Besra Gold 20F 2007 Annual report

Besra Gold 20-F2007 FY Annual report (foreign)

Content analysis

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F


	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

Olympus Pacific Minerals Inc.

(Exact name of Registrant as specified in its charter)

Canada

(Jurisdiction of incorporation or organization)

Suite 500 – 10 King Street East Toronto, Ontario Canada, M5C 1C3

(Address of principal executive offices)

Securities to be registered pursuant to Section 12(b) of the Act:
None

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

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None

Number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 232,377,011

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.
Yes No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 registrants was required to file such reports). And (2) has been subject to such filing requirements for the past 90 days. 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. (Check one):

Large accelerated file Accelerated file Non-accelerated file

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

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 No

Table of Contents


EXPLANATORY NOTE
GLOSSARY		1
ITEM 1:	Identity of Directors, Senior Management and Advisors	5
ITEM 2:	Offer Statistics and Expected Timetable	5
ITEM 3:	Key Information	5
3A.	Selected Financial Data	5
3B.	Capitalization and Indebtedness	7
3C.	Reasons For The Offer And Use Of Proceeds	7
3D.	Risk Factors	7
ITEM 4:	Information on the Company	13
4A.	History and Development of the Company	13
4B.	Business Overview	17
4C.	Organizational Structure	18
4D.	Property, Plants and Equipment	18
4D.1.	Phuoc Son Gold Property	19
4D.2.	Bong Mieu Gold Property	28
ITEM 5:	Operating and Financial Review and Prospects	37
5A.	Operating Results	37
5B.	Liquidity and Capital Resources	42
5C.	Research and development, patents and licenses, etc	44
5D.	Trend Information	45
5E.	Off-Balance Sheet Arrangements	45
5F.	Tabular Disclosure of Contractual Obligations	45
ITEM 6:	Directors, Senior Management, and Employees	45
6A.	Directors and Senior Management	45
6B.	Compensation	48
6B.1.	Termination Agreements for Executive Officers and Directors	49
6B.2.	Stock Option Plan	54
6C.	Board Practices	55
6D.	Employees	55
6E.	Share Ownership	56
6E.1.	Details of Share Ownership	56
ITEM 7:	Major Shareholders and Related Party Transactions	58
7A.	Major Shareholders	58
7B.	Related Party Transactions	58
7C.	Interests of Experts and Counsel	60
ITEM 8:	Financial Information	60
8A.	Consolidated Statements and Other Financial Information	60
8B.	Significant Changes	60


ITEM 9:	The Offer and Listing	60
9A.	Common Share Trading Information	60
9b.	Plan of Distribution	61
9C.	Markets	61
9D.	Selling Shareholders	61
9e.	Dilution	61
9F.	Expenses of the Issue	61
ITEM 10:	Additional Information	61
10A.	Share Capital	61
10B.	Memorandum and Articles of Association	62
10C.	Material Contracts	64
10D.	Exchange Controls	64
10E.	Taxation	66
10E.1.	Certain Canadian Federal Income Tax Consequences — General	66
10E.2.	Dividends	66
10E.3.	Disposition of Common Shares	66
10E.4.	United States Taxation	67
10F.	Dividends and Paying Agents	71
10G.	Statements by Experts	71
10H.	Documents on Display	71
10I.	Subsidiary Information	71
ITEM 11:	Quantitative and Qualitative Disclosures about Market Risk	71
ITEM 12:	Description of Securities other than Equity Securities	71
ITEM 13:	Defaults, Dividend Arrearages and Delinquencies	72
ITEM 14:	Material Modifications to the Rights of Security Holders and Use of Proceeds	72
ITEM 15:	Controls and Procedures	72
ITEM 16:	Audit Committee	73
16A.	Audit Committee Financial Expert	73
16B.	Code of Ethics	73
16C.	Principal Accountant Fees and Services	73
16D.	Exemptions from the Listing Standards for Audit Committees	74
16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	74
ITEM 17:	Financial Statements	75
ITEM 18:	Financial Statements	75
ITEM 19:	Exhibits	75
19A.	Financial Statements	75
19B.	Exhibits	75
SIGNATURES		77

Table of Contents

GLOSSARY

Following is a glossary of terms used throughout this Annual Report.


artisanal mining		mining at small-scale mines (and to a lesser extent quarries) that are labor intensive, with mechanization being at a low level and basic. Artisanal mining can encompass all small, medium, large, informal, legal and illegal miners who use rudimentary processes to extract valuable rocks and minerals from ore bodies.


bitumen		known as asphalt or tar, bitumen is the brown or black viscous residue from the vacuum distillation of crude petroleum.


breccia		a rock in which angular fragments are surrounded by a mass of finer-grained material.


C-horizon soil		the soil parent material, either created in situ or transported into its present location. Beneath the C horizon lies bedrock.


concentrate		a concentrate of minerals produced by crushing, grinding and processing methods such as gravity, flotation or leaching.


exploration stage		the search for mineral deposits which are not in either the development or production stage.


Form 43-101		technical report issued pursuant to Canadian securities rules, the objective of which is to provide a summary of scientific and technical information concerning mineral exploration, development and production activities on a mineral property that is material to an issuer. The NI 43-101 Report is prepared in accordance with the National Instrument 43-101 Standards of Disclosure for Mineral Projects [‘‘NI 43-101’’]. The 43-101 Form sets out specific requirements for the preparation and contents of a technical report.


feasibility study		a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.


grade		the metal content of rock with precious metals. Grade can be expressed as troy ounces or grams per tonne of rock.


granodiorite		a medium to coarse-grained intrusive igneous rock, intermediate in composition between quartz diorite and quartz monzonite.

Table of Contents


gold deposit		a mineral deposit mineralized with gold


hydrothermal		the products or the actions of heated waters in a rock mass such as a mineral deposit precipitating from a hot solution.


igneous		a primary type of rock formed by the cooling of molten material.


inferred mineral resource		that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and reasonable assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes.


intrusion		intrusive-molten rock which is intruded (injected) into spaces that are created by a combination of melting and displacement.


mafic		igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.


metallurgical tests		scientific examinations of rock/material to determine the optimum extraction of metal contained. Core samples from diamond drill holes are used as representative samples of the mineralization for this test work.


mineral resource		a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.


ore		a naturally occurring rock or material from which minerals, such as gold, can be extracted at a profit; a determination of whether a mineral deposit contains ore is often made by a feasibility study.


open pit		a mining method whereby the mineral reserves are accessed from surface by the successive removal of layers of material usually creating a large pit at the surface of the earth.


ounce or oz.		a troy ounce or 20 pennyweights or 480 grains or 31.103 grams.

Table of Contents


petrology		a field of geology which focuses on the study of rocks and the conditions by which they form. There are three branches of petrology, corresponding to the three types of rocks: igneous, metamorphic, and sedimentary.


pre-feasibility study		a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining methods, in the case of underground mining, or the pit configurations, in the case of an open pit, has been established, where effective methods of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, and economic factors and evaluation of other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.


probable reserve		the economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by a least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.


prospect		an area prospective for economic minerals based on geological, geophysical, geochemical and other criteria.


production stage		all companies engaged in the exploitation of a mineral deposit (reserve).


proven reserve		the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.


qualified person		an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the Technical Report; and is a member or licensee in good standing of a professional association.


reserve		that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. Reserves are customarily stated in terms of ‘‘ore’’ when dealing with metalliferous minerals such as gold or silver.


shaft		a vertical or inclined tunnel in an underground mine driven downward from surface.

Table of Contents


shear		a tabular zone of faulting within which the rocks are crushed and flattened.


stratigraphic units		sequences of bedded rocks in specific areas.


strike		the direction of line formed by intersection of a rock surface with a horizontal plane. Strike is always perpendicular to direction of dip.


thrust fault		a particular type of fault, or break in the fabric of the Earth’s crust with resulting movement of each side against the other, in which a lower stratigraphic position is pushed up and over another. This is the result of compressional forces.


trenching		the surface excavation of a linear trench to expose mineralization for sampling.


vein		a tabular body of rock typically of narrow thickness and mineralized occupying a fault, shear, fissure or fracture crosscutting another pre-existing rock.

For ease of reference, the following conversion factors are provided:


1 mile (mi)	= 1.609 kilometres (km)	2,204 pounds (lbs)	= 1 tonne
1 yard (yd)	= 0.9144 meter (m)	2,000 pounds/1 short ton	= 0.907 tonne
1 acre	= 0.405 hectare (ha)	1 troy ounce	= 31.103 grams
1 kilometre (km)	= 1,000 meters

Table of Contents

PART I


ITEM 1:	Identity of Directors, Senior Management and Advisors

Not applicable.


ITEM 2:	Offer Statistics and Expected Timetable

Not Applicable.


ITEM 3:	Key Information


3A.	Selected Financial Data

Following is selected financial data of the Company, expressed in Canadian dollars, for the fiscal years ended December 31, 2003-2007 prepared in accordance with Canadian generally accepted accounting principles (‘‘Canadian GAAP’’), which differ substantially from United States generally accepted accounting principles (‘‘US GAAP’’). Reference is made to Note 16 to the audited financial statements for the years ended December 31, 2007, 2006 and 2005 in ‘‘Item 17. Financial Statements’’ for a description of the differences between Canadian and United States generally accepted accounting principles, and how these differences could affect the Company’s financial statements.

The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report on Form 20-F.

Table of Contents

Table No. 1: Selected Financial Data


(CAD$)	Year Ended December 31, 2007			Year Ended December 31, 2006			Year Ended December 31, 2005			Year Ended December 31, 2004			Year Ended December 31, 2003
CANADIAN GAAP
Revenue		6,996,257			1,644,040		Nil				Nil		Nil
Income (Loss) for the Period		(8,941,689	)		(9,478,887	)		(2,768,461	)		(2,182,459	)		(1,350,509	)
Basic Earning (Loss) Per Share		(0.04	)		(0.06	)		(0.02	)		(0.02	)		(0.02	)
Diluted Earnings (Loss) per Share		(0.04	)		(0.06	)		(0.02	)		(0.02	)		(0.02	)
Dividends Per Share	Nil			Nil			Nil				Nil		Nil
Period-end Shares		232,377,011			164,678,791			131,846,200			97,748,660			81,341,526
Cash		26,656,146			4,101,536			404,987			5,597,628			5,975,181
Working Capital		25,342,329			1,720,050			(1,862,041	)		717,921			4,991,885
Mineral Properties		9,818,923			10,015,755			10,060,904			10,060,904			4,848,605
Deferred Development and Exploration		21,707,466			13,724,846			13,089,242			8,375,473			3,837,795
Long-term Liabilities		721,686			890,322			351,428			1,231,119			36,384
Capital Stock		104,159,423			66,074,507			49,709,671			38,749,225			32,330,552
Shareholders’ Equity		67,241,595			35,963,859			27,386,599			18,105,269			13,691,021
Total Assets		71,650,159			41,556,694			30,510,086			24,418,374			14,965,364
US GAAP
Net Income (Loss)		(16,924,309	)		(10,231,323	)		(7,434,680	)		(6,720,137	)		(2,385,282	)
Income (Loss) Per Share – basic and diluted		(0.08	)		(0.06	)		(0.06	)		(0.08	)		(0.04	)
Mineral Properties		9,781,423			9,978,255			10,060,904			10,060,904			4,848,605
Deferred Development and Exploration	Nil			Nil			Nil			Nil			Nil
Shareholders’ Equity		45,417,297			22,122,181			14,297,357			9,729,796			9,853,226
Total Assets		49,825,861			27,228,479			17,420,844			16,042,901			11,127,569

In this Annual Report on Form 20-F, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CAD$).

Table No.2 sets forth the exchange rates for the Canadian Dollar at the end of the five most recent fiscal years ended December 31, the average rates for the period and the range of high and low rates for the period. The data for each of the last six months is also disclosed.

For the purposes of this table, the rate of exchange means 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 table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates on the last day of each month during the period.

Table of Contents

Table No. 2: U.S. Dollar/Canadian Dollar


	Average		High		Low		Close
February 2008		—		1.0199		0.9711		0.9844
January 2008		—		1.0369		0.9851		1.0038
December 2007		—		1.0250		0.9756		0.9913
November 2007		—		1.0020		0.9066		1.000
October 2007		—		1.0012		0.9440		0.9447
September 2007		—		1.0583		0.9913		0.9948
Fiscal Years Ended:
12/31/2007		1.0748		—		—		0.9913
12/31/2006		1.1341		—		—		1.1528
12/31/2005		1.2115		—		—		1.1656
12/31/2004		1.3017		—		—		1.2034
12/31/2003		1.4008		—		—		1.2923

The 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. At March 26, 2008, one U.S. dollar, as quoted by Reuters and other sources at 12 P.M. Eastern Time for New York foreign exchange selling rates, equalled $1.0180 in Canadian dollars (Source: Federal Reserve Bank of New York).


3B.	Capitalization and Indebtedness

Not applicable.


3C.	Reasons For The Offer And Use Of Proceeds

Not Applicable.


3D.	Risk Factors

The Company faces risk factors and uncertainties including the following general description of significant risk factors:

•

Not All of Our Mineral Properties Contain a Known Commercially Mineable Mineral Deposit: The business of mineral exploration and extraction involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. Major expenses may be required to located and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of its ability to develop the extraction and processing facilities and infrastructure at any site chosen for extraction . It is impossible to ensure that the exploration or development programs planned by the Company will result in a profitable commercial mining operation. Whether a mineral deposit is commercially viable in Vietnam or Philippines depends on a number of factors, including, but not limited to the following factors that are applicable to our properties: particular attributes of the deposit, such as grade, size and proximity to infrastructure; metal prices, which are volatile; and government regulations, including regulations relating to investment, mining, prices, taxes, royalties, land use and tenure, importing and exporting of minerals and environmental protection.

•

Because We Have Primarily Been an Exploration Company, We are Dependent Upon Our Ability to Raise Funds In Order to Carry Out Our Business: Even though the Company has produced and sold 9,198 ounces of gold for the year ended December 31, 2007, the Company is still primarily an exploration Company. The Company had an accumulated deficit of $43,400,327 as at December 31, 2007. With ongoing cash requirements for exploration, development and new

Table of Contents

operating activities, it will be necessary in the near and over the long- term to raise substantial funds from external sources. If we do not raise these funds, we would be unable to pursue our business activities and investors could lose their investment. If we are able to raise funds, investors could experience a dilution of their interests which would negatively impact the market value of the shares.

•

We Will Not Be Able to Insure Against All Possible Risks: Exploration for natural resources involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The Company’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, namely typhoon season in Vietnam. None of our properties are in a flood or earthquake zone. Such occurrence s could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to the Company’s properties or the properties of others, delays, monetary losses and possible legal liability. If any such catastrophic event occurs, investors could lose their entire investment. Obtained insurance will not cover all the potential risks associated with the activities of the Company. Moreover, the Company may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to the Company or to other companies in the mining industry on acceptable terms. The Company might also become subject to liability for pollution or other hazards which may not be insured against or which the Company may elect not to insure against because of premium costs or other reasons. Losses from these events may cause the Company to incur significant costs that could have a material adverse effect upon its financial performance and results of operations. Should a catastrophic event arise, investors could lose their entire investment.

•

Commodity Price Fluctuations — if the Price of Gold Declines, Our Properties May Not Be Economically Viable: The Company’s revenues are expected to be in large part derived from the extraction and sale of base and precious metals such as gold. The price of those commodities has fluctuated widely, particularly in recent years, and is affected by numerous factors beyond the Company’s control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new or improv ed mining and production methods. The effect of these factors on the price of base and precious metals cannot be predicted and the combination of these factors may result in us not receiving adequate returns on invested capital or the investments retaining their respective values. If the price of gold (including other base and precious metals) is below our cost to produce gold, our properties will not be mined at a profit. Fluctuations in the gold price affect the Company’s reserve estimates, its ability to obtain financing and its financial condition as well as requiring reassessments of feasibility and operational requirements of a project. Reassessments may cause substantial delays or interrupt operations until the reassessment is finished.

