price of our common shares on the TSX Venture Exchange on May 30, 2008 was $0.38. 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, 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

January 1, 2006 to December 31, 2006

$0.98

$0.325

January 1, 2007 to December 31, 2007

$1.59

$0.55

Quarterly Periods

High

Low

January 1, 2006 to March 31, 2006

$0.98

$0.65

April 1, 2006 to June 30, 2006

$0.83

$0.46

July 1, 2006 to September 30, 2006

$0.57

$0.325

October 1, 2006 to December 31, 2006

$0.65

$0.33

January 1, 2007 to March 31, 2007

$1.59

$0.60

April 1, 2007 to June 30, 2007

$1.35

$1.00

July 1, 2007 to September 30, 2007

$1.19

$0.55

October 1, 2007 to December 31, 2007

$1.07

$0.60

January 1, 2008 to March 31, 2008

$0.72

$0.355

Monthly Periods

High

Low

December 2007

$0.75

$0.60

January 2008

$0.72

$0.40

February 2008

$0.45

$0.355

March 2008

$0.42

$0.355

April 2008

$0.41

$0.34

May 2008

$0.42

$0.35

9.B.

Plan of Distribution

Not Applicable.

9.C.

Markets

The common shares of the Company were listed for trading on the TSX-Venture Exchange on 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

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 shareholders a re 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 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 incorporation that would have the effect of delaying, deferring or preventing a change in control.

There are no provisions in our bylaws or articles of incorporation 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

The following are the material contracts which we, or any of our subsidiaries, have entered into in the last two years immediately prior to date of this report. See “Principal Expenditures and Divestitures”:

Mineral Property Option Agreement between the Wendt Family Trust and us dated May 9, 2006.

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

Agreement dated April 4, 2007 between NUSTAR Exploration LLC and us for the acquisition of a 100% interest in 427 mineral claims located in the Arizona Strip of the Colorado Plateau in northwest Arizona.

Mineral Property Option Agreement dated September 10, 2007 between Energex LLC and us to acquire a 100% interest in the Ravin molybdenum/tungsten property in Lander County, Nevada.

Mineral Property Option Agreement between MSM LLC and us dated December, 2007 to acquire a 100% interest in the East Manhattan Wash claims in the Manhattan Mining District, Nye County, Nevada.

Mineral Property Option Agreement between Eastfield Resource Ltd. and us dated June 9, 2008 to acquire a 60% interest in the Indata project located in North Central B.C.

Mineral Property Option Agreement between Eastfield Resource Ltd. and us dated June 9, 2008 to acquire a 60% interest in the Howell property in southeastern B.C.

We have 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 our business.

10.D

Exchange Controls

There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital (including, without limitation, foreign exchange controls), or that affect the remittance of dividends, interest or other payments to non-resident holders of our Common Shares. However, any such remittance to a resident of the United States may be subject to a withholding tax pursuant to the reciprocal tax treaty between Canada and the United States. For further information concerning such withholding tax, see “Item 10.E. Taxation.”

There are no limitations under the laws of Canada, the Province of Alberta, or in our charter or other constituent documents with respect to the right of non-resident or foreign owners to hold and/or vote our common shares. However, theInvestment Canada Act (the “Act”), enacted on June 20, 1985, as amended, requires the prior notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a “non-Canadian” of “control” of a “Canadian business,” all as defined in the Act. For the purposes of the Act, “control” can be acquired through the acquisition of all or substantially all of the assets used in the Canadian business, or the direct or indirect acquisition of interests in an entity that carries on a Canadian business or which controls the entity which carries on the Canadian business. &nbs p;Under the Act, control of a corporation is deemed to be acquired through the acquisition of a majority of the voting shares of a corporation, and is presumed to be acquired where more than one-third, but less than a majority, of the voting shares of a corporation are acquired, unless it can be established that the corporation is not controlled in fact through the ownership of voting shares. Other rules apply with respect to the acquisition of non-corporate entities.

Investments requiring review and approval include direct acquisition of Canadian businesses with assets with a gross book value of $5,000,000 or more; indirect acquisitions of Canadian businesses with assets of $50,000,000 or more; and indirect acquisitions of Canadian businesses where the value of assets of the entity or entities carrying on business in Canada, control of which is indirectly being acquired, is greater than $5,000,000 and represents greater than 50% of the total value of the assets of all of the entities, control of which is being acquired.

Pursuant to theWorld Trade Organization Agreement Implementation Act, the Act was amended to provide that the value of the business acquisition threshold (the “Threshold”) above described is increased from those levels outlined where the acquisition is by a World Trade Organization Investor or by a non-Canadian other than a World Trade Organization Investor where the Canadian business that is the subject of the investment is immediately before the investment controlled by a World Trade Organization Investor. The Threshold is to be determined yearly in accordance with a formula set forth in the Act. For 2007, the Threshold was determined to be $281,000,000.

A World Trade Organization Investor includes an individual, other than a Canadian, who is a national of a World Trade Organization Member, or who has the right of permanent residence in relation to that World Trade Organization Member.

Different provisions and considerations apply with respect to investment to acquire control of a Canadian business that, as defined in the Act or regulations:

engages in production of uranium and owns an interest in a producing uranium property in Canada;

provides financial services;

provides transportation services;

is a cultural business.

If an investment is reviewable, an application for review in the form prescribed by regulation is normally required to be filed with the Ministry of Industry, Director of Investment prior to the investment taking place and the investment may not be consummated until the review has been completed and ministerial approval obtained. Applications for review concerning indirect acquisitions may be filed up to 30 days after the investment is consummated. Applications concerning reviewable investments in culturally sensitive and other specified activities referred to in the preceding paragraph are required upon receipt of a notice for review. There is, moreover, provision for the Minister (a person designated as such under the Act) to permit an investment to be consummated prior to completion of review if he is satisfied that delay would cause undue hardship to the acquirer or jeopardize the operation of the Canadian business th at is being acquired.

10.E

Taxation

U.S. Federal Income Tax Consequences

The following is a summary of certain material U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the Company (“Common Shares”).

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. Holder as a result of the acquisition, ownership, and disposition of Common Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S.

Holder. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the Internal Revenue Service (the “IRS”), published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this Annual Report. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be appl ied on a retroactive basis.

U.S. Holders

For purposes of this summary, a “U.S. Holder” is a beneficial owner of Common Shares that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the U.S., (b) a corporation, or any other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the U.S., any state in the U.S., or the District of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.

Non-U.S. Holders

For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of Common Shares other than a U.S. Holder. This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to non-U.S. Holders. Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) of the acquisition, ownership, and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to U.S. Holders that are subject to special provisions under the Code, including the following U.S. Holders: (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that are liable for the alternative minimum tax under the Code; (f) U.S. Holders that own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (g) U.S. Holders that acquired Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (h) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of the Code; or (i) U.S. Holders that own (directly, indirectly, or constructively) 10% or more of the total combined voting power of all classes of shares of the Company entitled to

vote. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners. Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.

Tax Consequences Other than U.S. Federal Income Tax Consequences Not Addressed

This summary does not address the U.S. state and local, U.S. federal estate and gift, or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Shares. Each U.S. Holder should consult its own tax advisor regarding the U.S. state and local, U.S. federal estate and gift, and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Shares

Distributions on Common Shares

General Taxation of Distributions

Subject to the “passive foreign investment company” rules discussed below, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to the Common Shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated (a) first, as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Common Shares and, (b) thereafter, as gain from the sale or exchange of such Common Shares. (See “Disposition of Common Shares” below).