•

We May Not be Able to Compete with Other Mining Companies for Mineral Properties, Investment Funds, Personnel and Technical Expertise: The resource industry is intensely competitive in all of its phases, and the Company competes for mineral properties, investment funds and technical expertise with many companies possessing greater financial resources and technical facilities than it does. Competition could prevent the Company from conducting its business activities or prevent profitability of existing or future properties or operations if the Company were unable to obtain suitable properties for exploration in the future, secure financing for our operations or attract and retain mining experts.


•	If We do Not Comply with All Applicable Regulations, We May be Forced to Halt our Business Activities: Such activities are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, mine safety and other matters. We may not be able to obtain all necessary licenses

Table of Contents

and permits required to carry out exploration at, developments of, or mining at our projects. The Company’s operations are subject to environmental regulation in Vietnam and in Philippines. Environmental legislation is still evolving in this jurisdiction and it is expected to evolve in a manner which may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on the Company and cause increases in capital expenditures which could result in a cessation of operations by the Company. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions t hereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in resource exploration may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation of applicable laws or regulations. If there are future changes in environmental regulation, they could impede the Company’s current and future business activities and negatively impact the profitability of operations. Large increases in capital expenditures resulting from any of the above factors could force the Company to cease business activities.

•

If We Are Unable to Obtain and Keep in Good Standing certain Licenses, We will be Unable to Explore, Develop or Mine any of our Property Interests: In order to explore, develop or conduct mining operations in Vietnam, the Company must establish or create an entity authorized to conduct Business in Vietnam via an Investment Licence. Then, the Company requires a prospecting licence, an exploration licence and a mining licence, depending on the level of work being conducted on the property. Without all the appropriate licenses, our activities could not occur. Our application for an exploration license for Bong Mieu is in progress. Currently, the Company is engaging in exploration activities under the Bong Mieu investment license. Under Vietnamese law, an exploration license is required in order to get new or amended mining licenses. The Company currently has mining licenses to cover the area being mined but to further expand the mining area or cover a new mining area the Company would require an exploration license before obtaining the new or amended mining license. If we do not obtain needed exploration licenses, this could limit our ability to mine new additional areas and therefore negatively impact production and profitability of the Company.

•

If We Do Not Make Certain Payments or Fulfill Other Contractual Obligations, We May Lose Our Option Rights and Interests in Our Joint Ventures: The Company may, in the future, be unable to meet its share of costs incurred under any option or joint venture agreements to which it is presently or becomes a party in the future and the Company may have its interest in the properties subject to such agreements reduced as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, the Company may be unable to finance the cost required to complete recommended programs. The loss of any option rights or interest in joint ventures would have a material, adverse effect on the Company.

•

Title to Assets Can Be Challenged or Impugned Which Could Prevent Us From Exploring, Developing or Operating at any of our Properties: There is no guarantee that title to concessions will be not challenged or impugned. In Vietnam or the Philippines, the system for recording title to the rights to explore, develop and mine natural resources is such that a title opinion provides only minimal comfort that the holder has title. In Vietnam, mining laws are in a state of flux, continuously being reviewed and updated, and the system is new and as yet untested. If title to assets is challenged or impugned, the Company may not be able to explore, devel op or operate its properties as permitted or enforce its rights with respect to the properties.


•	Political and Economic Instability In Vietnam or the Philippines Could Make it More Difficult or Impossible, for Us to Conduct Our Business Activities: The Company’s exploration, development and operation activities occur in Vietnam and Philippines and, as such, the Company

Table of Contents

may be affected by possible political or economic instability in that country. The risks include, but are not limited to, terrorism, military repression, fluctuations in currency exchange rates and high rates of inflation. Changes in resource development or investment policies or shifts in political attitude or community relations in that country may prevent or hinder the Company’s business activities and render our properties unprofitable by preventing or impeding future property exploration, development or mining. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. The laws on foreign investment and mining are still evolving in Vietnam and it is not known to where they will evolve. The effect of these factors cannot be accurately predicted.

•

Exchange Rate and Interest Rate Fluctuations May Increase the Company’s Costs: The profitability of the Company may decrease when affected by fluctuations in the foreign currency exchange rates between the Canadian Dollars, Australian dollars, US Dollars and Vietnamese Dongs. Exchange rate fluctuations affect the costs in Canadian dollar terms the Company incurs in its exploration and development activities. For example, the appreciation of the US dollar against the Canadian dollar would increase costs in Canadian dollar terms. The Company does not currently take any steps to hedge against currency fluctuations. In the event of interest rates rising, the liabilities of the Company that are tied to market interest rates would increase the Company’s borrowing costs. Currently, the Company has no borrowings.

•

Our Stock Price Could be Volatile: The market price of our common shares has been and is likely to remain volatile. Results of exploration activities, the price of gold and silver, future operating results, changes in estimates of the Company’s performance by securities analysts, market conditions for natural resource shares in general, and other factors beyond the control of the Company, could cause a significant, decline of the market price of common shares.

•

Our Stock will be a Penny Stock which Imposes Significant Restrictions on Broker-Dealers Recommending the Stock For Purchase: Securities and Exchange Commission (SEC) regulations define ‘‘penny stock’’ to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These regulations include the following requirements: broker-dealers must deliver, prior to the transaction, a disclosure schedule prepared by the SEC relating to the penny stock market; broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative; broker-dealers must disclose current quotations for the securities; if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market; and a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customer’s account and information on the limited market in penny stocks. Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale. If our Shares become subject to these penny stock rules these disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the Shares, if such trading market should ever develop. Accordin gly, this may result in a lack of liquidity in the Shares and investors may be unable to sell their Shares at prices considered reasonable by them.

•

We Do Not Plan to Pay any Dividends in the Foreseeable Future: The Company has never paid a dividend and it is unlikely that the Company will declare or pay a dividend until warranted based on the factors outlined below. The declaration, amount and date of distribution of any dividends in the future will be decided by the Board of Directors from time-to-time, based upon, and subject to, the Company’s earnings, financial requirements and other conditions prevailing at the time.


•	Shareholders Could Experience Dilution of the Value of their Investment if We Issue Additional Shares: Sales of large quantities of our common shares in the public markets or the potential of

Table of Contents

such sales, could decrease the trading price of the common shares and could impair the Company’s ability to raise capital through future sales of common shares. As at December 31, 2007, the Company has issued 232,377,011 of outstanding common shares. As at December 31, 2007, there were 42,988,999 securities issuable in the future under outstanding options, compensation options, warrants, bonus shares under signed agreements. If these shares are issued, this will result in further dilution to the Company’s shareholders.

•

In the Event that Key Employees Leave the Company, the Company Would Be Harmed Since We are Heavily Dependent Upon Them for All Aspects of Our Activities: The Company is heavily dependent on key employees and contractors, and on a relatively small number of key directors and officers, the loss of any of whom could have, in the short-term, an negative impact on our ability to conduct our activities and could cause a decline in profitability of our properties or additional costs from a delay in development or exploration of properties. The Company has consulting agreements with the Chief Executive Officer, President, Country Manager and Chief Fi nancial Officer.

•

Our Management May Not Be Subject to U.S. Legal Process Making it More Difficult for Investors to Sue Them: The enforcement by investors of civil liabilities under the United States federal securities laws may not be possible by the fact that all of our officers and directors are neither citizens nor residents of the United States. U.S. stockholders may not be able to effect service of process within the United States upon such persons. U.S. stockholders may not be able to enforce, in United States courts, judgments against such persons obtained in such courts predicated upon the civil liability provisions of United States federal securities l aws. Appropriate foreign courts may not be able to enforce judgments of United States courts obtained in actions against such persons predicated upon the civil liability provisions of the federal securities laws. The appropriate foreign courts may not be able to enforce, in original actions, liabilities against such persons predicated solely upon the United States federal securities laws. However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions.

•

Management May Be Subject to Conflicts of Interest Due to Their Affiliations with Other Resource Companies: Because some of our directors and officers have private mining interests and also serve as officers and/or directors of other public mining companies, their personal interests are continually in conflict with the interests of the Company. Situations will arise where these persons are presented with mining opportunities, which may be desirable for the Company, as well as other companies in which they have an interest, to pursue. If the Company is unable to pursue such opportunities because of our officers’ and directors’ confl icts, this would reduce the Company’s opportunities to increase our future profitability and revenues. In addition to competition for suitable mining opportunities, the Company competes with these other companies for investment capital, and technical resources, including consulting geologists, metallurgist engineers and others. Similarly, if the Company is unable to obtain necessary investment capital and technical resources because of our officers’ and directors’ conflicts, the Company would not be able to obtain potential profitable properties or interests and reduce the Company’s opportunities to increase our future revenues and income. Such conflict of interests are permitted under Canadian regulations and will continue to subject the Company to the continuing risk that it may be unable to acquire certain mining opportunities, investment capital and the necessary technical resources because of competing personal interests of some of our officers and directors.

•

We used a Pre-Feasibility Study and did not Complete a Feasibility Study Before Making our Decision to Place the Ho Gan Mine into Production: The economic feasibility of our mining properties is based upon a number of factors, including estimations of reserves and mineralized material, extraction and process recoveries, engineering, capital and operating costs, future production rates and future prices of gold, and other precious metals that we may attempt to mine in the future. It is customary for a company to prepare a feasibility study on a property before making the decision to place the property into production. A feasibility study is a d etailed report

Table of Contents

assessing the feasibility, economics and engineering of placing a mineral deposit into commercial production. However, the Company did not have a feasibility study prepared before making its decision to place the Bong Mieu Central Gold Mine (‘‘Ho Gan Mine’’) into production. Instead, the Company prepared a pre-feasibility study, which is a less comprehensive report. Pre-feasibility studies can underestimate a project’s capital and operating costs, while at the same time overestimating the amount of reserves and mineralization. Accordingly, as the Company attempts to scale up the Ho Gan Mine to full production, it may learn that it has underestimated the amount of capital it will need and the costs involved in mining the deposit, as well as other issues affecting the project’s profitability. During fourth quarter 2006, management determined that the Bong Mieu Central mine was not reaching originally estimated future throughput. Consequently, an impairment charge of $4,280,0 00 was taken on the Bong Mieu Central (Ho Gan) deferred exploration and development costs. Had the Company prepared a full feasibility study, rather than just a pre-feasibility report, it is possible that the Company might have determined that the economics of the project were unfavorable and decided not to place the mine into production.

•

The Company Conducted only Limited Drilling on its Bong Mieu Property so its Decision to Place the Ho Gan Mine into Production May be Based upon Incomplete Information: The Company conducted a limited amount of drilling before making its decision to place the Ho Gan Mine into production. As a result, the Company’s estimates of the mineralized material and reserves on the property, which played a large role in the Company’s production decision, may not be accurate. Furthermore, the Company’s determination of the character, location, size and accessibility of the mineralized material may be based upon incomplete data, rendering its conclusions potentially inaccurate about the commerciality of the property.

•

Because the Company’s Testing of its Mining Process at the Ho Gan Mine was Limited to Small Pilot Plant and Bench Scale Testing, it may be Unable to Obtain the Expected Metallurgical Recoveries when It Scales Up its Operations, Rendering the Project Unprofitable: Before the Company placed the Ho Gan Mine into production, it built a pilot plant and conducted bench scale testing. A pilot plant is a small-scale mill in which representative tonnages of ore can be tested under conditions which foreshadow or imitate those of the full-scale operation proposed for a given ore. Although a pilot plant can provide information on mining the deposit, very frequently a company will have difficulty duplicating the results from the pilot plant and bench scale testing when scaling the project up to a production level, which has been the case to date with the Company’s operations at the Ho Gan Mine. The mine commenced limited operations in 2006, pouring its first gold bar in March 2006. At that time, it was determined that the mining process had to be reconfigured. Consequently, the Company has taken steps to modify its mining process, causing the Company not to meet its planned production goals. The current ore throughput at the mine is approximately 500 tons per day. The Company’s original estimates of future cash operating costs at the mine, which were based largely on the Company’s pilot plant and bench scale testing, have been increased to reflect the above factors.

Since the Ho Gan Mine, as well as the Company’s other property interests, have no significant operating histories, estimates of mineralized material and reserves, mining and process recoveries and operating costs must be based, in addition to the information received from the pilot plant and bench scale testing, to a large extent upon the interpretation of geologic data obtained from drill holes, and upon scoping and feasibility estimates that derive forecasts of operating costs from anticipated tonnages and grades of mineralized material and reserves to be mined and processed, the configuration of the mineralized deposits, expected recovery rates of minerals, comparable facility and equipment costs, and climatic conditions and other factors. Commonly in new projects, such as the Ho Gan Mine, actual construction costs, operating costs and economic returns differ materially from those initially estimated. The Company cannot be certain that the Ho Gan Mine w ill ever achieve the production levels forecasted, that the expected operating cost levels will be achieved, or that funding will be available from internal and external sources in necessary amounts or on acceptable terms to continue the necessary development work. Failure to achieve the Company’s production forecasts would negatively affect the Company’s revenues, profits and cash flows. Accordingly, if the Ho Gan Mine, or any of the Company’s other

Table of Contents

properties, cannot be developed within the time frames or at the costs anticipated, or that any forecasted operating results can be achieved, the projects could possibly be rendered unprofitable.


ITEM 4:	Information on the Company


4A.	History and Development of the Company

Olympus Pacific Minerals Inc. (the ‘‘Company’’ or ‘‘Olympus’’) was incorporated by registration of its memorandum and articles under the laws of the Province of Ontario on July 4, 1951 under the name ‘‘Meta Uranium Mines Limited’’. Effective August 24, 1978, the Company changed its name from ‘‘Meta Uranium Mines Limited’’ to ‘‘Metina Developments Inc.’’ The Company was continued under the Company Act (British Columbia) with the name ‘‘Olympus Holdings Ltd.’’ on November 5, 1992 and consolidated its share capital on a 4.5:1 basis. The Company further consolidated its share capital on a 3:1 basis and changed its name from ‘‘Olympus Holdings Ltd.’’ to ‘‘Olympus Pacific Minerals Inc.’’ on November 29, 1996.

On February 26, 1997, and subsequently amended on August 18, 1997, the Company entered into the Ivanhoe agreement with Ivanhoe Mines Limited (‘‘Ivanhoe’’) (formerly Indochina Goldfields Ltd.) and Zedex Ltd. (‘‘Zedex’’) (formerly Iddison Group Vietnam Limited, Iddison Holdings Limited, Iddison Limited and IT Capital Limited). Pursuant to the Ivanhoe Agreement, which was completed on September 11, 1997, the Company acquired from Ivanhoe all of the shares of Formwell Holdings Limited (‘‘Formwell’’), which holds all the shares of Bong Mieu Holdings Limited, which in turn holds 80% of the shares of Bong Mieu Gold Mining Limited (‘‘Bogomin’’). Bogomin, together with other local and national branches of the government of Vietnam, holds various mining and exploration licenses comprising the Bong Mieu gold mine and the Tien Ha properties in Quang Nam-Da Nang Province, in the Socialist Republic of Vietnam. The Company also entered into a joint venture agreement with Ivanhoe and Zedex, whereby the Company had a 57.18% interest in New Vietnam Mining Corporation (‘‘NVMC’’) as at December 31, 2001. NVMC was comprised of Olympus (57.18%), Ivanhoe (32.64%) and Zedex (10.18%). The Phuoc Son Gold Project is held by NVMC. Olympus is the operator of the project.

In 2000, the Company was successful in raising $3.4 million in equity financings. During 2000, the Company accelerated its exploration activities at the Phuoc Son gold project in Central Vietnam.

In 2003, the Company’s subsidiary, NVMC entered into a strategic alliance with Mien Trung Industrial Company (‘‘Minco’’), a mining company controlled by the local provincial government, resulting in the formation of the Phuoc Son Gold Company (‘‘PSGC’’) for the purposes of exploration and extraction activities and any other related activities. The Company owns 100% of NVMC which, in turn, owns an 85% interest in the Phuoc Son Gold Company (‘‘PSGC’’). Minco, owns 15% of PSGC. Refer to Item 4D.1 for further details on the joint venture.