Reduced Tax Rates for Certain Dividends

For taxable years beginning or before January 1, 2011, a dividend paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a) the Company is a “qualified foreign corporation” (as defined below), (b) the U.S. Holder receiving such dividend is an individual, estate, or trust, and (c) such dividend is paid on Common Shares that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the “ex-dividend date.”

The Company generally will be a “qualified foreign corporation” under Section 1(h)(11) of the Code (a “QFC”) if (a) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or (b) the Common Shares are readily tradable on an established securities market in the U.S. However, even if the Company satisfies one or more of such requirements, the Company will not be treated as a QFC if the Company is a “passive foreign investment company” (as defined below) for the taxable year during which the Company pays a dividend or for the preceding taxable year.

As discussed below, the Company believes that it was a “passive foreign investment company” for the taxable year ended December 31, 2007, and based on current business plans and financial projections, expects that it will be a “passive foreign investment company” for the taxable year ending December 31, 2008. (See

“Additional Rules that May Apply to U.S. Holders—Passive Foreign Investment Company” below). Accordingly, the Company does not expect to be a QFC for the taxable year ending December 31, 2007.

If the Company is not a QFC, a dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains). The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the dividend rules.

Distributions Paid in Foreign Currency

The amount of a distribution received on the Common Shares in foreign currency generally will be equal to the U.S. dollar value of such distribution based on the exchange rate applicable on the date of receipt. A U.S. Holder that does not convert foreign currency received as a distribution into U.S. dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the U.S. dollar value of such foreign currency on the date of receipt. Such a U.S. Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for U.S. dollars).

Dividends Received Deduction

Dividends received on the Common Shares generally will not be eligible for the “dividends received deduction.” The availability of the dividends received deduction is subject to complex limitations that are beyond the scope of this summary, and a U.S. Holder that is a corporation should consult its own tax advisor regarding the dividends received deduction.

Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Common Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s adjusted tax basis in the Common Shares sold or otherwise disposed of. Subject to the “passive foreign investment company” rules discussed below, any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if the Common Shares are held for more than one year.

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

Foreign Tax Credit

A U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends received on the Common Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a taxable year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” In addition, this limitation is calculated separately with respect to specific categories of income.

Gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of Common Shares generally will be treated as “U.S. source” for purposes of applying the foreign tax credit rules, unless the gain is subject to tax in Canada and resourced as foreign source gain under the provisions of the Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or loss as foreign source. Dividends received on the Common Shares generally will be treated as “foreign source” and generally will be categorized as “passive income.” The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Information Reporting; Backup Withholding Tax

Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, or proceeds arising from the sale or other taxable disposition of, Common Shares generally will be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, U.S. Holders that are corporations generally are excluded from these informa tion reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding tax rules.

Additional Rules that May Apply to U.S. Holders

If the Company is a “controlled foreign corporation” or a “passive foreign investment company” (each as defined below), the preceding sections of this summary may not describe the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares.

Controlled Foreign Corporation

The Company generally will be a “controlled foreign corporation” under Section 957(a) of the Code (a “CFC”) if more than 50% of the total voting power or the total value of the outstanding shares of the Company is owned, directly or indirectly, by citizens or residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or domestic trusts (each as defined in Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10% or more of the total voting power of the outstanding shares of the Company (a “10% Shareholder”).

If the Company is a CFC, a 10% Shareholder generally will be subject to current U.S. federal income tax with respect to (a) such 10% Shareholder’s pro rata share of the “subpart F income” (as defined in Section 952 of the Code) of the Company and (b) such 10% Shareholder’s pro rata share of the earnings of the Company invested in “United States property” (as defined in Section 956 of the Code). In addition, under Section 1248 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares by a U.S. Holder that was a 10% Shareholder at any time during the five-year period ending with such sale or other taxable disposition generally will be treated as a dividend to the extent of the “earnings and profits” of the Company that are attributable to such Common Shares. If the Company is both a CFC and a &# 147;passive foreign investment company” (as defined below), the Company generally will be treated as a CFC (and not as a “passive foreign investment company”) with respect to any 10% Shareholder.

The Company does not believe that it has previously been, or currently is, a CFC. However, there can be no assurance that the Company will not be a CFC for the current or any subsequent taxable year.

Passive Foreign Investment Company

The Company generally will be a “passive foreign investment company” under Section 1297(a) of the Code (a “PFIC”) if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable year is passive income or (b) on average, 50% or more of the assets held by the Company either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if the Company is not publicly traded and either is a “controlled foreign corporation” or makes an election). “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. “Gross Income” means, generally, all revenues less cost of goods sold. However, for transactions entered into after December 31, 2004, active business gains arising from the sale or exchange of commodities by the Company generally are excluded from “passive income” if substantially all of the Company’s commodities are (a) stock in trade of the Company or other property of a kind that would properly be included in inventory of the Company, or property held by the Company primarily for sale to customers in the ordinary course of business, (b) property used in the trade or business of the Company that would be subject to the allowance for depreciation under section 167 of the Code, or (c) supplies of a type regularly used or consumed by the Company in the ordinary course of its trade or business.

For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such other foreign corporation. In addition, for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a “related person�� (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

The Company believes that it was a PFIC for the taxable year ended December 31, 2007, and based on current business plans and financial projections, expects that it will be a PFIC for the taxable year ending December 31, 2008. The determination of whether the Company was, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to various interpretations. In addition, whether the Company will be a PFIC for the taxable year ending December 31, 2008 and each subsequent taxable year depends on the assets and income of the Company over the course of each such taxable year and, as a result, cannot be predicted with certainty as of the date of this Annual Report. Accordingly, there can be no assurance that the IRS will not challenge the determination made by the Company concerning its PFIC status for any taxable year.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares will depend on whether such U.S. Holder makes an election to treat the Company as a “qualified electing fund” or “QEF” under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder.”

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of Common Shares and (b) any excess distribution received on the Common Shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current taxable year) exceeds 125% of the average distributions received during the three preceding taxable years (or during a U.S. Holder’s holding period for the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares, and any excess distribution received on the Common Shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding period for the Common Shares. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holder’s holding period for the Common Shares (other than years prior to the first taxable year of the Company beginning after December 31, 1986 for which the Company was not a PFIC) will be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year. Such a Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible. The amount of any such gain or excess distribution allocated to the current year of such Non-Electing U.S. Holder’s holding period for the Common Shares will be treated as ordinary income in the current year, and no interest charge will be incurred with respect to the resulting tax liability for the current year.

If the Company is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Common Shares, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent taxable years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Shares were sold on the last day of the last taxable year for which the Company was a PFIC.

In addition, if the Company is a PFIC and owns shares of another foreign corporation that also is a PFIC, under certain indirect ownership rules, a disposition by the Company of the shares of such other foreign corporation or a distribution received by the Company from such other foreign corporation generally will be treated as an indirect disposition by a U.S. Holder or an indirect distribution received by a U.S. Holder, subject to the rules of Section 1291 of the Code discussed above. To the extent that gain recognized on the actual disposition by a U.S. Holder of Common Shares or income recognized by a U.S. Holder on an actual distribution received on the Common Shares was previously subject to U.S. federal income tax under these indirect ownership rules, such amount generally should not be subject to U.S. federal income tax.