On March 1, 2004, the Company entered into a Vend-in Agreement and on June 21, 2004 an Extension of Vend-in Agreement with Ivanhoe Mines Ltd and Zedex Limited (the ‘‘vendors’’) to acquire the remaining interests held by the vendors in NVMC. In June 2004, the Company acquired the remaining 42.82% of the outstanding shares of NVMC from Zedex Limited (now referred to as ‘‘Zedex Minerals Limited’’ after a name change) and Ivanhoe.

In other areas in Vietnam, the Company is continuing broad regional geology programs to identify other potential exploration areas. Additional applications for exploration licenses have been filed in Vietnam and the Company has also lodged an application in Laos. These applications are in early stages of review by the respective government bodies. Based on the Company’s experience working in these countries, the timing of application approvals can vary significantly, and are expected to be granted within the next one to two years.

On November 23, 2006, the Company signed a Memorandum of Agreement and Supplement to Memorandum of Agreement (collectively, the ‘‘MOA’’) with Abra Mining and Industrial Corporation (‘‘AMIC’’) and Jabel Corporation (‘‘Jabel’’) that allows the Grantee (defined as the Company and a Philippine national corporation to be identified by the Company) to acquire an option to earn a

Table of Contents

60% interest in the Capcapo Property (as defined below) upon completing a specified level of expenditures on the Capcapo Property. The Capcapo Property consists of a Mineral Production Sharing Agreement (‘‘MPSA’’) No. 144-99-CAR (‘‘MPSA 144’’), which covers 756 hectares in Capcapo, Licuan-Baay, Abra Province, Philippines, and a two-kilometre radius buffer zone around MPSA 144, with an area of about 3,500 hectares, which falls under a neighbouring Exploration Permit Application (‘‘EXPA’’). Jabel holds the Property in its name and is a minority shareholder in AMC. AMIC has an operating agreement with Jabel in respect of the Capcapo Property.

The MOA is a binding agreement that is conditional on the Company’s completion of a due diligence program to validate historical drilling information. Under the MOA, the parties will form a joint venture corporation (‘‘Newco’’) that will develop, manage and conduct mining operations on the Property. Newco and Jabel will become co-holders of the titles to the Property. Although Jabel’s name will remain on the Capcapo Property titles, Jabel’s only economic interest in the Property will be a royalty. Aside from the royalty, all of the Capcapo Property’s proceeds shall flow through Newco.

Upon full exercise of the option, Newco will be 40% owned by Kadabra Mining Corp. (‘‘Kadabra’’), 20% owned by a Philippine national that the Company will identify (‘‘Philco’’), and 40% owned by AMIC. Collectively, the 40% ownership of Kadabra and the 20% ownership of Philco in Newco represent the 60% interest in the Property that is subject of the MOA. Under Philippine law, foreign-owned entities can only hold up to 40% of a Mineral Production Sharing Agreement (‘‘MPSA’’).

Under the MOA, once the due diligence procedures are complete with the drilling information being validated and a formal agreement is signed, a cash payment of U.S.$200,000 will be made by the Grantee to AMIC to be funded by the recent August 10, 2007 share placement with gross proceeds of $25,000,000. Six months after the signing of the formal agreement, the Grantee will issue Olympus common shares to AMIC with a total value of U.S.$350,000 based on the average of the trading price of the Company’s common shares for the five trading days preceding the date of the signing of the formal agreement. Once the Grantee has spent U.S.$3 million on exploration and development work on the property, the Grantee will issue to AMIC further common shares of Olympus with a total value of U.S.$450,000 based on the average of the trading price of the Company’s common shares for the five trading days preceding their date of issuance. To earn the 60%&nb sp;interest, a cumulative spending of U.S.$6 million by the Grantee on exploration and development must occur by the end of the 5^th year after the signing of the formal agreement. The Grantee earns a 20% interest after the first U.S.$1 million is spent, an additional 20% interest after an additional U.S.$2 million has been spent and an additional 20% interest after an additional U.S.$3 million has been spent. Once the 60% interest has been earned, a new joint venture company (‘‘NEWCO’’) would be formed of which the Grantee would hold a 60%. If the Grantee obtains less than the 60% interest, the Grantee would share in less than 60% of the results of the joint venture. One year after full commercial production is achieved on the property, a royalty would be paid to Jabel, the underlying title holder of the property, e qual to either 3% of gross value of production or 6% of annual Profit of NEWCO, as defined in the agreement, whichever is higher.In order to make the required cash payments and exploration and development expenditures if the formal agreement is signed, the Company intends to raise funding through equity issuance. Approximately $2.5 million of the August 10, 2007 share placement has been allocated to be used for the Capcapo exploration program. If exploration results are favorable, then the focus would be to construct a mine in order to extract, process and produce gold, with the future impact on the Company of higher capital expenditures associated with mine construction and upon completion of the mine construction, increased production and sales.

On May 31, 2007, the Company registered a Philippine corporation with the Republic of the Philippines Securities and Exchange Commission under the corporate name of Kadabra Mining Corp (‘‘Kadabra’’). Kadabra has an authorized and outstanding stock of PHP30,000,000.00 and is 100% beneficially owned by the Company. Kadabra will hold the Company’s 40% interest in Newco and is used to track expenditures by the Company on the joint venture. Kadabra has articles of incorporation and authorized and outstanding stock of PHP30,000,000. Refer to exhibit 3.20 for Certificate of Incorporation and Articles of Incorporation.

Table of Contents

On September 21, 2007, the Company announced that it has completed its due diligence at Capcapo. During the next phase at Capcapo, the Company will complete formal joint venture documentation as well as fulfilling its legal, social and community responsibilities through the terms of the National Commission on Indigenous People. The Company was informed that an objection to exploration activities had been lodged with the National Council of Indigenous Peoples relating to the Capcapo area. A campaign of Community Consultation in accordance with Philippine laws was started in the fourth quarter of 2007 that must be resolved before a full exploration campaign can commence in 2008. Refer to Item 3D for list of risk factors.

We have spent $678,541 on this project which has been capitalized to deferred exploration and development costs on the balance sheet.

In July, 2007, the Company signed a Framework of Laos and Cambodia Joint Venture Agreement with Zedex covering exploration activities in Laos and Cambodia. Refer to Exhibit 3. 26. As this joint venture is in the early stages of set-up, there has been minimal activity in 2007 and there is minimal budgeted expenditures anticipated in 2008.

The Company’s executive office is located at:
        Suite 500 – 10 King Street East
        Toronto, Ontario, M5C 1C3
        Canada

The Company’s registered and records office is located at Suite 500, 10 King Street East, Toronto, Ontario, Canada. Its telephone number is (416) 572- 2525.

The Company has financed its operations through the financings listed in the table shown below. All placements were made in Canada.

Table No. 3: Financings


Fiscal Year	Nature of Issuance	Number of Shares		Capital Raised
December 31, 2000	Private Placement⁽¹⁾		6,625,000		$	1,840,000
December 31, 2001	Private Placement⁽²⁾		10,964,500		$	3,944,000
December 31, 2002	Nil		Nil	Nil
December 31, 2003	Private Placement⁽³⁾		21,163,459		$	6,832,063
December 31, 2004	Private Placement⁽⁴⁾		Nil	Nil
December 31, 2005	Private Placement⁽⁵⁾		32,645,000		$	11,063,500
December 31, 2006	Private Placement⁽⁶⁾		27,000,000		$	15,660,000
December 31, 2007	Private Placement and Public Offering⁽⁷^{) (}⁸⁾		60,106,503		$	37,153,601

Notes:

(1)	In 2000, the Company raised a total of $1,840,000 through two separated financings:

(i.)

In March 2000, 4,500,000 units were sold for $0.22/unit. Each unit was comprised of one common share and one two-year share purchase warrant entitling the holders to acquire up to 4,500,000 shares at $0.30/unit during the first year and at $0.40/unit during the second year;

(ii.)

In August 2000, 2,125,000 common shares were issued at $0.40/share to various holders.

(2)	In 2001, the Company completed three financings and raised a total of $3,944,000:

(i.)

In February, 1,200,000 units were sold for $0.60/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.75/warrant for a one-year period, and $1.00/warrant for the second year;

(ii.)

In July, 552,000 units were sold for $0.50/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.65/warrant for a one-year period, and $1.00/warrant for the second year;

(iii.)

In December, 9,212,500 units were sold for $0.32/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.32.

(3)	In 2003, a total placement, raising $6,832,063 was completed in three closings:

(i.)

In February, 1,562,750 units were sold for 0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.40/unit for a one-year period;

Table of Contents

(ii.)

In March, 3,267,500 units were sold for $0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.50/warrant for a one-year period;

(iii.)

In October, 16,333,209 units were sold for $0.30/unit. Each unit consists of one common share and one-half of one common share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.40/unit for a one-year period and thereafter at a price of $0.50/unit for a one-year period.

(4)

On June 29, 2004, the Company closed a ‘‘Vend-In Agreement’’, whereby it acquired the remaining 42.82% interest in the NVMC joint venture. The acquisition resulted in the issuance of 13,483,133 common shares of the Company of which Zedex received 3,205,467 shares and Ivanhoe received 10,277,646 shares. No capital was raised in this transaction.

(5)	In 2005, a total placement, raising $11,063,500 was completed in two closings:

(i.)

In January, the Company closed a $5,080,000 private placement with Dragon Capital Markets Limited (‘‘Dragon Capital’’) by issuing 12.7 million common shares priced at $0.40/unit. In consideration for its service, Dragon Capital was paid a finders’ fee of US$261,471 and was granted 1,270,000 warrants exercisable at $0.40/unit for a period of one year from the date of closing;

(ii.)

In September, the Company received $5,983,500 from the closing of a private placement and issued 19,945,000 common shares priced at $0.30/share.

(6)	On March 31, 2006, a private placement closed where the Company issued 27,000,000 shares at $0.58 raising $15,660,000.

(7)

On March 19, 2007, the Company completed a non-brokered private placement, of 21,428,571 shares at a price of $0.56 per share, for gross proceeds of $12,000,000 and net proceeds of $11,967,772. All shares issued have a hold period in Canada of four months from the closing of the placement. The net proceeds are being used for ongoing exploration, feasibility studies and development work on the Company’s mineral projects and for general corporate purposes.

(8)

On August 10, 2007, the Company closed an offering (the ‘‘Offering’’) of units of the Company (‘‘Units’’) for aggregate gross proceeds of $25,000,000 (the ‘‘Closing’’). Pursuant to the Offering, the Company issued and sold a total of 38,461,538 Units at a price of $0.65 per Unit. Each Unit is comprised of one common share of the Company (a ‘‘Share’’) and one-half of one common share purchase warrant (‘‘Warrant’’). Each whole Warrant will be exercisable at $0.80 until August 10, 2009. The Company granted the Agents an over-allotment option (the ‘‘Over-Allotment Option’’) exercisable in whole or in part at the sole discretion of the Agents, for a period of 30 days from c losing of the Offering, to purchase up to an additional 5,769,230 Shares (‘‘Additional Shares’’) at a price of $0.62 per Additional Share and up to an additional 2,884,615 Warrants (‘‘Additional Warrants’’) at a price of $0.06 per Additional Warrant, for further gross proceeds of up to $3,750,000, if exercised in full. In consideration for their services, the Corporation paid a fee of $1,500,000 to the Agents (equal to 6% of the gross proceeds realized from the sale of Units). The Agents were also granted non-transferable options (the ‘‘Compensation Options’’) to acquire 2,307,692 Units (each an ‘‘Agents’ Unit’’) (equal to 6% of the number of Units issued pursuant to the Offering). Each Compensation Option is exercisable to acquire one Agents’ Unit at $0.65 until August 10, 2009. Each Agent’s Unit consists of one common share of the Company and one-half of one common share purchase warr ant (‘‘Agents’ Warrants’’). Each whole Agents’ Warrant will be exercisable to acquire one common share of the Company (a ‘‘Agents’ Warrant Share’’) at a price of $0.80 per Agents’ Warrant Share until August 10, 2009. On September 7, 2007, the over-allotment option granted to the agents in connection with the Company’s public offering of units (the ‘‘Offering’’), was exercised in respect of 216,394 common shares (‘‘Additional Shares’’) at a price of $0.62 per Additional Share and 323,947 warrants (‘‘Additional Warrants’’) at a price of $0.06 per Additional Warrant, resulting in additional gross proceeds of $153,601. Each whole Warrant will be exercisable at $0.80 until August 10, 2009. The partial exercise of the over-allotment options brings the aggregate gross proceeds to the Company under the Offering to $25,153,601. The net proceeds from the Offering are being used for further exploration and feasibility studies at the Company’s Bong Mieu Gold and Phuoc Son Gold properties in Vietnam and the Capcapo property in the Philippines and for working capital and general corporate purposes.

The Company does not have an agent in the United States.

Capital Expenditures

The table below shows the historical capital balances:


As at December 31	Capital Assets, Mineral Properties and Deferred Exploration and Development Costs
2000		$	11,304,325
2001			11,241,723
2002			7,830,889
2003			8,735,520
2004			18,618,467
2005			29,600,068
2006			35,134,131
2007			42,620,952

Table of Contents


4.B	Business Overview

General

Olympus Pacific Minerals Inc. (the ‘‘Company’’ or ‘‘Olympus’’) is an international mining exploration and development company focused on the mineral potential of Vietnam and the Southeast Asia. The Company is a public company listed on the TSX Exchange under the trading symbol OYM since April 3, 2006 (on the TSX Venture prior to April 3, 2006), and the Frankfurt Stock Exchange under the trading symbol OP6 and trades on the over the counter bulletin board in the United States under the symbol OLYMF since March 5, 2008. Olympus has been active in Vietnam since the mid-1990s on its own account and through associated companies New Vietnam Mining Corporation and Bong Mieu Gold Mining Corporation and maintains an office in Danang in central Vietnam.

The Company’s two most advanced properties, covered by investment licenses, are the 70 square km Phuoc Son Gold property and the 30 square km Bong Mieu Gold property. About half of the Phuoc Son 70 km square is not available for exploration at this stage. Both properties are located in central Vietnam along the Phuoc Son-Sepon Suture that hosts such world-class deposits as the Sepon deposit of Oxiana Limited that is about 150 km to the west of the Company’s two properties. The Bong Mieu and Phuoc Son Gold properties are approximately 74 km apart. Proven and probable reserves exist for the Bong Mieu Central Gold Mine. In 2005 and 2006, the Company constructed a pilot plant at the Company’s Bong Mieu Central Gold Mine.

Exploration work to date has resulted in one new significant discovery in the Bong Mieu East area (Thac Trang) as well as a number of new, surface showings. In addition, further exploration will be required to define the extent of the deposits in several directions. Based on results of the exploration work completed to date, management believes the potential for additional discoveries and resource expansion at the Bong Mieu property is positive. Underground evaluation studies are continuing at the Bong Mieu Underground mine, located within one km of the operating Bong Mieu Central plant site.

The Phuoc Son Gold property is located in central Vietnam, 74 km away from the Bong Mieu Gold property. The property hosts over 30 known gold prospects and two known high-grade gold deposits in the Dak Sa area of the property. Phuoc Son Gold Mining Company has been granted a Mining Licence by the Government of Vietnam to mine and develop its Dak Sa Deposits (North and South Deposits). The Mining Licence was the last major permit required prior to proceeding with development and production. All major environmental approvals have been received. Exploration work to date has defined the ‘‘productive’’ Dak Sa zone, which contains the two deposits, North and South Deposits, over a minimum length of approximately five km. Evaluation of the large Phuoc Son land package continues to reinforce the potential of the overall property to host new deposits which could be mined in conjunction with the anticipated Dak Sa operation or have potential to be stand alone deposits.