QEF Election

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely. A QEF Election generally will be “timely” if it is made for the first year in a U.S. Holder’s holding period for the Common Shares in which the Company is a PFIC. In this case, a U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents with such U.S. Holder’s U.S. federal income tax return for such first year. However, if the Company was a PFIC in a prior year in a U.S. Holder’s holding period for the Common Shares, then in order to be treated as making a “timely” QEF Election, such U.S. Holder must elect to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if the Common Shares were sold on the qualification date for an amount equal to the fair market value of the Common Shares on the qualification date. The “qualification date” is the first day of the first taxable year in which the Company was a QEF with respect to such U.S. Holder. In addition, under very limited circumstances, a U.S. Holder may make a retroactive QEF Election if such U.S. Holder failed to file the QEF Election documents in a timely manner.

A QEF Election will apply to the taxable year for which such QEF Election is made and to all subsequent taxable years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent taxable year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those taxable years in which the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent taxable year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any such subsequent taxable year in which the Company qualifies as a PFIC. In addition, the QEF Election will remain in effect (although it will not be applicable) with respect to a U.S. Holder even after such U.S. Holder

disposes of all of such U.S. Holder’s direct and indirect interest in the Common Shares. Accordingly, if such U.S. Holder reacquires an interest in the Company, such U.S. Holder will be subject to the QEF rules described above for each taxable year in which the Company is a PFIC.

A U.S. Holder that makes a timely QEF Election generally will not be subject to the rules of Section 1291 of the Code discussed above. For example, a U.S. Holder that makes a timely QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common Shares.

However, for each taxable year in which the Company is a PFIC, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder. Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each taxable year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Co mpany. However, a U.S. Holder that makes a QEF Election may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.

A U.S. Holder that makes a QEF Election generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents “earnings and profits” of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.

U.S. Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the Common Shares are marketable stock. The Common Shares generally will be “marketable stock” if the Common Shares are regularly traded on a qualified exchange or other market. For this purpose, a “qualified exchange or other market” includes (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, surveillance, and other requirements designed to prevent fraudulent and manipulative acts and practices, remove impediments to and perfec t the mechanism of a free, open, fair, and orderly market, and protect investors (and the laws of the country in which the foreign exchange is located and the rules of the foreign exchange ensure that such requirements are actually enforced) and (ii) the rules of such foreign exchange effectively promote active trading of listed stocks. If the Common Shares are traded on such a qualified exchange or other market, the Common Shares generally will be “regularly traded” for any calendar year during which the Common Shares are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A Mark-to-Market Election applies to the taxable year in which such Mark-to-Market Election is made and to each subsequent taxable year, unless the Common Shares cease to be “marketable stock” or the IRS consents to

revocation of such election. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

A U.S. Holder that makes a Mark-to-Market Election generally will not be subject to the rules of Section 1291 of the Code discussed above. However, if a U.S. Holder makes a Mark-to-Market Election after the beginning of such U.S. Holder’s holding period for the Common Shares and such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the Common Shares.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each taxable year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares as of the close of such taxable year over (b) such U.S. Holder’s adjusted tax basis in such Common Shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the lesser of (a) the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the Common Shares over (ii) the fair market value of such Common Shares as of the close of such taxable year or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years. &nb sp;

A U.S. Holder that makes a Mark-to-Market Election generally will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years).

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common Shares that would otherwise be tax-deferred (such as gifts and exchanges pursuant to tax-deferred reorganizations under Section 368 of the Code). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Shares are transferred.

Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Shares.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.

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 together 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 establishment" or &q uot;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 in any other case will be redu ced 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.

10.G

Statement by experts

Not Applicable.

10.H

Documents on Display

We have filed with the Securities and Exchange Commission this annual report on Form 20-F, including exhibits, under the Securities and Exchange Act of 1934.

We are subject to the informational requirements of the Securities Exchange Act of 1934 and file reports and other information with the Securities and Exchange Commission. Reports and other information which we file with the Securities and Exchange Commission, including this Annual Report on Form 20-F, may be inspected and copied at the public reference facilities of the Securities and Exchange Commission at:

100 F Street, NE

Washington D.C. 20549

You can also obtain copies of this material by mail from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. Additionally, copies of this material may also be obtained from the Securities and Exchange Commission's internet site at http://www.sec.gov. The Commission's telephone number is 1-800-SEC-0330. Copies of the above material contracts may be inspected at our principal executive office at the address on the face page of this Report during normal business hours.

10.I Subsidiary Information

As of May 31, 2008, we have one subsidiary, MAX Resources, Inc., a wholly owned Nevada corporation.

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

We were incorporated under the laws of Alberta, Canada and our financial results are quantified in Canadian dollars. We raise equity funding through the sale of securities denominated in Canadian dollars, whereas the majority of our obligations and expenditures with respect to our properties will be incurred in US Dollars. Variations in the exchange rate may give rise to foreign exchange gains or losses that may be significant. Market risks relating to our operations, if we begin production, are anticipated to result primarily from changes in interest rates, foreign exchange rates and commodity prices, as well as credit risk concentrations. We do not use financial instruments for trading purposes and are not parties to any leverage derivatives. We do not currently engage in hedging transactions. See “Currency and Exchange Rates” and Item 4 – “Information on the Company”.

Item 12.

Description of Securities Other than Equity Securities

The required disclosure is not applicable.

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

We have had no material defaults in payment of principal, interest or sinking or purchase fund installments or other material defaults relating to indebtedness.

Item 14.

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

The required disclosure is not applicable.

Item 15T.

Controls and Procedures

(a)Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. After evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d – 14(c)) as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were effective.

(b) Report on Internal Control Over Financial Reporting

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions;

provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles;

provide reasonable assurance that receipts and expenditures are made only in accordance with authorizations of our management and board of directors (as appropriate); and

provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of fiscal year ended December 31, 2007 based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (the “Framework”). Based on this evaluation, our management concluded that, as of fiscal year ended December 31, 2007, there may be potential weaknesses concerning segregation of duties; however, they are not considered to be material weaknesses.

During its evaluation, our management identified the need for additional accounting staff in order to ensure more complete segregation of duties during the accounting and financial reporting process in the future. Effective January 2008, we retained additional experienced accounting staff to assist in the preparation of financial statements and the documentation of internal controls and procedures. Our management is committed to continuously improve its internal controls throughout 2008.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide

only management’s report in this annual report. These temporary rules permits a “non-accelerated filer” to provide only management’s report on internal control over financial reporting in an annual report and omit an attestation report of the issuer’s registered public accounting firm regarding management’s report on internal control over financial reporting until it is required to file an annual report for its first fiscal year ending after December 15, 2008.

(c) Changes in Internal Control Over Financial Reporting

There were no significant changes in our internal controls or in other factors that could materially affect these controls subsequent to the date our Chief Executive Officer and our Chief Accounting Officer completed their evaluation.

Item 16.

16A.

Audit Committee Financial Expert

We do not have an audit committee financial expert serving on our audit committee. Our Audit Committee consists of three independent directors, all of whom are both financially literate and very knowledgeable about our corporate affairs. Because our structure and operations are straightforward, we do not find it necessary to augment our Audit Committee with a financial expert.

16.B

Code of Ethics

We have not adopted a formal code of ethics. We have concluded that a written code of ethics would serve little practical purpose for us in deterring wrongdoing and promoting ethical conduct and full, fair and accurate public disclosure and compliance with applicable laws and regulatory requirements. Since our operations are currently relatively small, most of our important activities are conducted directly by or under the direct supervision of our directors and senior officers. All of our current directors and officers have held their positions for a number of years and are familiar with our operations and our informal requirements for conduct. In light of the lack of perceived benefit from adopting a formal code considered against the time and cost for management to consider and implement a code, we have decided not to do so at the present time. We will continue to monitor the possible benefits of adopting a formal code of ethics, particularly as our operations expand and will consider whether we should adopt a formal code of ethics at a future date.

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 our principal accountant for the audit of our 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 $20,320 for the year ending December 31, 2007 and $16,300 for the year ending December 31, 2006.

(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 our financial statements but are not reported under paragraph (a) of this Item were $nil for the year ending December 31, 2007 and $nil for the year ending December 31, 2006.

(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 $5,000 for the year ended December 31, 2007 and $350 for the year ended December 31, 2006 for preparation of our 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, 2007 and $nil in the year ending December 31, 2006.

(e)

Pre-Approval Policies

Our Audit Committee nominates and engages the independent auditors to audit the financial statements, and approves all audits, audit-related services, tax services and other services provided by the auditor. Any services provided by our independent auditor that are not specifically included within the scope of the audit must be pre-approved by our audit committee prior to any engagement. Our audit committee is permitted to approve certain fees for audit-related services, tax services and other services pursuant to ade minimusexception before the completion of the engagement.

16.D

Exemptions from the Listing Standards for Audit Committees

Not applicable.

16.E

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no repurchases by or on behalf of the Company or any affiliated purchaser, including any repurchases 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 fiscal year. We made no open market repurchases.

PART III

Item 17.

Financial Statements

We are furnishing the following financial statements and reports:

Auditor’s Report dated March 21, 2008

Consolidated Balance Sheets at December 31, 2007 and December 31, 2006

Consolidated Statements of Operations and Deficit for the year ended December 31, 2007 and the year ended December 31, 2006 and the year ended December 31, 2005

Consolidated Statements of Cash Flow for the year ended December 31, 2007 and the year ended December 31, 2006 and the year ended December 31, 2005

Notes to the Consolidated Financial Statements

All financial statements herein, unless otherwise stated, have been prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”). These principles, as they pertain to our consolidated financial statements, differ from United States’ generally accepted accounting principles (“U.S. GAAP”) in a number of material respects, which are set out elsewhere herein. See Note 9 to the attached consolidated financial statements.

MAX RESOURCE CORP.

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2007

Expressed in Canadian Dollars

INDEPENDENT AUDITORS’ REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

[f20f2007012.jpg]

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, 2007 and 2006 and the consolidated statements of operations and deficit and cash flows for the years ended December 31, 2007, 2006 and 2005. 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, 2007 and 2006 and the results of its operations and its cash flows for the years ended December 31, 2007, 2006 and 2005 in accordance with Canadian generally accepted accounting principles.

“DMCL”

DALE MATHESON CARR-HILTON LABONTE LLP

DMCL CHARTERED ACCOUNTANTS

Vancouver, Canada

March 21, 2008

[f20f2007013.jpg]


MAX RESOURCE CORP. (An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed In Canadian Dollars)

				December 31,		December 31,
				2007		2006

ASSETS

CURRENT
Cash and cash equivalents		$		7,661,128	$	880,201
Receivables and prepaids				208,046		21,895
Taxes recoverable				17,139		2,317
				7,886,313		904,413

RECLAMATION BONDS (Note 3)				28,444		-
MINERAL PROPERTIES (Note 3)				2,886,325		1,371,697
EQUIPMENT, net of accumulated amortization of $4,253 (2006 - $3,783)				-		470

		$		10,801,082	$	2,276,580

LIABILITIES

CURRENT
Accounts payable and accrued liabilities		$		34,442	$	58,451

				34,442		58,451

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:	21,549,229 common shares (2006 – 11,363,741 common shares)			13,230,666		4,337,082
SHARE PURCHASE WARRANTS (Note 5)				288,562		5,828
CONTRIBUTED SURPLUS (Note 5)				855,264		389,517
DEFICIT				(3,607,852)		(2,514,298)

				10,766,640		2,218,129

			$	10,801,082	$	2,276,580

NATURE OF OPERATIONS (Note 1)

APPROVED BY THE DIRECTORS:



Paul John – Director		Stuart Rogers – Director

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


MAX RESOURCE CORP. (An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed In Canadian Dollars)
		Year ended December 31, 2007	Year ended December 31, 2006	Year ended December 31, 2005

EXPENSES
Amortization	$	470	$ 120	$ 148
Consulting		52,033	29,698	3,998
Consulting – stock-based compensation (Note 5)		154,591	13,813	46,562
Investor relations – stock-based compensation (Note 5)		70,388	-	31,826
Management fees (Note 4)		90,000	60,000	52,500
Management and directors fees – stock-based compensation (Note 5)		345,409	115,352	76,878
Office and general		10,778	8,454	8,618
Professional fees		51,093	42,199	41,870
Shareholder and investor relations		339,034	210,274	103,838
Transfer agent and filing fees		25,581	21,170	18,793
Travel and promotion		28,370	22,411	24,754

LOSS BEFORE THE FOLLOWING		(1,167,747)	(523,491)	(409,785)

Interest income		222,290	19,458	1,804
Write-down of mineral properties (Note 3)		(148,097)	(218,125)	(57,000)

NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR		(1,093,554)	(722,158)	(464,981)

DEFICIT, BEGINNING		(2,514,298)	(1,792,140)	(1,327,159)

DEFICIT, ENDING	$	(3,607,852)	$ (2,514,298)	$ (1,792,140)



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

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		17,549,381	10,846,412	7,633,101

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


MAX RESOURCE CORP. (An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed In Canadian Dollars)

		Year ended December 31, 2007	Year ended December 31, 2006	Year ended December 31, 2005

CASH PROVIDED BY (USED IN):

OPERATING ACTIVITIES
Loss for the year	$	(1,093,554)	$ (722,158)	$ (464,981)
Adjustments for items not involving cash:
Amortization		470	120	148
Stock-based compensation - consulting, management and investor relations expense		570,388	129,165	155,266
Write-down of mineral properties		148,097	218,125	57,000
Changes in non-cash working capital items:
Increase in receivables and prepaids		(186,151)	(3,604)	(17,309)
Increase in taxes recoverable,		(14,822)	3,497	(3,659)
Decrease in accounts payable and accrued liabilities		(24,009)	(12,533)	(5,163)

CASH USED IN OPERATING ACTIVITIES		(599,581)	(387,388)	(278,698)

FINANCING ACTIVITIES
Repayments to related parties		-	-	(27,080)
Issuance of common shares		8,829,677	905,700	1,349,804

CASH PROVIDED BY FINANCING ACTIVITIES		8,829,677	905,700	1,322,724

INVESTING ACTIVITIES
Reclamation bonds		(28,444)	-	-
Mineral property acquisition and exploration costs		(1,420,725)	(203,836)	(480,311)

CASH USED IN INVESTING ACTIVITIES		(1,449,169)	(203,836)	(480,311)

INCREASE (DECREASE) IN CASH		(859,073)	314,476	563,715

CASH AND CASH EQUIVALENTS, BEGINNING		880,201	565,725	2,010

CASH AND CASH EQUIVALENTS, ENDING	$	7,661,128	$ 880,201	$ 565,725

SUPPLEMENTARY CASH FLOW DISCLOSURE: (Note 7)

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

MAX RESOURCE CORP.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2007

(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.. To date, the Company has not generated any revenues from operations and will require additional funds to meet its obligation s and the costs of its operations. As a result, further losses are anticipated prior to the generation of any profits.