REGULATION OF MINING INDUSTRY AND FOREIGN INVESTMENT IN VIETNAM

The current Vietnamese mining law was enacted in 1996, with various subsequent modifications. The Vietnamese Mining Law was initially drafted by an international law firm (Phillip Fox) and broadly modeled on Australian and Canadian Mining Law. A company may apply to the licensing authority, the Ministry of Natural Resources & Environment, for prospecting, exploration and mining Licenses, much as in Australia and Canada. A prospecting license provides for low impact prospecting over a broad area for a 2 year term; an exploration license provides an exclusive right to conduct advanced exploration over areas of up to 50 km² for an initial 2 year term, after which 50% of that area may be renewed for a further 2 year term. Exploration license holders have the right to apply for a mining license at any time up to 6 mont hs after expiry of an exploration license. A mining preliminary feasibility study, an Environmental Impact Report and an investment license are required to support a mining license application. Investment licenses are issued by the Ministry of Planning and Investment. A mining license provides the right to mine specified minerals for the life-of-mine indicated by the preliminary feasibility study.

Table of Contents

Since Vietnam is now a member of the World Trade Organization (‘‘WTO’’), foreign companies under the terms of WTO membership, are expected to be treated on an equal basis as Vietnamese companies. Refer to the discussion under Item 5A for further details.


4C.	Organizational Structure

(1)

Following the grant of an investment license Phuoc Son Gold Company Limited was formed with Mien Trung Industrial Company holding 15% and NVMC holding 85%.

(2)

BM Holdings was deregistered in Thailand due to non-filing. BM Holdings was reinstated on November 5, 2007 by the Thai government.

(3)

Presently non-operating.


4D.	Property, Plant and Equipment

General

Olympus is exploring the Phuoc Son property for primary gold deposits. The Phuoc Son property is located in the western highlands of Quang Nam Province, in central Vietnam, some eight km (14.5 km by road) northwest of the small town of Kham Duc and approximately 90 km southwest of the costal city of Da Nang, the fourth largest city in Vietnam. The South and North Deposits (formerly Bai Dat and Bai Go), which comprise the Dak Sa Underground project, lie about one km apart. Once these deposits are developed and constructed into mines, they would share the same infrastructure and eventually be connected by an underground tunnel. The property is covered by a 30-year Investment Licence covering 70 square km granted in October 2003. About half of the 70 square km area is not available for exploration at this stage. A five-year Mining Licence has been granted over the South and North deposits. The five year Mining License is renewable and amendable. The elevation of the project area ranges between 400 and 800 metres above sea level. Olympus owns 85% and the Company’s Vietnamese partner owns 15% of the Phuoc Son Gold Project.

The Company holds Mining and Investment Licences covering 30 square km within the Bong Mieu gold property area. The Investment Licence covers three deposits: Bong Mieu Central (an open pit — Ho Gan), Bong Mieu East (a potentially open-pittable deposit) and Bong Mieu Underground (an underground deposit) that was operated by the French from 1896 to 1941. Olympus acquired this project in 1997. Olympus owns 80% and the Company’s Vietnamese partner own 20% of the Bong Mieu property. The Company constructed the Bong Mieu Central open pit mine and associated infrastructure in 2005 and 2006, with commercial gold production starting in the fourth quarter of

Table of Contents

2006. Current ore throughput at Ho Gan pilot plant is about 500 tons per day. Electric power for the plant is provided by the national grid with back-up power generation provided by the Company-owned generators which have the capacity to run the full operation. The main equipment utilized at the Bong Mieu Central open pit mine includes the following: ball mills, generators, assay lab equipment, lab flotation cell, crusher/conveyor system and Gekko Gold processing plant. The general manpower requirement at Bong Mieu is approximately 367 workers on average. Processing plant and lab maintenance routinely occurs with the operations.

Schedule of Investment Licenses

PROJECT

OWNER

LICENSE

AREA

STATUS

GRANT
DATE

TERM

EXPIRY DATE

1. Bong Mieu

BMGMC

IL 140/GPDC2

30 Sq Km

Granted

5/3/91

25 years

5/3/2016

2. Phuoc Son

PSGC

IL 2355/GP

70 Sq Km

Granted

20/10/2003

30 years

20/10/2033

Schedule of Mining Licenses

PROJECT

MINE

OWNER

LICENSE

AREA

STATUS

GRANT DATE

TERM

EXPIRY DATE

1. Bong Mieu

Ho Gan

BMGMC

ML592/CNNg

358 Ha

Granted

22/7/92

25 years

22/7/2017

Bong Mieu

Nui Kem

BMGMC

ML592/CNNg

358 Ha

Granted

22/7/92

25 years

22/7/2017

Bong Mieu

Ho Ray

BMGMC

Proposed new MLA

Not yet defined

Proposed

—

2. Phuoc Son

Dak Sa

PSGC

ML116/GP-BTNMT

To be amended

Granted

23/1/2006

3 years

23/1/2009

Schedule of Exploration License

Phuoc Son

PSGC

EL 67/GP-BTNMT

42 Sq Km

Granted

10/01/2008

2 years

10/01/2010

Schedule of Certificates

Company

Type of Certificate

Date Granted

Term

Expiry Date

Bong Mieu Gold Mining Company

Gold export certificate

November 27, 2007

~ 1 year

Dec 31, 2008

Bong Mieu Gold Mining Company

Land Use Certificate

October 9, 1993

25 years

September 2017

Schedule of Exploration Tenements (Applications)


PROJECT	E.L. REG. #		REG. HOLDER
1. Phuoc Son	67/GP-BTNMT		PSGMC
2. Bong Mieu		—	BMGMC
3. Capcapo	MPSA#141, EXPA#085		AMIC
4. Khau Pum		—	OPVL
5. Phuoc Thanh		—	NVMC
6. Phuoc Thanh		—	PSGC
7. Sanakham	MEAPA		OYM

4D.1 Phuoc Son Gold Property

Olympus Pacific currently holds an 85% interest in the Phuoc Son Gold Project with a focus of exploration, development and production of gold and other potential minerals in the specified project area, located in Phuoc Son and Nam Giang districts in the Quang Nam Province. In 2003, the Company’s subsidiary, New Vietnam Mining Company (‘‘NVMC’’), entered into a joint venture with Mien Trung Industrial Company (‘‘Minco’’), a mining company controlled by the local provincial government, to form the Phuoc Son Gold Company (‘‘PSGC’’). PSGC has an investment license on the Phuoc Son property. NVMC’s initial interest in the PSGC is 85% and Minco has a 15% interest. After five years, from the end of the period in which PSGC makes a profit for 12 consecutive months, Minco can increase its interest by 15% to 30% if Minco chooses to acquire such interest from NVMC by paying fair market valu e. After 20 years, Minco can increase its interest to a total of 50% if Minco chooses to acquire such additional 20% interest from NVMC by paying fair market value. Fair market

Table of Contents

value shall be determined by using an independent accounting firm to perform the fair market value assessment and that assessment will be considered final and binding for both parties. If Minco does not proceed on exercising its right of acquisition within three months from the dates of entitled acquisition, Minco will be considered as having waived its right to acquire the interest. Total invested capital is estimated to be approximately U.S.$10 million dollars, although actual costs incurred could differ from this estimate. If any party fails to contribute, by way of debt or equity, in proportion to its participating interest or defaults on any other substantial obligation under the agreement and such default is not rectified within 60 days of notice of default, the non-defaulting party can terminate the agreement or serve notice on the defaulting party which would result in the participating interest of each party being recalculated and adjusted based on the percentage of debt and equity contributed by each party when compared to the total debt and equity contributed by both parties.

On March 1, 2004, the Company entered into a Vend-in Agreement and on June 21, 2004 an Extension of Vend-in Agreement with Ivanhoe Mines Ltd and Zedex Limited (the ‘‘vendors’’) to acquire the remaining interests held by the vendors in NVMC. The Company issued a total of 13,483,113 shares to acquire the NVMC interest. As a result of these agreements, the Company owns 100% of NVMC. NVMC owns 85% of the Phuoc Son Gold Project resulting in the Company holding an 85% interest in the Project. Upon closing of the Vend-in Agreement, the original joint venture agreement dated September 11, 1997 between Olympus, Zedex Limited and Ivanhoe Mines Ltd. was terminated. Post closing, each vendor has the right to nominate two directors as long as each vendor holds 15% or more of Olympus’ issued and outstanding shares as at the record date for the annual general meetings. If the ownership of Olympus’ issued and out standing shares drops below 15% but above or equal to 10%, the right exists for one director to be nominated and if ownership is below 10%, there is no obligation to include a nominee for director from a vendor. In June 2004, the Company acquired the remaining 42.82% of the outstanding shares of NVMC from Zedex and Ivanhoe. The Company completed the acquisition by issuing 13,483,133 common shares of which 3,205,467 shares were received by Zedex and 10,277,646 shares were received by Ivanhoe. As at September 30, 2006, Ivanhoe held no Olympus shares and Zedex Minerals Limited (formerly Zedex Limited) holds approximately 16% of Olympus’ issued and outstanding shares. Consequently, only Zedex Minerals Limited has retained the right to nominate two directors and Olympus no longer has the obligation to include a nominee from Ivanhoe Mines Ltd.

At Phuoc Son, the Company holds an investment license covering a 70 square km area and a mining license on the Dak Sa deposits. About half of the 70 square km area is not available for exploration at this stage. The Dak Sa Underground Project is currently comprised of two deposits, the North (Bai Go) and South (Bai Dat) deposits.

On September 16, 2006, an Agreement for Fulfilment of Contract was entered into between PSGC and Huong Toan Company Ltd. (‘‘Huong Toan’’). The purpose of the agreement is to contract out the mining of the ore for Dak Sa project to Huong Toan and includes such activities as preparing the construction site, building the explosive magazine, supplying and transporting explosives, preparing and obtaining approval for blasting plan, and supplying the labor involved. The cost of the agreement is approximately $3.8 million over the whole term of the agreement which is up to a maximum of three years. On November 26, 2006, this contract was cancelled as a result of inclement weather and changes in the construction plan.

On March 7, 2007, the Company released updated resource estimates for Phuoc Son incorporating the results of drilling up to October 2006. On January 15, 2008, the Company released updated resource estimate for Phuoc Son incorporating the results of drilling up to October, 2007. Exploration work to date has defined the ‘‘productive’’ Dak Sa shear deposit over a strike length of approximately five kilometers, expanded the Dak Sa resource base, and has confirmed that the mineralization remains open. The potential for additional discoveries and continued resource expansion in 2008 are considered positive.

Phuoc Son Gold Company Limited has entered into a contract, dated June 11, 2007, with Gaet Company — Ministry of Defense for the supply of explosives and blasting accessories to be used at the Dak Sa property. Phuoc Son Gold Company Limited entered into a contract, dated May 31,

Table of Contents

2007, with Intergeo Division for drilling services with an estimated value of US$800,000. The contract stipulates the US dollar per meter rate for drilling activities.

(a) Property Description and Location

The Phuoc Son Gold property, is located in the western highlands of Quang Nam Province, in central Vietnam, some 8 km (14.5 km by road) northwest of the small town of Kham Duc and approximately 90 km (140 km by road) southwest of the coastal city of Da Nang, the fourth largest city in Vietnam (see Figure 1).

To date, over 30 gold prospects have been identified within the 70 square km project area. The most advanced prospects are in the Dak Sa sector. On May 18, 2005, Olympus announced the results of a positive independent preliminary assessment study completed by Micon International Limited (‘‘Micon’’) for the Dak Sa Underground Project which covers the South (Bai Dat) and North (Bai Go) deposits which lie about 1 km apart and these two deposits, once developed and constructed into mines, will share the same infrastructure and expected to eventually be connected by an underground tunnel. There is no known commercially mineable mineral deposits on this property and there can be no assurance that a commercially mineable mineral deposit exists on the property.

On October 20, 2003, a 30-year investment license No. 2355/GP was granted for the Phuoc Son property covering 7,000 ha. The license permits Minco and NVMC to establish a joint venture, Phuoc Son Gold Company Limited (‘‘PSGC’’), for a term of 30 years. PSGC has investment capital of $10,000,000 and the legal capital of $3,000,000 of which NVMC contributes $2,550,000 (85%) and Minco contributes $450,000 (15%). PSGC must pay the Vietnamese government annual land rent and annual corporate tax of 40% of net profit but will be exempt from import duties and is subject to 7% tax upon remittance of profits abroad. Minco has not contributed to the legal capital and Minco has chosen to defer its rights to receive its share of the distributions of profits until its contribution to legal capital is recovered in full. Minco is not planning to pay its legal contribution. Minco will not receive their entitled share of profits until their l egal capital portion has been recovered, after which Minco will start receiving their share of profits. Legal capital recorded for PSGC of $2,550,000 is equal to what has been contributed. The Company and NVMC are not required to contribute Minco’s share of the legal capital.

On January 23, 2006, a Mining License application was granted over the South and North deposits. The Mining License allows the Phuoc Son Gold Company Ltd. within a 3.5 year period from date of grant to construct the mine within 1.5 years and perform mining activities over two years. The Company expects that it will need to obtain an extension on the Mining License as the 3.5 year period will be inadequate for construction and mining. The Company is in the process of obtaining the construction license and the import license for mining equipment for the Phuoc Son Gold property. In January 2008, PSGC obtained a new exploration license with a term of two years which will allow exploration activities in the specified areas. Under the Vietnamese law, an exploration license is required to get a newer amended mining license. Refer to risks outlined under Item 3D.

Table of Contents

Figure 1 shows the location of the property.

Figure 2 shows the location of these deposits and the principal facilities on the property.

Figure 1. Phuoc Son Gold Property

Table of Contents

Figure 2. Project Site Plan for Bai Dat (South) and Bai Go (North) deposits

(b) Accessibility, Climate, Local Resources, and Infrastructure

Access to the Dak Sa Project area within the Phuoc Son property is by 140 km of bitumen road from Da Nang to Kham Duc. From Kham Duc to the mine area is approximately 14.5 km on a fairly poor dirt road. This access road will be upgraded during construction. The South and North gold deposits lie about one km apart and are linked together via a dirt road.

The climate is sub-tropical with average monthly temperatures ranging from about 27°C in June to 20.5°C in December, although it is reported that temperatures may fall below 15º C in the cold season. Average annual rainfall is 2,762.5 mm with the maximum average monthly value of 763.8 mm, which occurs in October.

The minimum average monthly precipitation value is for February and measures 30.9 mm. Regionally, the relative humidity is high and reasonably consistent year round, ranging from an average of approximately 83% in April to 93% in November and December. Storms often occur in Quang Nam Province in September, October and November and cause heavy rain and strong wind with an average speed of 65 km/hr and a maximum of approximately 140 km/hr.

The Phuoc Son Project is located in the central highlands, an area that is one of the poorest regions of Vietnam. The local economy is primarily subsistence agriculture although local ongoing

Table of Contents

highway construction has provided a source of employment. Artisanal mining is ongoing on the Property and while this activity has reduced from past periods it is not strongly discouraged by the government as it helps reduce unemployment and stimulate the local economy. Olympus is doing its best to keep this activity in check and has good relations with the miners. These miners may be suitable candidates for future Olympus development and mining operations.

Nearby communities include Phuoc Duc Commune (population ~1,990) and Kham Duc District Town (population ~6,560), where Olympus has its local headquarters. Although Kham Duc has a district hospital with out-patient facilities and limited trauma casualty facilities, health care and education facilities are considered inadequate, with a distinct division in the standard of services and socio-economic opportunity available to ethnic minorities.

Electricity is provided from the Vietnam national grid supplying 1.6 MW at 22 kV supply. Telecommunications facilities are good and include internet and cell phone service. Water, although often polluted by the artisanal mining, is readily available on and near the Property. The population density within the Dak Sa Valley is approximately 25 per km². Except for small-scale slash and burn agriculture, the topographic relief in the area of the project area is unfavorable for farming activities.

Two major stratigraphic units are present on the Property as follows:

Kham Duc Formation (Proterozoic): This formation consists largely of sedimentary rock.

Avuong Formation (Paleozoic): This formation is distinctive as it hosts significant amounts of mafic volcanic rock types.

The most significant fault related to mineralization on Property is the Dak Sa Fault Zone (‘‘DSFZ’’). The Dak Sa fault zone runs North-South for over five km through the centre of the Dak Sa Prospect (host to the South (Bai Dat) and North (Bai Go) deposits). The DSFZ appears to be primarily a thrust fault and features prominent gold mineralized quartz vein/breccias.