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 has sufficient funds on hand to cover anticipated operating expenses for the next year.

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.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

These consolidated 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 recoverability of mineral property interests, the determination of future income taxes 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)

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid Canadian dollar denominated guaranteed investment certificates with original terms to maturity of not more than ninety days which are readily convertible to contracted amounts of cash. Cash equivalents are classified as held-for-trading and are recorded at fair value with realized and unrealized gains and losses reported in net income (loss). At December 31, 2007 the Company had cash equivalents comprised of guaranteed investment certificates issued by major financial institutions in the aggregate amount of $7,640,000 and bearing interest at rates varying from 3.65% to 4.8% per annum.

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 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. The Company adopted the accounting standards of the Canadian Institute of Chartered Accountants (“CICA”) regarding stock-based compensation and other stock-based payments. The standard requires that all stock-based awards be 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 Canadian Institute of Chartered Accountants issued the following standards effective for the fiscal years beginning on or after October 1, 2006: Accounting Standards Section 1530 "Comprehensive Income", Accounting Standards Section 3855 "Financial Instruments –Recognition and Measurement" Accounting Standard Section 3861 "Financial Instruments – Presentation and Disclosure" and Accounting Standards Section 3865 –"Hedges". These sections require certain financial instruments and hedge transactions to be recorded at fair value. The standards also introduce the concept of comprehensive income and accumulated other comprehensive income.

The Company adopted these standards effective January 1, 2007 on a prospective basis without retroactive restatement of prior periods. Under the new standard, financial instruments designated as "held for trading" and "available for sale" will be carried at their fair value while financial instruments designated as "loans and receivables", "financial liabilities" and those classified as "held to maturity" will be carried at their amortized cost. All derivatives will be carried on the consolidated balance sheet at their fair value. Mark-to-market adjustments on these instruments will be included in net income. Transaction costs incurred to acquire financial instruments will be included in the underlying balance. The adoption of these new standards did not have a material impact on the Company’s financial statements.

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.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. Management is of the opinion that the Company does not have any asset retirement obligations at this time.

Mineral property related retirement obligations are capitalized as part of deferred exploration and development costs.

Impairment of Long-lived Assets

The Company follows the recommendations of the CICA Handbook section 3063, “Impairment of Long-Lived Assets”. Section 3063 establishes standards for recognizing, measuring and disclosing impairment of long-lived assets held for use. The Company conducts its impairment test on long-lived assets when events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized when the carrying amount of an asset to be held and used exceeds the undiscounted future net cash flows expected from its use and disposal. If there is impairment, the impairment amount is measured as the amount by which the carrying amount of the asset exceeds its fair value, calculated using discounted cash flows when quoted market prices are not available.

Flow-through Shares

The resource expenditure deductions for income tax purposes related to exploration activities funded by flow-through share arrangements are renounced to investors in accordance with Canadian tax legislation. Under the recommendations of the Emerging Issues Committee (EIC 146), future income tax liabilities resulting from the renunciation of qualified mineral expenditures by the Company is recorded as a reduction in share capital. Any corresponding realization of future income tax benefits resulting from the utilization of prior year losses available to the Company not previously recorded, as the Company did not meet the criteria for recognition, will be reflected as part of the Company’s operating results as a recovery of future income taxes in the same period of filing the renunciations with the Canada Revenue Agency.

NOTE 3.

MINERAL PROPERTIES


	Balance December 31, 2005	Additions	Write-down	Balance December 31, 2006	Additions	Write-down	Balance December 31, 2007
Acquisition costs:
Target Claims, NWT	$ 91,000	$ -	$ -	$ 91,000	$ -	$ (90,999)	$ 1
Gold Hill, Alaska	353,827	29,070	-	382,897	-	-	382,897
MacInnis Lake, NWT	95,000	15,000	-	110,000	-	-	110,000
Thomas Mtn, UT	68,180	(2,300)	(65,880)	-	-	-	-
C de Baca, NM	44,684	37,863	-	82,547	24,435	-	106,982
Diamond Peak, NV	-	41,462	-	41,462	1,725	-	43,187
Nustar Claims, AZ	-	-	-	-	440,453	-	440,453
Ravin, NV	-	-	-	-	65,677	-	65,677
East Manhattan, NV	-	-	-	-	38,073	-	38,073

	652,691	121,095	(65,880)	707,906	570,363	(90,999)	1,187,270

Exploration costs:
Target Claims, NWT	57,098	-	-	57,098	-	(57,098)	-
Gold Hill, Alaska	333,414	13,217	-	346,631	747,221	-	1,093,852
MacInnis Lake, NWT	243,515	-	-	243,515	130,792	-	374,307
Thomas Mtn, UT	18,455	133,790	(152,245)	-	-	-	-
C de Baca, NM	-	16,547	-	16,547	200,688	-	217,235
Nustar Claims, AZ	-	-	-	-	1,963	-	1,963
Ravin, NV	-	-	-	-	11,698	-	11,698

	652,482	163,554	(152,245)	663,791	1,092,362	(57,098)	1,699,055

	$ 1,305,173	$ 284,649	$ (218,125)	$ 1,371,697	$ 1,662,725	$ (148,097)	$ 2,886,325

NOTE 3.

MINERAL PROPERTIES (continued):

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 per share and agreeing to incurring a minimum of $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 year ended December 31, 2005 the Company elected to write-off the Target 2 Claim as it did 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 costs. During the year ended December 31, 2007, the Company recorded an impairment charge of $148,097 on the Target 1 Claim as the Company has not done any work on the property since 2004 and has no immediate plans to do so.

Gold Hill Property, Alaska

During 2004 the Company entered into an option agreement to acquire an interest in the Gold Hill claims 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 exercisable at $0.47 per share for a two year period. In order to maintain the Option, the Company issued an additional 200,000 common shares effective December 31, 2004 at a value of $74,000 and a further 200,000 common shares during the year ended December 31, 2005 at a value of $120,000.

The Company assumed 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)

2006 deferred to 2007

25,000 (paid)

2007 250,000 (incurred) 25,000 (paid)

2008 250,000 50,000

2009 500,000 75,000

2010 500,000 100,000

2011

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 royalty 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 1% NSR royalty.

During the years ended December 31, 2007 and 2006, the Company incurred the following exploration costs on the Gold Hill Property:


	2007	2006
Drilling	$ 375,291	$ -
Field expenses	260,680	3,483
Geological consulting	90,900	3,683
Licenses, permits and lease payments	6,330	6,051
Travel	14,020	-
	$ 747,221	$ 13,217

NOTE 3.

MINERAL PROPERTIES (continued):

MacInnis Lake, Northwest Territories, Canada

The Company entered into an option agreement dated April 1, 2005, as amended April 11, 2006, with Alberta Star Development Corp. (“Alberta Star”) whereby the Company can earn an interest in the MacInnis Lake Uranium Project in the Northwest Territories. The terms of the option agreement call for payments as follows:

(i)

cash payments totalling $30,000 (paid);

(ii)

the issuance to Alberta Star of 200,000 common shares of the Company upon TSX Venture Exchange (“TSX-V”) acceptance for filing (issued) and

(iii)

work commitments totalling $2,000,000 over a five year period ($750,000 on or before October 1, 2008; $250,000 on or before April 1, 2009; $750,000 on or before October 1, 2009 and $250,000 on or before April 1, 2010).

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 years ended December 31, 2007 and 2006, the Company incurred the following exploration costs on the MacInnis Lake project:


	2007	2006
Geological consulting	$ 5,792	$ -
Geophysical surveys	125,000	-
	$ 130,792	$ -

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, 2006, the Company satisfied its work commitments on the PPCO claims by incurring $133,790 in exploration expenses on the Thomas Mountain project. However, as the drilling conducted did not encounter economic grades of uranium, the Company elected not to pay the option payment due to Energex or the claim maintenance fees that were due in September, 2006 and abandoned the property, resulting in a write-down of $218,125.

C de Baca, New Mexico, United States

On September 22, 2005 the Company announced that it had entered into an agreement to acquire 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 TSX-V (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.

NOTE 3.

MINERAL PROPERTIES (continued):

C de Baca, New Mexico, United States (continued)

To December 31, 2007, the Company had incurred total acquisition costs of $106,982 with respect to the Dat Claims. This amount is comprised of staking fees of $35,235, filing fees of $37,119 and the purchase price of $34,628 (US$30,000).

During the years ended December 31, 2007 and 2006, the Company incurred the following exploration costs on the C de Baca project:


	2007	2006
Drilling	$ 136,683	$ -
Geological consulting	49,162	13,379
Field expenses	2,967	1,353
Licenses, permits and lease payments	11,877	1,814
	$ 200,689	$ 16,546

Diamond Peak, Nevada, United States

On May 9, 2006 the Company 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 Wendt Family Trust is controlled by Clancy J. Wendt, the Vice President of Exploration for the Company. The terms of the Option Agreement call for the issuance to the Wendt Family Trust of 100,000 escrowed shares (issued) of the Company valued at $40,000 and the following rental payments:

Date

Payment Amount

Upon execution of the Agreement

$ 25,000 (U.S.) (paid)

May 9, 2007

$ 35,000 (U.S.) (paid)

May 9, 2008

$ 45,000 (U.S.)

Each anniversary thereafter for 10 years

$ 50,000 (U.S.)

The Company may purchase the property for 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 will be subject to a 3% NSR royalty. Upon full exercise of the option, the Company will own 100% of the property.

On May 15, 2006, the Company entered into a mineral property Option Agreement with Kokanee Placer Ltd. (“Kokanee”), a British Columbia company, whereby it granted Kokanee the right to acquire up to a 51% interest in the Diamond Peak Property in consideration of a cash payment of US$25,000 (paid) and the issuance of 100,000 shares of Kokanee to the Company upon completion of Kokanee’s public listing (uncompleted as at December 31, 2007). In addition, the following annual payments and share issuances are due from Kokanee to the Company:

By May 15, 2007:

(a)

Issue 200,000 shares of Kokanee to the Company (pending completion of Kokanee’s public listing); and pay US$35,000 to the Company (received)

By May 15, 2008:

(a)

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

(b)

Either pay US$45,000 to the Company or issue the greater of either 300,000 common shares of Kokanee or that number of shares of Kokanee which are valued at US$45,000.

By May 15, 2009, either pay US$100,000 to the Company or issue to the Company either 600,000 common shares or that number of shares of Kokanee which are valued at US$100,000, whichever is greater.

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

NOTE 3.

MINERAL PROPERTIES (continued):

Diamond Peak, Nevada, United States (continued)

The option granted to Kokanee is for a term of three years from the date of the agreement, subject to the following annual mineral exploration commitments:

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

ii)

$300,000 in the second year, and

iii)

$600,000 in the third year.

The Company did not incur any exploration expenses on the Diamond Peak project during the years ended December 31, 2007 or 2006.

Nustar Claims, Arizona, United States

On April 4, 2007 the Company entered into an Agreement with NUSTAR Exploration LLC, a private Arizona limited liability corporation, for the acquisition of a 100% interest in 427 mineral claims located in the Arizona Strip of the Colorado Plateau in northwest Arizona.

Under the terms of the agreement, the Company acquired a 100% interest in the claims by making a cash payment of US$128,100 (paid) and issuing 200,000 shares of common stock (issued) with a fair value of $1.21 per share or $242,000, subject to a gross royalty of 4% (the “Royalty”) of sales revenue from commercial production of uranium from the claims. For each breccia pipe identified on the claims that goes into commercial production, the Company shall have the right to purchase 3% of the 4% Royalty on that breccia pipe by payment of $1,000,000. The Company has also paid filing fees of $70,353, which have been capitalized as acquisition costs.

During the year ended December 31, 2007, the Company incurred $1,963 for geological consulting on the claims.

Ravin Claims, Nevada, United States

On September 10, 2007 the Company entered into an Option Agreement with Energex, a Nevada corporation, for the acquisition of a 100% interest in the Ravin molybdenum/tungsten property, 162 mineral claims located in Lander County, Nevada. Energex is wholly-owned by Clancy J. Wendt, the Vice President of Exploration for the Company.

The terms of the Option Agreement with Energex call for the payment of US$5,000 on execution of the agreement (paid), US$25,000 by September 10, 2008, US$35,000 by September 10, 2009 and US$50,000 on each anniversary thereafter. The Ravin Property is subject to a 3% NSR royalty. Upon full exercise of the option, the Company will own 100% of the project. In addition, the Company has paid filing fees of $60,677, which have been included in acquisition costs.

During the year ended December 31, 2007, the Company incurred $10,869 for geological consulting and $829 for field expenses on the Ravin claims.

East Manhattan, Nevada, United States

On December 4, 2007 the Company entered into an Option Agreement with MSM LLC (“MSM”), a Nevada corporation, for the acquisition of a 100 % interest in the East Manhattan Wash mineral claims located in Nye County, Nevada.

The terms of the Option Agreement with MSM call for the payment of US$28,000 on execution of the agreement (paid), US$20,000 by December 4, 2008, US$25,000 by December 4, 2009, US$40,000 by December 4, 2010, US$50,000 by December 4, 2011 and US$100,000 by December 12, 2012. The East Manhattan Property is subject to a 3% NSR royalty. Upon full exercise of the option, the Company will own 100% of the project

The Company did not incur any exploration expenses on the East Manhattan Wash project during the year ended December 31, 2007.

NOTE 4.

RELATED PARTY TRANSACTIONS

During 2007, management fees of $90,000 (2006 - $60,000; 2005 - $52,500) were paid or accrued to a private company controlled by a director.

During 2007, the Company granted 675,000 options to directors resulting in a stock-based compensation expense of $345,409 (2006: 450,000 options, $115,352 expense; 2005: 421,000 options, $76,878 expense).

Refer to Note 3.