(d) History of Exploration on the Phuoc Son Gold Property

In 1997 and 1998, Olympus Pacific Minerals became involved in the Phuoc Son project and took over direction of exploration programs from Indochina Goldfields Ltd. (subsequently Ivanhoe Mines Ltd.).

Since Olympus became directly involved in Phuoc Son in 1998 there have been several stages of exploration (carried out through and by NMVC). Selected portions of the property, including some safely-accessible artisanal underground workings, have been subjected to geological mapping, bedrock, float and channel sampling, soil geochemical surveying, magnetic surveying, self-potential geophysics and diamond drilling. The exploration stages are described as follows:


	•	Stage 1 (October 1998 – March 1999): reconnaissance surveying of the then 100 km2 license area, identification of the three major mineralized shear structures, and commencement of detailed exploration over the first of these structures (the Dak Sa shear zone);


	•	Stage 2 (April 1999 – December 1999): continuation of detailed exploration over the southern end of the Dak Sa shear zone (including mapping/sampling and diamond drilling six holes at Bai Dat) and follow-up exploration at other sites (particularly at K7) within the balance of the license area;


	•	Stage 3 (January 2000 to June 2000): grid soil sampling in the Dak Sa & K7 shear zones, rock sampling, geological mapping, pan concentrate survey, diamond drilling of 29 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go, within the Dak Sa shear zone;


	•	Stage 4 (July 2000 to December 2000): detailed geological mapping, nine km2 soil survey north of Bai Go, rock geochemistry, petrology and diamond drilling of 17 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go;

Table of Contents


	•	Stage 5 (January 2001 – December, 2001): continuation of drilling with 31 additional holes at the Bai Go, Bai Gio and Bo prospects, as well as geological mapping, rock and soil geochemistry, pitting, surface and underground channel sampling, petrology, and gridding at other prospects including K7, Hoa Son, Tra Lon, Suoi Cay, Vang Nhe, Khe Rin, Khe Do and Khe Cop;


	•	Stage 6 (January 2002 to December, 2002): scout drilling at the Khe Rin, North Khe Do, Khe Do, Bai Buom, Tra Long and K7 prospects (32 drillholes), as well as pitting at Nui Vang, geological mapping/sampling, soil geochemistry, ground magnetometer surveying at Khe Rin-Khe Do and Bai Buom, reconnaissance mapping elsewhere, including Vang Nhe, Tra Long, K7 and Hoa Son; commencement of mine scoping studies at Dak Sa; and


	•	Stage 7 (January 2003 to December 31, 2003): in-fill, step-out and geotechnical diamond drilling at Bai Dat, Bai Go, Bai Chuoi and Bai Cu (27 holes); preparation of mineral resource estimates for the Bai Dat and Bai Go deposits; continuation of the scoping studies. A diamond drilling program was completed at Bai Chuoi sector (between the Bai Dat and Bai Go deposits) and soil geochemical surveys were being conducted elsewhere on the property.

As at December 31, 2003, accumulated deferred exploration costs were $3,320,716 and mineral properties was $904,605 for the Phuoc Son Gold Property

2004 Work

In 2004, deep C-horizon soil geochem, ground magnetic and radiometric surveying were completed at the South Bai Cu, Round Hill, Ca Creek, Dak Sa, North Dak Sa, Bai Gio East, Bai Gio North, Hoa Son, K7 East and Tra Long prospects. A small orientation SP (self potential geophysics), program was completed at Nui Vang prospect. Geological mapping was conducted at Dak Sa, Quartz Creek, South Bai Cu, Round Hill, K7 and Ca Creek prospects. A BLEG and stream sediment sample program was completed over the northern section of the Phuoc Son Investment Licence not covered by previous surveys. Diamond drill programs were carried out at Bai Cu (4 holes), Bai Chuoi (one hole), Round Hill (5 holes), Nui Vang (3 holes), K7 (3 holes), Bai Gio North (6 holes), and Khe Rin (7 holes), prospects. Two metallurgic drill holes were completed at Dak Sa — South Deposit (one hole), and North Deposit (one hole). A geophysical consultant from Canada visited the property and filter ed/processed all previous magnetic data to facilitate improved anomaly resolution. Based on favorable results, exploration continued into 2005. During the year ended December 31, 2004, $1,095,335 was incurred on mineral properties for the Phuoc Son Gold Property, excluding the impact of the Vend− In transaction described in Item 4.D.1.

2005 Work

In 2005, Self Potential (SP), geophysical programs were completed over the Dak Sa sector, Hoa Son, Bai Gio North, Bai Gio East and Bai Cu prospects. Trenching and sampling at Bai Gio North and Bai Gio East was completed. Geological mapping was completed at Bai Gio North, Bai Gio East, Hoa Son and Bai Chuoi. Exploration diamond drilling programs were conducted at Bai Go North (one hole), North Deposit (9 holes), South Deposit (16 holes) and Bai Chuoi (3 holes). An intensive re-logging program was carried out on North Deposit drill core during the year, combined with structural studies and new drill sections prepared and reviewed for Dak Sa. Resource estimates were completed to update the South Deposit ore body, incorporating the results of the in-fill drill program. The results of exploration were favourable in 2005, especially in the Dak Sa area, resulting in further exploration work in 2006. During the year ended December 31, 2005, deferred exploratio n and development costs of $1,805,607 were incurred for the Phuoc Son Gold Property.

2006 Work

As of December 31, 2006, the Company has completed 63 drill holes totalling approximately 11,330 metres, mainly focusing on the: North (Bai Go) Deposit, South (Bai Dat) Deposit and other exploration holes on assorted priority targets in the Dak Sa area. These ongoing exploration activities

Table of Contents

resulted in additional positive drill results at Phuoc Son. Over the course of 2006, the North Deposit has been significantly enlarged and now extends in excess of 900 metres in a north-south orientation. The drilling has also confirmed that the deposit remains open for further expansion. In April 2006, resource estimates were updated internally by qualified persons using the original resource estimates audited by engineering firm, Watts Griffis and McOuat [‘‘WGM’’] as a base document. The April 2006 update was on the North Deposit ore body, incorporating the results of drilling to March 31, 2006. An in-house technical report has been completed with respect to the North and South Deposits. An engineering firm has been selected to complete an independent review of this technical report that would result in an issuance of a Form 43-101 Compliant Independent Technical Report. The Form 43-101 evaluates the economics of mining the property and defines the mineral reserv es and mineral resources. This Technical Report would include a further update of reserves and resources at Phuoc Son, reflecting the continued positive drill results we have experienced in 2006. During the year ended December 31, 2006, deferred exploration and development costs of $2,458,242 were incurred for the Phuoc Son Gold Property.

2007 Work

On January 15, 2008, the Company released updated resource estimates and exploration results at Dak Sa (VN 320). The Measured and Indicated [‘‘M & I’’] resources, based on drilling up to October 2007, stands at 600,260 tonnes at an average grade of 10.95 g/t for 211,325 ounces of gold. The M & I total is comprised of Measured resources of 157,450 tonnes, grading 13.06g/t and Indicated resources of 442,810 tonnes, grading 10.2g/t. Additional resources of 425,610 ounces are contained within the Inferred category (1,955,400 tonnes at 6.77 g/t). Refer to the technical report ‘‘Preliminary Assessment of the Phuoc Son Project’’ dated December 2007 posted on www.sedar.com (under the Company’s filings) for further details.

During the year ended December 31, 2007, deferred exploration and development costs of $5,064,000, were incurred for Phuoc Son Gold Company.

Year to date as at December 31, 2007, the drilling program at Phuoc Son has completed 11,170 meters in 37 drill holes. Current drilling is focused on the north-extension of the Dak Sa shear zone, which is one of several large mineralized fault/shear structures being explored within the Phuoc Son property. The goal of the on-going drilling and underground mine development is to indicate the continuity of mineralization between North and South deposits, as well as result in an increase of further mineable resources within the north-extension. The current drilling program is extending the known mineralization of Dak Sa structure to the west and down-dip of the limits of NI 43-101 resources in both the north and south sectors of the deposit. The current North-Extension drilling program has so far extended the Dak Sa mineralized structure for more than 800 metres beyond the previously defined limit of NI 43-101 resources in the North Deposit. The total strike length of the Dak Sa shear zone is now well over 2 km.

The Dak Sa Underground Project (VN320) is currently comprised of the South (Bai Dat) and North (Bai Go) deposits which lie about one kilometer apart. The northern area of the future mine will be accessed from the southern area by underground development. During 2007, the following work was completed or in progress:


	•	145 meters of the main access decline was developed. The initial ore intersection will be a further 80 meters.


	•	The exhaust portal was constructed and 45 meters of the exhaust ramp was developed.


	•	Surface Site earthworks for the development work were completed.


	•	Construction and asphalting of the road to magazine were completed.


	•	A nine kilometer road access to site was completed


	•	Explosive magazine facility was licensed and commissioned.


	•	Water service lines were installed.

Table of Contents


	•	Surface fans were installed and commissioned.


	•	Cement work (grouting) was completed at sheared zone to prevent water inflow.


	•	Accommodation arrangements were completed to house the existing staff.

An independent assessment of the Company’s inhouse scoping study is underway for the project.

(e) Mineral Occurrences

Since 1998 Olympus has discovered and/or explored 23 important showings on the Phuoc Son Property. The most significant of these are the South and North Deposits in the Dak Sa area of the property. Following are descriptions of these two significant discoveries and a table summarizing the others based upon the Company’s own work.

South Deposit (Bai Dat)

The South Deposit is located in the southern portion of the property along the Dak Sa zone. Exploration to date has delineated one main mineralized quartz vein. The vein varies in thickness from one metre to over ten metres. The mineralized quartz vein contains pyrite, pyrrhotite, galena, sphalerite, and native gold. The total sulphides vary from less than 1% to more than 60%.

The South Deposit mineralization remains undefined on the down-dip to the NW (although rising terrain indicates increased depth to target in this direction) and with additional exploration, additional resources could be identified.

North Deposit (Bai Go)

The North Deposit is some 1000 m north of the South Deposit on the Dak Sa zone. Overall, the North Deposit quartz vein system has widths of up to 32 m. The Au-Ag-Pb-Zn mineralization is primarily fracture controlled in quartz. Drilling has delineated a central high-grade zone. The 2006 drilling at the North Deposit has returned results nearly extending the strike length of the North Deposit to over 900 metres and confirming that the deposit mineralization remains undefined further to the north and south. Ongoing drilling in 2007 will focus on continuing to enlarge the deposit as well as bringing the currently outlined exploration extensions to mineral resource status.

Other Phuoc Son Property Showings

The Phuoc Son property hosts approximately 23 other occurrences and further exploration is required to evaluate the economic viability. Four of these occurrences are located in the Dak Sa area and have significant exploration potential that could result in development.

(f) Resource Estimates

Cautionary Note to U.S. Investors concerning estimates of
Measured and Indicated mineral Resources

This section uses the term ‘‘indicated resources.’’ We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.

Cautionary Note to U.S. Investors concerning estimates of
Inferred MINERAL Resources

This section uses the term ‘‘inferred resources.’’ We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. ‘‘Inferred resources’’ have a great uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules,

Table of Contents

estimates of Inferred Mineral Resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically and legally mineable.

Summary of Phuoc Son Gold Project Mineral Resource Estimates:⁽¹⁾⁽²⁾

Measured & Indicated Mineral Resources


Category	Tonnes		Gold Grade (g/t)		Contained Gold (oz)
Measured		157,450		13.06		66,110
Indicated		442,810		10.2		145,215
Total Measured plus Indicated Resources		600,260		10.95		211,325

Additional Resources* (Inferred resources are in addition to measured and indicated resources)

Category

Tonnes

Gold Grade
(g/t)

Contained Gold
(oz)

Total Inferred

1,955,400

6.77

425,610

Notes:

(1)

Employed a lower 3.0 g/t grade cutoff. These Resource estimates were prepared by Olympus in October 2007 and validated by Terra Mining Consultants and Stevens and Associates (‘‘TMC/SA’’) in October 2007 and were prepared in accordance with National Instrument 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definition standards. Prior resources were audited by Watts, Griffis and McOuat Limited (‘‘WGM’’) and published in a Technical Report dated January 30, 2004. A copy of the Technical Report titled ‘‘A Technical Review of the Phuoc Son Gold Project in Quang Nam Province, Vietnam’’ by WGM can be found in the Company’s filings at www.sedar.com. A copy of the report titled ‘‘Prelimin ary Assessment of the Phuoc Son Project in Quang Nam Province, Vietnam’’, dated December, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com.

(2)

The mineral reserve and mineral resource estimates contained in this table have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’). The NI 43-101 standards are similar to those used by the United States Securities and Exchange Commission’s (‘‘SEC’’) Industry Guide No. 7. However, the definitions in NI 43-101 differ in certain respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a ‘‘reserve’’ unless the determin ation has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. None of the Company’s mineral reserves as determined under NI 43-101 to date would qualify as mineral reserves under Industry Guide No. 7. There are also uses of the terms ‘‘indicated resources’’ and ‘‘inferred resources’’. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.


4D.2	Bong Mieu Gold Property

Olympus has been involved with the property since September 1997. Olympus acquired its interest in the Bong Mieu Gold Property in September 1997 by acquiring 100% of Bong Mieu Holding, Ltd. from Ivanhoe Mines Ltd. The Company has a 100% interest in Bong Mieu Holdings Ltd., which holds an 80% ownership interest in Bong Mieu Gold Mining Company Limited (‘‘Bogomin’’), a joint venture enterprise incorporated in Vietnam, which has surface rights on the Bong Mieu property. The other 20% of Bogomin is owned by two Vietnamese governmental organizations, MIDECO (10%) and Minco (10%).

The Company manages the exploration programs on the property on behalf of the joint venture. The property covers four known deposits, namely Bong Mieu Central (Ho Gan), Bong Mieu East (Ho Ray), Bong Mieu East (Thac Trang) and Bong Mieu Underground (Nui Kem), and several other mineralized occurrences. One property, Bong Mieu Central (Ho Gan), has proven and probable reserves resulting in the related mine construction and gold production.

Starting in 2005 and continuing into 2006, mine construction at the Company’s Bong Mieu Central Gold Mine (Ho Gan) was completed. After the initial gold pour in March 2006, it was determined that the process needed to be reconfigured. The logistic supply chain for importing

Table of Contents

equipment into Vietnam is lengthy and deliveries take six to eight weeks after order placement. Consequently, new equipment installation and resulting system optimization has taken place during the course of second and third quarters of 2006.

Production at the Bong Mieu Central plant (VN220) has steadily improved since commercial production began in October 2006 as a result of improved throughput levels, grades, and recoveries. Ongoing improvements have been made to increase recovery and capacity including the installation of a control monitoring system in the first quarter of 2007; and in the first and second quarter of 2007, installation of a third detoxification tank and absorption tank to scavenge gold in solution from the leach tails. The plant has been producing, on average, approximately 1,000 ounces per month since July 2007.

Mill throughput fell three percent in the fourth quarter of 2007 compared to the third quarter of 2007 due to a ball mill motor failure, power outages, and high levels of rainfall in October 2007. Recoveries were also lower in the fourth quarter due to changes in the ore type being processed. As a result of lower throughput and recoveries in the fourth quarter 2007, gold production was 8.6 percent lower than the third quarter of 2007. A total of 9,198 ounces of gold were sold for proceeds of US$6,514,000 during 2007.

The plant was designed as a gravity/sulphide flotation circuit and the main cause of the fluctuating recovery is a result of the degree of oxidization in the ore feeds. Oxidized ores do not float well and reduce recovery. To mitigate this problem, the mine has blended the ore to obtain a higher recovery. The Company also plans to install a Falcon concentrator in early 2008 to help improve recoveries. It is anticipated that, in the future, the tails will be reworked.

The carrying value of the mineral property and rights and deferred development costs related to the Bong Mieu Central (Ho Gan) mine, is about $1.1 million and nil respectively, as at December 31, 2007, and the carrying value of the property, plant, equipment and infrastructure for the Bong Mieu (Ho Gan) Central mine is approximately $6.8 million. Current ore throughput at Ho Gan to date is about 500 tons per day. Electric power for the plant is provided by the national grid with back-up power generation provided by the Company-owned generators which have the capacity to run the full operation.

At Bong Mieu Underground (‘‘BM Underground’’), an underground deposit mined in the 1940s, is fully permitted to mine and is located within one kilometre of the BM Central plant.

Exploration work to date has resulted in one new significant discovery in the Bong Mieu East area (Thac Trang), a number of new, previously unexplored surface showings and indicated that all existing deposits remain undefined in several directions. Based on exploration results between 2004 to 2007, the potential for additional discoveries and resource expansion at the Bong Mieu property is considered excellent.

(a) Property Description and Location

The Bong Mieu property is located in the Tam Lanh Commune of the Tam Ky District, in the southeast corner of Quang Nam Province in central Vietnam. It is some 20 km south of the provincial capital of Tam Ky which lies about 60 km south of the city of Da Nang along Highway 1 (see Figure 3).

The Bong Mieu Central (Ho Gan) gold deposit is located some 2 km south of the Bong Mieu camp and offices on the southern side of the Bong Mieu River. Figure 4 shows the location of the Ho Gan, Bong Mieu East (Ho Ray) and Nui Kem deposits and the other principal occurrences on the property.

The property is covered by a 25-year Investment License covering 3,000 ha granted in March, 1991. Two Mining Licenses (one on Ho Gan, the other on Nui Kem), a tailings area and a construction area (on the camp/office area), covering a total of 365 ha are located within the Investment License area.

The investment license, No: 140/GP dated March 5, 1991, permits two parties namely: MIDECO, a Vietnamese Company, and Covictory Investment Limited (‘‘CIL’’), based in Australia, to establish a

Table of Contents

joint venture in Vietnam named Bong Mieu Gold Mining Co. Ltd. (‘‘Bogomin’’). The joint venture has a term of 25 years starting from the date of issuance of the investment license and after 25 years, an application can be made for extension. The joint venture was to have investment capital of $13,200,000 and legal capital of $1,000,000, with MIDECO contributing $200,000 cash or ‘‘in-kind’’ being 20% of legal capital and CIL contributing the equivalent of $800,000 in foreign currency, equipment and expenditures to Bogomin. Bogomin is exempt from import duties for all materials, equipment and spare parts imported by Bogomin and the product of Bogomin is licensed for export and sale in Vietnam. Bogomin must pay a 3% net smelter return royalty to the Vietnamese government, pay specified rent of US$200 per hectare per annum for land, remit corporate profit tax equal to 18% of profits for the first five years of profit (after five years the tax rate will be determined but will not exceed 25%); however, Bogomin is exempt from corporate profit tax for the first two profit-making years. The joint venture profits shall be shared as follows: 10% for MIDECO, 10% for MINCO and 80% for CIL. At the remittance of profits abroad, CIL must remit 5% of profits as profit remittance tax. In an amendment to investment license No 140/GP, dated November 29, 1993, the assignment of all share capital, obligations, and rights of CIL in Bogomin to Bong Mieu Holdings Limited (‘‘BMHL’’) was approved. The license was also amended increasing the invested capital to $15,000,000. In a further amendment to investment license No 140/GP, dated June 9, 2005, the profit remittance tax was cancelled and the total invested capital was increased to $25,000,000 and legal capital was increased to $3,000,000 of which MIDECO contributes $600,000 of the legal capital in currency or in kind and BMHL contributes $2,400,000 in currency, materials, equipment and expenditu res. As at December 31, 2007, MIDECO has contributed $200,000 and BMHL has contributed $2,400,000 to legal stated capital of Bogomin, resulting in total legal stated capital for Bogomin equal to $2,600,000.

On July 22, 1992, Bogomin obtained a mining license to allow the mining of gold at the Bong Mieu gold mine whereby the total mining area is 358 ha including open pit area of 230 ha, underground mine of 100 ha and tailings area of 28 ha. The mining license has a term of 25 years starting at the date of the issuance of the investment license. Each year a mining report must be submitted to the Ministry of Heavy Industry and the State Mineral Resources Management Department.

On October 9, 1993, a Land Use certificate was issued to Bong Mieu Gold Mining Co. Ltd. by the People’s Committee of Quang Nam-Da Nang Province for the Bong Mieu gold mine. The certificate covers a 365 ha area of which 300 ha is gold mining land, 32.3 ha is waste dumping land and 2.7 ha is for basic construction. The Land Use Certificate has a term of 25 years from September 1992 to September 2017.

On November 27, 2007, Bong Mieu Gold Mining Company obtained an annual gold export certificate to allow for exportation of any dore that is produced by the Company that will be refined and sold offshore, which will expire on December 31, 2008.

The Bong Mieu exploration license has expired and a new license is in the process of being obtained. This license is separate from the other licenses. If we are unable to obtain our exploration license, this could impede our future activities. Currently, the Company is engaging in exploration activities under the investment license. Under Vietnamese law, an exploration license is required in order to get new or amended mining licenses. The Company currently has mining licenses to cover the area being mined but to further expand the mining area or cover a new mining area the Company would require an exploration license before obtaining the new or amended mining license. Refer to Item 3D for discussion of risk factors. Exploration license term is typically two years if it is the first renewal of the license. Given the lengthy process involved in obtaining an exploration license, the Company anticipates receiving the license during 2008.

Table of Contents

Figure 3. Bong Mieu Gold Property

Table of Contents

Figure 4: Ho Gan Mining Map

(b) Accessibility, Climate, Local Resources, and Infrastructure

Access to the Bong Mieu Project area is by 90 km of bitumen road from Da Nang, via Tam Ky to Tien Phuoc. The Bong Mieu Central (Ho Gan) Mine is accessed from Bong Mieu via previously constructed dirt tracks. Some of these are heavily eroded in places but can easily be reformed by bulldozer and faced with rock to provide all weather access.

The monsoon tropical climate has temperatures varying from a high of 42°C in summer to 16°C in winter, although it is reported that temperatures may fall below 16°C in the cold season. Rainfall records from the weather station at Bong Mieu show an average annual rainfall of 4,086 mm over the 2 year (August 1993 to July 1995) with a minimum annual rainfall of 2,935 mm and a maximum annual rainfall of 5,265 mm. Generally, 80% of the total annual precipitation occurs within the wet season (September to December) with the greatest precipitation occurring in October. January through August are generally drier months, with less than 180 mm of precipitation per month and January to April are typically extremely dry. Regionally, the relative humidity is high and reasonably consistent year round, ranging from an average of approximately 83% in April to 93% in November and December.

Most of the Property is relatively rugged with steep slopes and valleys. Maximum elevation is approximately 500 metres above sea level. The flattest portion of the Property is cultivated but the remainder has second and third — growth forest.

The Property is near the commune of Tam Lanh which comprises 10-12 villages and a population of between 5,000 to 10,000. The commune provides a medical clinic and primary schools. The local

Table of Contents

economy is based on agriculture although some employment is found in local construction and a small amount of artisanal gold mining, both on the Property and outside.

Electrical power via the national grid is close to the Property and reaches the villages. Water is available on the Property from the local rivers.

The Bong Mieu property is situated in central Vietnam, 20 km south of one of the main branches of the Phuoc Son Suture, which is probably one of the most important structural controls of gold metallogeny in central Vietnam.

Bong Mieu Central (Ho Gan Deposit)

The Ho Gan deposit is flat lying, occurs on surface over an area of 1000 metres by 800 metres and extends in most places to a known vertical depth of up to 15 metres. The gold mineralization is hosted within altered, intrusive rocks, breccias and quartz veins.

Bong Mieu East (Ho Ray Deposit & Thac Trang)

Mineralization is hosted by quartz veined and sulphide bearing skarn, granite gneiss and schists that dip moderately to the northeast.

Nui Kem

The mineralization is dominantly hosted by quartz-sulphide veins and shear zones contained within a sequence of altered sedimentary schists that dip shallowly to the south.

For the above three deposits, typical gold mineralization contains sulphides consisting primarily of pyrite and locally pyrhotite up to to 10%.

(d) History of Exploration on Bong Mieu Gold Property

From 1997 until late 2001 Olympus (which managed the project for Bogomin) carried out no work on the Property. During this period a small staff was employed to maintain a presence at the field office, to keep the Property secure and discourage artisanal mining as much as possible.

In mid-2002, Olympus renewed work at Bong Mieu. The Property database was reviewed, mapping and sampling carried out and historic Mineral Resource estimates reassessed, all in part by a geologist who had worked on the Property previously. A start was made on preparing updated JORC-compliant Mineral Resource estimates and recommendations were made for additional work.

In 2003, regional and property — scale geological mapping and geochemical rock sampling was completed. By the end of 2003, several areas were identified as meriting follow-up work.

As at December 31, 2003, accumulated deferred exploration costs were $517,079 and mineral properties was $3,944,000 for the Bong Mieu Gold Property.

2004 Work

Bong Mieu Central (Ho Gan Deposit)

Infill and delineation diamond drilling programs comprising 228 holes were undertaken on the Ho Gan deposit. The holes were drilled vertically, on approximately 25 metre centers to depths ranging from 5.0 to 36 metres. The objective of the drill program was to expand and/or define the limits of the deposit to enable detailed engineering of the pit outlines and the preparation of production schedules.

The program was successful in extending the limits of the known mineralization as well as establishing the continuity of mineralization between the previously defined resource outlines in all three areas.

Table of Contents

Bong Mieu East (Ho Ray Deposit & Thac Trang)

At Thac Trang immediately southeast of the Ho Ray deposit, a 15-hole program was completed in July 2004. It encountered encouraging results which management believed warranted additional exploration in 2005.

During the year ended December 31, 2004, deferred exploration and development costs of $2,847,014 were incurred for the Bong Mieu Gold Property.

2005 Work

Bong Mieu Central (Ho Gan Deposit)

New resource estimates were completed in March of 2005 for the Ho Gan open pit deposit following completion of the 2004 drilling and receipt of all results. The updated Ho Gan mineral resource estimates (using a 1.0 g Au/t lower cutoff and a 10.0 g Au/t top cut) are shown in 4D.2(f). The development of the mine commenced with the construction of the plant, tailings dams and related infrastructure.

Bong Mieu Central

Three shallow exploration and condemnation holes 54 metres were completed. Engineering, metallurgical and environmental studies were successfully completed.

Bong Mieu East — Ho Ray Deposit, Thac Trang and Rung De Prospects

A diamond drilling program during the early part of 2005 continued to evaluate the Thac Trang discovery.

Nui Kem

Five widely spaced exploration holes were completed at the Nui Kem deposit located approximately 1.5 km from the Ho Gan deposit. The drill program successfully confirmed the down-dip continuation of the main Nui Kem structure over a strike length of approximately 1.7 km and to a depth of 250 metres below the deepest underground development level. Gold assays ranging from 1.65 g/t to 2.68 g/t were returned. The drill program resulted in expanding the structure.

During the year ended December 31, 2005, $2,794,000 was spent on deferred exploration and development and $5,577,384 on capital assets for the Bong Mieu Gold Property.

2006 Work

Exploration, infill and metallurgical drill programs continued in the Bong Mieu East area. As of December 2006, Olympus has completed 66 drill holes totalling approximately 3,020 metres. Metallurgical test-work on representative Bong Mieu East ore types is currently underway. The results of this work and the updating of the Bong Mieu East resource estimates are expected in third quarter 2007.

Preliminary exploration programs, including drilling, have been initiated to evaluate the economic potential of two new prospects, Ho Gan East and Bong Mieu West. At the Nui Kem mine, the exploration decline portal has been completed and the first 70 metres of the tunnel has been developed.

During the year ended December 31, 2006, deferred exploration and development costs of $3,147,855 were incurred for the Bong Mieu Gold Property.

2007 Work

As at December 31, 2007 Olympus has completed 15 drill holes totalling approximately 1,615 metres on the property The bulk of the drilling was focused on the Nui Kem/Saro Hill areas (VN230) which host vein structures parallel to the main Nui Kem vein system.

Table of Contents

On October 9, 2007, the Company reported increases to the mineral resources at the Bong Mieu Gold Property as outlined in a Technical Report prepared by Terra Mining Consultants and Stevens & Associates (‘‘TMC/SA’’). The full text of the report is available on the Sedar website: (www.sedar.com). Refer to the updated mineral resources estimates table in Item 4.D.2(f).

During the year ended December 31, 2007, deferred exploration and development costs of $1,870,000 were incurred for the Bong Mieu Gold Property.

(e) Main mineral occurrences

Olympus is exploring the Bong Mieu project area for primary gold deposits. The majority of gold deposits and prospects on the property lie within the core and on both limbs of the Bong Mieu anticline. Mineralization at all locations, except that at Ho Ray, occurs within shears that host quartz+sulphide veins, brecciated quartz+sulphide+schist and/or sulphide bearing schist. The Ho Ray mineralization occurs within calc-silicate lithologies and underlying quartzite, biotite schist and gneiss. The mineralization has an apparent stratabound distribution. The most significant mineral occurrences on the property are the Ho Gan, Ho Ray and Nui Kem. Resource and reserve estimates for these deposits are summarized as following:

Ho Gan (Bong Mieu Central)

Gold mineralization is located within several closely stacked shallow dipping shears that host quartz+sulphide veins, brecciated quartz+sulphide+schist, and/or sulphide bearing schist (occasionally oxidized and carrying limonite/goethite). Some shears have demonstrated lateral extent to some 2 km. The most common sulphide is pyrite. Galena and arsenopyrite also occur.

Much of the deposit outcrops or occurs shallowly beneath the surface and varies in thickness, with a maximum thickness of 11.6 m.

Ho Ray and Thac Trang (Bong Mieu East)

The Ho Ray and Thac Trang gold (plus minor sulphide) mineralization occurs within calc-silicate rocks.

The gold is often associated tungsten mineralization which occurs as scheelite.

Nui Kem (Bong Mieu Underground)

Gold mineralization is hosted by quartz+sulphide veins that occupy shears in the underlying quartz+feldspar+biotite schist and gneiss. They have been exploited over a strike length of some 2 km and down dip for at least 350 m. The common sulphide minerals are pyrite, galena, sphalerite and lesser pyrrhotite The veins vary in thickness up to 2.2 m and average 1.0 m.

The Bong Mieu property hosts five other gold occurrences that warrant additional exploration to determine economic viability. These occurrences are located in the Bong Mieu area and have significant exploration potential that could result in development.

(f) Resource and Reserve Estimates

The mineral reserve and mineral resource estimates contained in this Annual Report or Fom 20-F have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’). These standards are similar to those used by the United States Securities and Exchange Commission’s (‘‘SEC’’) Industry Guide No. 7. However, the definitions in NI 43-101 differ in certain respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a ‘‘reserve’’ unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determina tion is made. None of the Company’s mineral reserves as determined under NI 43-101 to date would qualify as mineral reserves under Industry Guide No. 7.

Table of Contents

Summary of Bong Mieu Gold Property Mineral Reserve and Resource Estimates

Diluted Proven and Probable Reserves (NI 43-101)


Category/Deposit	Tonnes		Gold Grade (g/t)		Contained Gold (oz)
Proven⁽¹⁾		104,890		2.96		9,987
Probable⁽¹⁾		322,070		2.43		25,136
Proven plus Probable⁽¹⁾		426,960		2.56		35,123

Notes:

(1)

Employed a lower 0.5 g/t grade cutoff and 10 g/t grade upper cutoff and 10% dilution (0.0 g/t Au). These proven and probable reserve estimates were prepared by Olympus in September 2005 and validated by Terra Mining Consultants and Stevens & Associates (‘‘TMC/SA’’) in August 2007 and were prepared in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions standards. A copy of the report titled Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam, dated August 31, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com. The data presented at 31 December 2007 and 2006 represents remaining reserves after depletion by mining; the reserves will be recalcu lated during 2008.