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


	Number of Shares	Share Capital	Contributed Surplus
Common Shares Issued:
Balance at December 31, 2005	9,943,241	$ 3,367,520	$ 284,214
Shares issued for mineral properties	100,000	40,000	-
Exercise of stock options	118,000	68,562	(23,862)
Exercise of warrants	62,500	33,000	-
Private placements	1,140,000	855,000	-
Finders fees	-	(27,000)	-
Stock-based compensation	-	-	129,165

Balance at December 31, 2006	11,363,741	4,337,082	389,517
Shares issued for mineral properties	200,000	242,000	-
Exercise of stock options	500,000	317,321	(104,641)
Exercise of warrants	826,918	471,171	-
Private placement	8,658,570	8,800,370	-
Share issue costs	-	(937,278)
Stock-based compensation	-	-	570,388

Balance at December 31, 2007	21,549,229	$ 13,230,666	$ 855,264

Private Placements

On March 29, 2006 the Company announced a non-brokered private placement of up to 1,400,000 units at $0.75 per unit, with each unit consisting of one common share and one non-transferable share purchase warrant. Each warrant will entitle the holder to purchase one additional common share of the Company for a two year period, exercisable at $1.00 per share. The first tranche of this private placement, comprised of 997,000 units, was completed in April, 2006 for gross proceeds of $747,750. The second and final tranche of this placement, comprised of an additional 143,000 units for proceeds of $107,250, was completed in May, 2006, bringing the final total for this placement to 1,140,000 units. The fair value of the warrants was estimated to be $85,500 (10%of the proceeds received from the private placement); this estimate has not been recorded as a separate component of shareholders’ equity. Finder’s fees of $27,000 were paid with respe ct to a portion of this placement. .

NOTE 5.

SHARE CAPITAL (continued)

On May 24, 2007 the Company completed a brokered private placement of 5,000,000 units at a price of $1.00 per unit, and 500,000 flow-through units (the “FT Units”) at a price of $1.20 per FT Unit (the “Offering”). Each unit consists of one common share of the Company and one-half of a transferable common share purchase warrant. Each FT Unit consisted of one common share of the Company and one-half of a warrant. Each warrant will entitle the holder to purchase one additional common share of the Company at a price of $1.30 for an 18 month period following the closing. The fair value of the warrants was estimated to be $560,000 (10%of the proceeds received from the private placement); this estimate has not been recorded as a separate component of shareholders’ equity. The agents received a commission of 7% of the gross proceeds of the offering, of which half was paid in cash and the balance was settled by the issuance of 199,570 units at $1.00 per unit. In addition, the agents received 495,000 compensation warrants, with each compensation warrant entitling the agents to purchase one common share of the Company at a price of $1.20 for a period of 18 months following the closing. The broker’s warrants have been recorded as share issuance costs at a fair value of $205,875.

In addition, during May 2007 the Company also completed a non-brokered private placement of 209,000 flow-through units at a price of $1.20 per unit and 2,750,000 non-flow through units at a price of $1.00 per unit for gross proceeds of $3,000,800. Each unit consists of one common share of the Company and one-half of a transferable common share purchase warrant. Each flow-through unit consisted of one common share of the Company and one-half of a warrant. Each warrant will entitle the holder to purchase one additional common share of the Company at a price of $1.30 for an 18 month period following the closing. The terms of the units in the non-brokered private placement are the same as the terms of the units in the brokered offering. The fair value of the warrants was estimated to be $300,080 (10%of the proceeds received from the private placement); this estimate has not been recorded as a separate component of shareholders’ eq uity. Finders’ fees of $56,700 in cash and 198,810 share purchase warrants exercisable at $1.20 for a period of 18 months from closing were paid with respect to a portion of this private placement. The finders’ warrants have been recorded as share issuance costs at a fair value of $82,687

Stock Options

On February 7, 2006 the Company granted stock options to directors and officers entitling them to purchase 225,000 common shares at a price of $0.70 per share to February 7, 2008. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $70,381 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 3.99% and an expected volatility of 86%.

On March 30, 2006 the Company granted stock options to a consultant entitling him to purchase 25,000 common shares at a price of $0.85 per share to March 30, 2008. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $9,724 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 4.07% and an expected volatility of 89%.

On September 5, 2006 the Company granted stock options to directors and officers entitling them to purchase 300,000 common shares at a price of $0.35 per share to September 5, 2008. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $49,060 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 3.97% and an expected volatility of 93%.

On April 5, 2007 the Company granted stock options to a consultant entitling him to purchase 50,000 common shares at a price of $1.09 per share to April 5, 2009. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $23,645 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 4.10% and an expected volatility of 76%.

NOTE 5.

SHARE CAPITAL (continued)

Stock Options (continued)

On July 27, 2007 the Company granted stock options to a directors, officers and consultants entitling them to purchase 875,000 common shares at a price of $1.05 per share to July 27, 2010. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $447,752 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 3 years, a risk-free interest rate of 4.61% and an expected volatility of 77%. A further 200,000 options exercisable at $1.05 per share until July 27, 2009 were granted to consultants at this same time, with these options vesting over a one-year period.. The total fair value of $84,243 was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 4.64% and an expected volatility of 77%. The granting of these options resulted in a stock based compensation expense of $42,120 being recorded, representing the fair value of the options vested during the period. The remainder of $42,123 will be expensed on vesting in 2008.

On August 30, 2007 the Company granted stock options to a consultant entitling him to purchase 225,000 common shares at a price of $0.81 per share to August 30, 2009. .These options vest over a one-year period. The total fair value of $69,810 was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 4.21% and an expected volatility of 79%. The granting of these options resulted in a stock based compensation expense of $23,268 being recorded, representing the fair value of the options vested during the period. The remainder of $46,542 will be expensed on vesting in 2008.

On October 5, 2007 the Company granted stock options to consultants entitling them to purchase 75,000 common shares at a price of $0.85 per share to October 5, 2009. These options vested immediately. The granting of these options resulted in a stock based compensation expense of $28,603 being recorded, representing the fair value of the options vested during the period. 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 4.36% and an expected volatility of 79%.

On December 4, 2007 the Company granted stock options to a consultant entitling him to purchase 200,000 common shares at a price of $0.80 per share to December 4, 2009. These options vest over a one-year period. The total fair value of $59,990 was estimated using the Black-Scholes option pricing model assuming an expected life of 2 years, a risk-free interest rate of 3.78% and an expected volatility of 82%. The granting of these options resulted in a stock based compensation expense of $4,999 being recorded in 2007, representing the fair value of the options vested during the period. The remainder of $54,991 will be expensed on vesting in 2008.

The following table summarizes information about stock option transactions:


	Outstanding Options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
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
Options granted	550,000	0.52	-
Options exercised	(118,000)	0.38	-
Options cancelled and expired	(125,000)	0.40	-

Balance, December 31, 2006	1,075,000	0.47	1.00 years
Options granted	1,625,000	0.98	-
Options exercised	(500,000)	0.43	-
Options cancelled and expired	(50,000)	0.60	-

Balance, December 31, 2007	2,150,000	$0.86	1.75 years

NOTE 5.