Mineral Resources Estimates


Measured & Indicated Resources							Inferred Resources⁽³⁾
Category/ Deposit	Tonnes		Gold Grade (g/t)		Contained Gold (oz)		Category/ Deposit	Tonnes		Gold Grade (g/t)		Contained Gold (oz)
Measured⁽¹⁾		822,700		2.41		63,750	Inferred⁽¹⁾		1,950,100		1.46		91,600
Indicated⁽¹⁾		2,069,300		2.03		134,800	Historical Inferred (Underground)⁽²⁾		1,220,000		8.10		317,300
Historical M&I (Underground)⁽²⁾		216,700		6.51		45,300
Tungsten and Fluorine as Gold Equivalent⁽⁴⁾
Measured						38,950	Inferred						90,400
Indicated						62,900

The Measured & Indicated Resource Estimates Includes Proven and Probable Reserves

Notes:

(1)

Employed a lower 1.0 g/t grade cutoff and 10 g/t grade upper cutoff. Updated by Olympus (March 2007) and validated by Terra Mining Consultants and Stevens & Associates (‘‘TMC/SA’’) in August 2007 from the prior mineral resource estimates audited by Watts, Griffis and McOuat (‘‘WGM’’) in accordance with National Instrument 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions standards. A copy of the Technical Report titled A Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam dated September 17, 2004 by WGM can be found in the Company’s filings at www.sedar.com. A copy of the report titled Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam, dated August 31, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com.

(2)

Employed a lower 3.0 g/t grade cutoff and 30 g/t grade upper cutoff. The Technical Report to accompany these historical resource estimates was the pre-feasibility study compiled in 1996 by Continental Resource Management Pty Ltd., acting as independent resource consultants. These estimates have been reviewed by Watts, Griffis and McOuat (‘‘WGM’’) in 1997 and were found to have been carried out in a manner consistent with standard practice in the industry at the time. These historical estimates are relevant as they are the most recent estimate completed for the project. In its Technical Report dated September 17, 2004, WGM considered the estimates to be relevant and of historic significance.

(3)	Inferred resources are in addition to measured and indicated resources.

(4)	Using values of US$250/MTU for Tungsten, US$200/MTU for Fluorine and US$700/oz for gold, the value of the Tungsten in the Bong Mieu East Resource is equivalent to 101,850 ounces.

Table of Contents


ITEM 5:	Operating and Financial Review and Prospects

The following is a discussion of the results of operations of the Company for the fiscal years ended December 31, 2007, 2006, and 2005, and should be read in conjunction with the audited financial statements of the Company for such periods, together with the accompanying notes, included elsewhere in this Annual Report on Form 20-F. Unless indicated otherwise, all references herein are to Canadian dollars. Please refer to ‘‘Item 3: Key Information’’ for exchange rate information on the Canadian dollar.

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles. Reference is made to Note 16 of the financial statement for the years ended December 31, 2007, 2006 and 2005. for a discussion of the material differences between Canadian and United States generally accepted accounting principles, and their effect on the Company’s annual audited financial statements, respectively. In addition to historical information, the following discussion contains forward-looking statements that involve risk and uncertainties. The Company’s actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors, including those discussed in ‘‘Risk Factors’’ and elsewhere in this Annual Report on Form 20-F.

Overview

Olympus is an international mineral exploration and development company engaged in the business of acquiring and developing mineral properties in Southeast Asia. The Company’s long-term strategy is to position itself as a significant gold producer in Southeast Asia. The Company currently owns interests in two gold properties in Vietnam, which are referred to in this application as the Phuoc Son gold property and the Bong Mieu gold property. The Company has also submitted applications to acquire interests in several other properties in Vietnam, Philippines and Laos.

The Ho Gan plant at the Bong Mieu gold property has been commissioned and commercial production started in the fourth quarter of 2006. The Company poured its first 3.6 kg doré bar on February 15, 2006. On October 9, 2007, the Company reported increases to the mineral resource estimates at the Bong Mieu Gold Property as outlined in a Technical Report prepared by TMC/SA. The full text of the report is available on Sedar website. (www.sedar.com).

At the Company’s Phuoc Son gold property, on January 25, 2006, the Company secured a mining license in respect of the Bai Dat and Bai Go deposits (collectively the ‘‘Dak Sa Underground’’). Additional metallurgical testing is underway to optimize the recoveries and to enable the final selection of the process equipment. The Company has received approval of its Environmental Impact Assessment Study. The Company expects to place the Dak Sa Underground into production, subject to obtaining the necessary financing. The Dak Sa mine construction is estimated to cost approximately US$52 million with the funding for this project to be financed by a combination of debt and equity. The continued drilling at the North Deposit now extends in excess of 900 metres in a north-south orientation. The drilling has also confirmed that the deposit remains open for further expansion. In January 2008, PSGC obtained a new exploration li cense with a term of two years which will allow exploration activities in the specified areas.


5A.	Operating Results

Bong Mieu Gold Property

In 2006, Olympus completed the construction of its gold processing plant at Bong Mieu Central (‘‘BM Central’’) where the first 3.65 kilogram gold dore bar was poured on February 15, 2006. The plant was built on budget at US$4.5 million but the start up was slightly delayed due to the typical annual heavy rain falls (‘‘monsoon’’) from May to October. The plant is currently operating with a throughput of about 500 tonnes per day (‘‘tpd’’). Based upon an evaluation of the operating results of the Bong Mieu Central (Ho Gan) plant since the commencement of commercial production, management determined during the fourth quarter of 2006 that the carrying amount of the long-lived assets related to the Bong Mieu Central (Ho Gan) mine was not fully recoverable. Consequently, an impairment charge of $4,280,000 was taken on the Bong Mieu Central (Ho Gan) deferred exploration and development cos t in fourth quarter 2006.

Table of Contents

The table below shows selected operating mine statistics:


	Q4			Q3			Q2			Q1			YTD 2007				YTD 2006
Tonnes of ore milled			42,300			43,600			36,000			33,600			155,500				131,000
Grade (g/t Au)			3.26			3.21			3.12			3.00			3.16				2.52
Mill recoveries (percent)			64.1			69.1			59.9			50.0			61.7				44.8
Gold production (ounces)			2,842			3,111			2,163			1,621			9,737				4,757
Gold sales (ounces)			2,497			3,055			2,186			1,460			9,198	(a)			4,651
Sales		$	2,004,292		$	2,232,250		$	1,640,631		$	1,119,084		$	6,996,257	(a)		$	1,644,040
Cost of sales		$	1,388,200		$	1,395,722		$	1,161,379		$	1,577,892		$	5,523,193			$	1,535,891
Amortization		$	412,529		$	495,253		$	509,083		$	446,489		$	1,863,354			$	554,923
Royalties		$	35,655		$	37,476		$	17,874		$	21,331		$	112,336			$	47,960

(a)	A total of 4,651 ounces of gold were sold for proceeds of US$2,917,582 during 2006 of which 2,335 ounces with proceeds of US$1,469,309 were netted against deferred development costs when the mine was not in commercial production.

Production at the Bong Mieu Central plant (VN220) has steadily improved since commercial production began in October 2006 as a result of improved throughput levels, grades, and recoveries. To increase gold recoveries, a re-grind circuit was received in December 2006 and was installed in the second quarter of 2007. Ongoing improvements have been made to increase recovery and capacity including the installation of a control monitoring system in the first quarter of 2007; and in the first and second quarter of 2007, installation occurred of a third detoxification tank and absorption tank to scavenge gold in solution from the leach tails. The plant has been producing, on average, approximately 1,000 ounces per month since July 2007. Mill throughput fell three percent in the fourth quarter of 2007 compared to the third quarter of 2007 due to a ball mill motor failure, power outages, and high levels of rainfall in October 2007. Recoveries were also lower in the fourth quarter due to changes in the ore type being processed. As a result of lower throughput and recoveries in the fourth quarter 2007, gold production was 8.6 percent lower than the third quarter of 2007. The plant was designed as a gravity/sulphide flotation circuit and the main cause of the fluctuating recovery is a result of the degree of oxidization in the ore feeds. Oxidized ores do not float well and reduce recovery. To mitigate this problem, the mine has blended the ore to obtain a higher recovery. The Company also plans to install a Falcon concentrator in early 2008 to help improve recoveries. It is anticipated that, in the future, the tails will be reworked.

A total of 9,198 ounces of gold were sold for proceeds of US$6,514,000 during 2007. The average realized gold price was US$708 per ounce in 2007. Revenues have increased in the second part of 2007 as a result of higher production and higher gold prices.

On November 1, 2005, Bong Mieu Gold Mining Company entered into a refining and sales contract with Argor-Heraeus SA (‘‘Argor’’) whereby Bong Mieu delivers doré bars which contain gold and silver to Argor’s delivery point at which point the risks of ownership pass to Argor. Argor purchases the gold and silver from Bong Mieu at an amount equal to the value of the gold and silver shipment less any refining and transport charges. The value of the gold and silver is determined by a number of factors such as the market price of gold and silver and assuming a specified return rate on gold and silver equal to 99.95% and 98%, respectively. The price of gold used in the calculation is equal to the London Bullion market AM-fixing in US dollars per troy ounce and the price of silver used is equal to the silver-fixing of the London Bullion market in US dollars per troy ounce. The original contract was valid from November 1, 2005 until October 31, 2007, with an option to extend the contract if agreed upon by both parties. An addendum to the original contract was signed to extend the original contract to December 31, 2008. Currently, the Company has one customer, Argor. If Argor was unable to purchase our gold, management believes another customer could be procured on a timely basis and any inventoried dore bars could be sold at the then market value.

Table of Contents

Bong Mieu Gold Mining Company Limited has entered into a contract, dated November 20, 2007, with Gaet Company — Ministry of Defense for the supply of explosives and blasting accessories to be used at the Bong Mieu Central Gold mine plant.

Exploration, infill and metallurgical drill programs continued in the Bong Mieu East area. During 2007, Olympus completed 15 drill holes totalling approximately 1,615 metres on the property . The bulk of the drilling was focused on the Nui Kem/Saro Hill areas which host vein structures parallel to the main Nui Kem vein system. Field exploration (VN210) conducted during the year covered an area approximated at 374 hectares out of which 147.50 hectares were gridded for geochemical soil sampling. A total of 592 samples were collected that consisted of 196 rock chips from 44 adits/pits, 121 from outcrops, 46 from floats, 22 from artisan miners’ stock piles and 207 geochemical soil samples. Field exploration programs indicate excellent, large scale, near-surface potential of the property and these will be progressively tested during 2008.

Surface exploration (VN210) continued on the trend that hosts the BM Underground Deposit (VN 230) investigating a zone approximately 100 meters above the BM Underground Deposit workings. A total of 961.8 meters was completed in nine holes. The drilled holes showed two mineralized zones within mafic rocks but gold grades were inconsistent, ranging from 0.16 g/t Au to 6.06 g/t Au. Four holes, totaling 468 meters, were drilled into the adjacent Saro Hill prospect with a similar variation in results. A detailed geological review of this data will be made prior to further targeting in early 2008.

We recommenced development of the decline at the Bong Mieu Underground deposit in September 2007. The exploration decline was developed for a total of 287 meters during 2007. A further 150 meters is required prior to carrying out the initial exploration drilling. The primary purpose of this decline is to access underground drilling platforms to test the depth extensions of the Nui Kem ore body as this is deemed more effective and economical than drilling from surface. The decline also affords access to the old mine which will allow mining operations to be carried out on old pillars and previously unmined blocks

Elsewhere on the property, surface prospecting and trenching have new areas of prospective alteration and mineralisation on the property which will be further evaluated and tested by drilling during 2007.

Phuoc Son Gold Property

On January 25, 2006, the Company received approval of its Mining Licence and on January 10, 2008, the Company received the exploration license that replaced the expired license for the Dak Sa Underground deposits located on the Phuoc Son property. The Dak Sa Underground is fully permitted. The Company has substantially completed the in-house scoping study and an independent assessment of the study is underway. The purpose of the in-house scoping study is to ascertain the costs associated with the construction and operation of a mine to process the ore, determine the process that will maximize gold recovery and assess the financial viability of such a project. Once the study is completed indicating economic viability, funding is arranged and all required licenses are obtained, the construction of the mine and production should follow within 18 to 24 months.

The capital costs for the Phuoc Son development and mine construction are estimated to be approximately $52 million. The project cost increase is related mainly to mine and plant site design and access changes as well as the impact of rising labor and raw material costs occurring industry-wide. The Dak Sa Underground Project (VN320) is currently comprised of the South (Bai Dat) and North (Bai Go) deposits which lie about one kilometer apart. The northern area of the future mine will be accessed from the southern area by underground development. During 2007, the following work was completed or in progress:


	•	145 meters of the main access decline was developed. The initial ore intersection will be a further 80 meters.


	•	The exhaust portal was constructed and 45 meters of the exhaust ramp was developed.

Table of Contents


	•	Surface Site earthworks for the development work were completed.


	•	Construction and asphalting of the road to magazine were completed.


	•	A nine kilometer road access to site was completed


	•	Explosive magazine facility was licensed and commissioned.


	•	Water service lines were installed.


	•	Surface fans were installed and commissioned.


	•	Cement work (grouting) was completed at sheared zone to prevent water inflow.


	•	Accommodation arrangements were completed to house the existing staff.

During 2007, Olympus completed 37 drill holes totalling approximately 11,170 metres largely in the North Deposit area. Results from this drilling have continued to be positive.

Current Trends, Uncertainties, or Events that could Impact our Results:


	1.	The current gold price volatility could impact our profitability at our current operating mine and economic viability at development and exploration projects


	2.	Our successful raising of additional funds through equity issuance or debt will determine the extent of exploration activities and development. On August 10, 2007, the Company completed an offering with gross proceeds of $25,000,000 to be used for further exploration and feasibility studies at the Company’s Bong Mieu Gold and Phuoc Son Gold properties in Vietnam and the Capcapo property in the Philippines and for working capital and general corporate purposes. However, management is evaluating the project funding for Phuoc Son to determine whether it will be raised through equity or debt/equity financing.


	3.	As a result of the offering, the Company is expanding its exploration programs during 2008 at its three key projects, namely Phuoc Son, Bong Mieu and Capcapo. The Company has approved a budget of U.S.$22 million that will be predominantly dedicated to exploration and developmental drilling, resource updates and feasibility studies. The key focus of the Company is to increase its gold reserves and resources through exploration and infill drilling programs at Bong Mieu, Phuoc Son and Capcapo. Consequently, the Company expects the level of spending on exploration, feasibility studies and development costs to increase over prior years and quarters.


	4.	Our loan facilities agreement with Macquarie Bank Limited (MBL) was repayable on July 31, 2007 and was extendable to June 30, 2008 at the option of MBL. On June 27, 2007, the U.S.$2 million debt facility was repaid in full. The Company completed a share offering with gross proceeds of $25,000,000 in August 2007. Consequently, the non-extension of the MBL facility did not have any impact on our Company’s results of operations.


	5.	Refer to Item 3D for complete list of risks.

Management’s Discussion and Analysis for the year ended December 31, 2007 and 2006

Results of Operation

The Bong Mieu (VN220) plant went into commercial production effective October 1, 2006. Since September 30, 2006, our Bong Mieu Central (VN220) mine no longer defers costs net of revenues as the mine is in commercial production. During the year ended December 31, 2007, a total of 9,198 ounces of gold were sold for proceeds of $6,996,257.