SHARE CAPITAL (continued)

Stock Options (continued)

The following incentive stock options were outstanding and exercisable at December 31, 2007:


Number of options outstanding	Exercise Price	Expiry Date	Number of options exercisable	Aggregate intrinsic value
200,000	$0.70	February 23, 2008	200,000
25,000	$0.85	March 30, 2008	25,000
300,000	$0.35	September 5,2008	300,000
50,000	$1.09	April 5, 2009	50,000
875,000	$1.05	July 27, 2010	875,000
200,000	$1.05	July 27, 2009	50,000
225,000	$0.81	August 30, 2009	56,250
75,000	$0.85	October 5, 2009	75,000
200,000	$0.80	December 4, 2009	Nil
2,150,000			1,631,250	$ 105,000

The following table summarizes information about the weighted-average grant date fair value of non vested stock options:


		Weighted
	Non vested	Average Grant Date
Non vested Options	Options	Fair Value
		$
Non vested options, December 31, 2005	-	-
Granted, February 7, 2006	225,000	0.31
Granted, March 30, 2006	25,000	0.39
Granted, September 30, 2006	300,000	0.18
Vested	(550,000)	0.25
Non vested options, December 31, 2006	-	-
Granted, April 5, 2007	50,000	0.47
Granted, July 27, 2007	875,000	0.51
Granted, July 27, 2007	200,000	0.42
Granted, August 30, 2007	225,000	0.31
Granted, October 5, 2007	75,000	0.38
Granted, December 4, 2007	200,000	0.38
Vested	(1,106,250)	0.49
Non vested options, December 31, 2007	518,750	0.36

Warrants

The following table summarizes information about warrant transactions:


	Outstanding Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
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
Warrants issued	1,140,000	1.00	-
Warrants exercised	(62,500)	0.53	-
Warrants cancelled and expired	(100,000)	0.45	-

Balance, December 31, 2006	1,977,558	0.82	0.97 years
Warrants issued	5,023,095	1.29	-
Warrants exercised	(826,918)	0.57	-
Warrants cancelled and expired	(10,640)	0.70	-

Balance, December 31, 2007	6,163,095	$ 1.23	0.79 years

NOTE 5.

SHARE CAPITAL (continued)

Warrants (continued)

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 %. These warrants were exercised during the year ended December 31, 2007.

In May 2007, the Company issued 693,810 warrants to the agents in connection with their participation in brokered and non-brokered private placements totalling 8,658,570 units. The fair value of these agents’ warrants was estimated to be $288,562 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 1.5 years, a risk-free interest rate of 4.56% and an expected volatility of 78%.

The following warrants to acquire common shares were outstanding at December 31, 2007:


	Number Of Shares	Exercise Price	Expiry Date

Warrants	984,000	$1.00	April 27, 2008
	156,000	$1.00	May 17, 2008
	637,500	$1.30	November 14, 2008
	2,849,785	$1.30	November 24, 2008
	814,500	$1.30	November 28, 2008
	27,500	$1.30	December 4, 2008

Agents’ Warrants	67,500	$1.20	November 14, 2008
	495,000	$1.20	November 24, 2008
	131,310	$1.20	November 28, 2008

	6,163,095

NOTE 6.

INCOME TAXES

The actual income tax provisions differ from the expected amounts calculated by applying the Canadian combined federal and provincial corporate income tax rates to the Company’s loss before income taxes. The components of these differences are as follows:


	2007	2006	2005

Loss for the year	$ (1,093,554)	$ (722,158)	$ (464,981)

Expected income tax recovery at 34% (blended rate)	(371,808)	(245,534)	(158,094)
Non-deductible items	244,445	118,119	72,221
Items deductible for tax purposes	(66,600)	(2,865)	(1,029)
Unrecognized benefit of non-capital losses	193,963	130,280	86,902

	$ -	$ -	$ -

NOTE 6.

INCOME TAXES (continued)

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


	2007	2006

Non-capital losses	$ 653,000	$ 503,800
Capital losses	25,200	25,200
Equipment	1,900	1,200
Resource properties	125,800	79,900
Share issuance costs	239,300	9,500

	1,045,200	619,600
Valuation allowance	(1,045,200)	(619,600)

Net future tax assets	$ -	$ -

The Company has non-capital losses of approximately $2,106,000 (2006: $1,706,000) which may be available to offset future income for Canadian income tax purposes which expire over the next twenty years. In addition, there are resource-related expenditures of approximately $3,291, 000 (2006: $1,482,000) 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 carry forwards 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 carry forwards and resource pools.

NOTE 7.

SUPPLEMENTARY CASH FLOW DISCLOSURE:


		2007	2006	2005
Cash paid for: Interest	$	-	$ -	$ -
Income taxes	$	-	$ -	$ -

Other Non-Cash Transactions:

During the year ended December 31, 2006, the Company issued 100,000 common shares for mineral properties at $0.40 per share. Refer to Note 3.

During the year ended December 31, 2007, the Company issued 200,000 common shares for mineral properties at $1.21 per share. Refer to Note 3.

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Good


		Canada		United States		Consolidated
December 31, 2007
Segmented revenue	$	222,290	$	-	$	222,290
Segmented loss	$	(1,043,158)	$	(50,396)	$	(1,093,554)
Identifiable assets	$	8,345,733	$	2,455,349	$	10,801,082
December 31, 2006
Segmented revenue	$	19,458	$	-	$	19,458
Segmented loss	$	(504,033)	$	(218,125)	$	(722,158)
Identifiable assets	$	1,406,497	$	870,083	$	2,276,580
December 31, 2005
Segmented revenue	$	1,804	$	-	$	1,804
Segmented loss	$	(460,038)	$	(4,943)	$	(464,981)
Identifiable assets	$	1,077,033	$	818,560	$	1,895,593


Consolidated Balance Sheets	Year ended December 31,			Cumulative from April 25, 1994 (inception)
Consolidated Balance Sheets	2007	2006	2005	to December 31, 2007
	$	$	$	$
Total assets, Canadian GAAP	10,801,802	2,276,580	1,895,593
Mineral property costs	(2,886,325)	(1,371,697)	(1,305,173)
Total assets, US GAAP	7,915,477	904,883	590,420

Deficit, Canadian GAAP	(3,607,852)	(2,514,298)	(1,792,140)	(3,607,852)
Mineral property costs	(2,886,325)	(1,371,697)	(1,305,173)	(2,886,325)
Stock-based compensation	(6,611)	(6,611)	(6,611)	(6,611)
Deficit, US GAAP	(6,493,161)	(3,892,606)	(3,103,924)	(6,493,161)


Consolidated Statements of Operations

Net loss, Canadian GAAP	(1,093,554)	(722,158)	(464,981)	(3,607,852)
Mineral property costs	(1,514,628)	(66,524)	(623,311)	(2,886,325)
Stock-based compensation	-	-	-	(6,611)
Net loss, US GAAP	(2,608,182)	(788,682)	(1,088,292)	(6,500,788)

Basic net loss per share, US GAAP	(0.15)	(0.07)	(0.14)


Consolidated Statements of Cash Flows

Cash used in operating activities, Canadian GAAP	(599,581)	(387,388)	(278,698)	(2,191,843)
Interest in unproven mineral properties	(1,420,725)	(203,836)	(480,311)	(2,792,422)
Cash used in operating activities, US GAAP	(2,012,386)	(591,224)	(759,009)	(4,984,265)

Cash used in investing activities, Canadian GAAP	(1,449,169)	(203,836)	(480,311)	(2,720,175)
Interest in unproven mineral properties	1,420,725	203,836	480,311	2,685,539
Cash used in investing activities, US GAAP	28,444	-	-	(32,698)

Net cash provided by financing activities, Canadian GAAP and US GAAP	8,829,677	905,700	1,349,804	4,931,208

Max Resource (MXROF) 20-F2007 FY Annual report (foreign)

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