Table of Contents

Comments on selected items from our consolidated statements of operations are noted in the table:


	2007			2006			% Change		Comments on variances
Sales		$	6,996,257		$	1,644,040		326	The Bong Mieu central plant (VN220) went into production in the fourth quarter of 2006. In 2007, we sold 9,198 ounces of gold at a realized price of US$708 per ounce. For more information, please see the MD&A section Production and Operational Results — Bong Mieu Central (VN 220).
Cost of sales			5,523,193			1,535,891		260	Increased due to higher sales volumes (a result of being in operation for the full year in 2007 compared to 2006). For more information, please see the MD&A section Production and Operational Results — Bong Mieu Central (VN 220) .
Amortization			1,925,458			596,176		223	A result of higher production in 2007, a result of being in operation for the full year compared to 2006.
Management fees and salaries	2,770,770			1,515,417			83		Increased as a result of a higher headcount, higher management salaries, and because we accrued for bonuses in 2007. In 2006, bonuses were not accrued until approved as we did not have a history of payment.
Professional fees			782,058			353,402		121	Higher in 2007 due to legal fees related to a potential merger with Zedex, accounting/audit services related to the US Form 20-F registration statement, and recruitment fees.
Travel			574,569			425,895		35	Increase in number of flights taken by senior management to Vietnam and Toronto.
Investor relations and promotion	527,466			256,207			106		Higher due to increased marketing efforts, an increase in the number of trade shows attended, and transportation expenses related to helicopter rentals for analyst trips.
Stock-based compensation	2,272,717			617,071			268		Higher number of stock options issued (8,950,000 – 2007 and 1,965,000 – 2006).
Interest expense (income)	(694,985)			(272,156)			155		Increase relates to higher interest earned on higher average cash balances held.
Foreign exchange loss (gain)	$566,894			$(8,865)			6495		Loss mainly a result of the foreign exchange rate fluctuations impacting the value of cash denominated in US dollars. The loss on the value of US dollars was about $550,000.

Table of Contents

Twelve Months Ended December 31, 2006 Compared to Twelve Months Ended December 31, 2005

The Bong Mieu (VN220) plant went into commercial production effective October 1, 2006, with revenues of $1,644,040 (2,316 oz) in fourth quarter 2006. After September 30, 2006, our Bong Mieu Central (VN220) mine no longer defers costs net of revenues as the mine is in commercial production. A total of 4,651 ounces of gold were sold for proceeds of USD$2,917,582 during 2006 of which 2,335 oz with proceeds of USD$1,469,309 were netted against deferred development costs.

The 2006 results also reflect a deferred exploration cost write off of $438,931 related to properties no longer being pursued by the Company and a $4,280,000 impairment charge against deferred development costs related to the Bong Mieu Central (Ho Gan) mine. During the fourth quarter 2007, management determined that the Bong Mieu Central mine was not going to reach the original estimated future throughput levels, resulting in the estimated undiscounted future cash flows being less than the carrying value of the Bong Mieu Central (Ho Gan) related assets. Consequently, the Company measured and recorded an impairment charge of $4,280,000. Foreign exchange gains of $9,062 were experienced in 2006 in comparison to foreign exchange gains of $239,626 in 2005 as a result of the stable exchange rates that occurred between Canada and United States in 2006. Interest income increased from $21,029 in 2005 to $272,156 in 2006, as the average invested cash balance was signific antly higher than 2005 as a result of a private placement in March 2006. Interest expense increased from $23,203 in 2005 to $127,262 in 2006, as a result of the Macquarie financing arrangement.

Twelve Months Ended December 31, 2005 Compared to Twelve Months Ended December 31, 2004

As at December 31, 2005, the Company had not begun production on any of its properties and does not have revenues or cash flows from operations.

During the year ended December 31, 2005, the Company’s total operating expenses of $3,063,799 were higher than in 2004 ($2,083,370). The difference is principally due to a non-cash increase of $780,000 in stock-based compensation related to the grant of options which vested during the year. Management fees also increased by $138,000 due to the addition of one officer and to another position becoming full time. Consulting fees increased $81,000 over the previous year in relation to an agreement with a previous officer of the Company.

Other items such as interest income decreased by $8,700 compared to 2004 as the average invested cash balance was lower during 2005.

Government Economic, Fiscal, Monetary or Political Policies or Factors

In order to explore, invest, mine, export or import equipment in Vietnam, the Company goes through a licensing process to obtain the specific licenses. This can be a lengthy process and, as a result, the Company must include the licensing process into the project plan when determining the time frame of a project. However, obtaining licenses can take longer than anticipated and could result in additional costs to the Company if delays occur that impact our projects or existing operations.

On January 11, 2007, Vietnam became a full member of the World Trade Organization (‘‘WTO’’). After becoming a full member of the WTO, various commitments Vietnam has made for joining the WTO will become effective. These commitments impact a number of areas such as tariffs and duties on goods, foreign service providers’ access to Vietnam, foreign ownership, reforms on Vietnam’s legal and institutional set up for trade, foreign exchange, commercial business, trading rights, policy making, duties, restrictions, pricing and export restrictions. The overall changes will further expand Vietnam’s access to the global economy and facilitate doing business in Vietnam. These reforms have no immediate impact on the Company but would likely make it easier in the future for the Company to conduct it’s business activities in Vietnam.


5B.	Liquidity and Capital Resources

The Company receives cash for use in exploration, development and future operations mainly from the issuance of common shares, debt financing, exercise of warrants/stock options, investment income generated by its cash position, gold sales and the occasional sale of selected assets.

Table of Contents

As at December 31, 2007, the cash and cash equivalents’ balance was $26,656,146 compared to $4,101,536 as at December 31, 2006. The increase was due to placements in 2007 totalling $37,000,000 of gross proceeds. On March 19, 2007 the Company completed a non-brokered private placement of 21,428,571 shares at a price of $0.56 per share, for gross proceeds of $12,000,000 All shares issued have a hold period in Canada until July 20, 2007. The net proceeds are being used for ongoing exploration, scoping studies, technical reports and development work on the Company’s mineral projects and for general corporate purposes.

On August 10, 2007, the Company closed an offering (the ‘‘Offering’’) of units of the Company (‘‘Units’’) for aggregate gross proceeds of $25,000,000 (the ‘‘Closing’’). On September 7, 2007, the over-allotment option granted to the agents in connection with the Company’s public offering of units (the ‘‘Offering’’), was exercised in respect of 216,394 common shares (‘‘Additional Shares’’) at a price of $0.62 per Additional Share and 323,947 warrants (‘‘Additional Warrants’’) at a price of $0.06 per Additional Warrant, resulting in additional gross proceeds of $153,601. The partial exercise of the over-allotment options brings the aggregate gross proceeds to the Company under the Offering to $25,153,601. The net proceeds from the Offering are being used for further exploration and feasibility stud ies at the Company’s Bong Mieu Gold and Phuoc Son Gold properties in Vietnam and the Capcapo property in the Philippines and for working capital and general corporate purposes.

In February 2006, the Company also entered into a US$2.0 million loan facility (the ‘‘Facility’’) with Macquarie Bank Limited (‘‘MBL’’) of Sydney, Australia. The Company drew down the US$2.0 million in the first quarter of 2006. The Facility bears an interest rate of LIBOR plus 2.75%. In consideration for setting up the facility, MBL was paid a US$50,000 fee and was granted 5,376,092 purchase warrants to acquire the same number of common shares of the Company at an exercise price of $0.4347 until July 31, 2007 and $0.4514 until the ultimate repayment date (currently July 31, 2007 with an option to extend until June 30, 2008). The Company can also accelerate exercise of the warrants if its common shares trade at a 100% premium to the exercise price for 30 consecutive trading sessions. The Facility agreement specifies some restrictions including, but not limited to, the Co mpany must not incur any indebtedness other than permitted financial indebtedness as defined under the Facility agreement. Permitted indebtedness includes any agreement entered into the ordinary course of business to acquire an asset or service where payment for the asset or service is deferred for a period of not more than 90 days and does not exceed, in aggregate, an amount of US$100,000 for each transaction party. Each transaction party is defined as Olympus, Bong Mieu and Formwell. The Facility agreement specifies that the transaction parties must not allow any encumbrance over its assets other than a permitted encumbrance or acquire an asset that is subject to an encumbrance that is not a permitted encumbrance. Each transaction party must not sell, assign, transfer or dispose of or partially dispose of any assets except an asset that does not form part of the secured property or an asset which is replaced by a similar asset. Each transaction party must not reduce its capital, buy back or redeem its shar es or other securities issued to it or provide any financial assistance. Each transaction party may not make a distribution without the prior written consent of MBL. A distribution is defined as a dividend, distribution or any other amount related to a marketable security issued by the transaction party or interest or fee paid by the transaction party on any financial accommodation provided by a person holding a direct or indirect interest in the transaction party. The requirement for a written consent for distributions has not had a significant impact on our cash obligations to date as we have not paid out any dividends. Intercompany loans amongst transaction parties cannot be repaid to the lending transaction party unless the lending transaction party uses the proceeds of repayment to repay the MBL Facility. The above restriction on intercompany loan settlement does not significantly impact our ability to meet cash obligations as it does not prevent the provision of intercompany loans and only affects the method and timing of intercompany loan settlements. The loan was secured and guaranteed by Bong Mieu Gold Mining Company Limited and Formwell Holdings Limited. On June 27, 2007 the US$2 million Non-Revolving Debt Facility (the ‘‘Facility’’) with Macquarie Bank Limited (‘‘MBL’’) of Sydney, Australia was repaid in full. MBL elected to exercise share purchase warrants to acquire 5,376,092 common shares of the Company at a price of $0.4347 for gross proceeds of $2,336,987. A portion of the proceeds from the exercise of the warrants was used to repay in full the outstanding balance of

Table of Contents

the Facility. The non-extension of the MBL facility has had no significant impact on the Company’s activities as the Company has raised $25,153,601 in gross proceeds in a most recent offering in the third quarter of 2007.

In Vietnam, Bong Mieu and Phuoc Son are able to receive funding from the Company based on loan agreements and the receipt of a Vietnamese State Bank Certificate with respect to foreign loans and repayments. Any foreign loans must receive a certification of registration of borrowing and repayment with the State Bank of Vietnam. The total of the foreign loan amounts and legal capital must not exceed the investment capital stated in the investment license. In the case of Bong Mieu and Phuoc Son, the total of the loans and legal capital are below the stated investment capital of the investment license for each project.

Profits earned in Vietnam transferred abroad annually shall be the amount of profits of a fiscal year distributed to the foreign investor after payment of corporate income tax, plus (+) other profits earned in the year, such as profits from assignment of capital, from assignment of assets, items of corporate income tax which were paid and then refunded to the foreign investor in accordance with the provisions of the Law on Corporate Income Tax; less (−) items which the foreign investor has used or undertaken to use to re-invest in Vietnam, profit items which the foreign investor has used to pay out the expenses of such foreign investor for production and business operations or for private needs of the investor in Vietnam, and profit items provisionally transferred during the year. The amount of income that an investor is permitted to transfer abroad in a fiscal year shall be determined after the Company submits an audited financial report and a tax finaliz ation report for the fiscal year with the local tax office which manages the enterprise. Foreign investors shall be permitted to transfer profits abroad in the following circumstances: (i) Annual transfer and one-off transfer of the whole of the amount of profits distributed or earned after the end of the fiscal year and after filing a tax finalization report with the tax office, (ii) Provisional transfer during a fiscal year once every quarter or once every six months after payment of corporate income tax in accordance with the Law on Corporate Income Tax (except for foreign investors exempt from corporate income tax in accordance with the provisions of the Law on Corporate Income Tax and the Law on Foreign Investment in Vietnam), (iii) Transfer of profits upon termination of business operation in Vietnam in accordance with the Law on Foreign Investment in Vietnam.

During the year ended December 31, 2007, Olympus invested $7,612,887 in exploration and development expenses and $1,627,525 in acquisitions of property, plant and equipment.

The Company received its mining permit at Phuoc Son on January 25, 2006. The Company is evaluating project funding for Phuoc Son to determine whether it will be raised either through equity or debt financing. Although the Company has been successful in accessing the equity markets in the past, there is no guarantee that this will continue to be available. The ability of the Company to continue activities or specific projects in or beyond 2008 is dependent upon obtaining the necessary funding to continue its exploration programs or the realization of proceeds from the sale of one or more of its properties and/or assets, of which there can be no assurance. As a result of the August 2007 share offering that closed, the Company has approved a budget of U.S.$22 million that will be predominantly dedicated to exploration and infill drilling programs at Bong Mieu, Phuoc Son and Capcapo. The estimated cost of US$52M for the Phu oc Son development and mine construction is not yet funded. Achieving these expenditures at Phuoc Son is dependent upon obtaining the necessary funding in 2008. The Company’s capital requirements in the future are largely dependent on the success of the exploration activities.


5C.	Research and development, patents and licenses, etc

The Company holds an Investment Licence and a Mining Licence covering 30 square km within the Bong Mieu Gold Property area. The Investment Licence area contains three deposits: Bong Mieu Central and Bong Mieu East (open-pit deposits) and Bong Mieu Underground. The Exploration Licence renewal application for the portion of the property not covered by the Mining Licence has been submitted and is being reviewed by the Vietnamese authorities.

On January 25, 2006, the Company received the granting of a Mining Licence by the Government of Vietnam to mine and develop its high-grade Dak Sa deposits within the Phuoc Son Gold property

Table of Contents

area. The Company is the process of obtaining two additional licenses, the construction license and the import license for mining equipment.

The Company obtained the exploration license for the Phuoc Son property area in January 2008 and is in the process of obtaining the exploration license of the Bong Mieu property.


5D.	Trend Information

Not Applicable


5E.	Off-Balance Sheet Arrangements

The Company is not engaged in any off-balance sheet arrangements.


5F.	Tabular Disclosure of Contractual Obligations

Table No. 4: Tabular Disclosure of Contractual Obligations as at December 31, 2007


	Payment Due by Period
Contractual Obligations	Total			Less than One Year			1-3 Years			3-5 Years			> 5 Years
Payments Due By
Capital lease obligations		$	388,390		$	388,390		$	—		$	—		$	—
Operating lease obligations			1,316,671			891,143			425,528			—			—
Purchase obligations – supplies and services			3,239,153			3,239,153			—			—			—
Purchase obligations – capital			2,214,365			2,214,365			—			—			—
Asset retirement obligations			1,072,931			147,572			353,646			444,352			127,361
Total		$	8,231,510		$	6,880,623		$	779,174		$	444,352		$	127,361


ITEM 6:	Directors, Senior Management, and Employees


6A.	Directors and Senior Management

Table No. 5: Directors and Senior Management

Name

Title

Date of Birth

Date of Latest
Election
(Directors only)

Term of Office
of the Directors

David A. Seton

Executive Chairman, Chief Executive Officer and Director

Dec. 13, 1955

June 7, 2007

1 year

Jon Morda

Director

Jan. 13, 1952

June 7, 2007

3 years

John A.G. Seton

Director

Jan. 10, 1963

June 7, 2007

2 years

Kevin Flaherty

Director

Dec. 20, 1959

June 7, 2007

1 year

T. Douglas Willock

Director

Jan. 8,1953

June 7, 2007

2 years

Pamela Campagnoni

Chief Financial Officer

Dec. 6, 1972

n/a

Peter Tiedemann

VP — Corporate Affairs

Sept 18,1942

n/a

Charles Barclay

Chief Operating Officer

Dec. 18, 1950

n/a

T. Rodney P. Jones

VP — Exploration

Aug. 26, 1944

n/a

Colin D. Patterson

Corporate Technical Advisor

Jan. 29, 1954

n/a

Jim Hamilton

VP — Investment Relations

Oct. 7, 1951

n/a

Russell Graham

VP — Finance Vietnam

May 21, 1965

n/a

Louis Montpellier

Corporate Secretary

Nov 13, 1953

n/a

Table of Contents

During the first quarter of 2008, the following changes occurred in senior management in preparation for the Company’s anticipated growth with plans to increase production and expand its operations: Mr. David A. Seton, the Company’s Executive Chairman, was also appointed its Chief Executive Officer. Mr. Colin Patterson, who had been the Company’s Chief Executive Officer and President, became Corporate Technical Advisor. Mr. Charles Barclay, who had been Vice President — Operations, was appointed Chief Operating Officer. Mr. Peter Tiedemann, who had been the Company’s Chief Financial Officer and Corporate Secretary, became the Company’s Vice President — Corporate Affairs. Ms. Pamela Campagnoni, who had been Vice President — Finance, was appointed Chief Financial Officer. Mr. Louis Montpellier was appointed as Corporate Sec retary and Mr. James Hamilton was appointed Vice President — Investor Relations. The Company is currently finalizing the terms of its various employment agreements with Messrs Seton, Barclay, Montpellier, Tiedemann and Ms. Campagnoni.

A brief education and relevant work history of our Directors and Management follows:

David A. Seton

Mr. David Seton has served variously as a director or managing director of a number of companies listed on the New Zealand and Australian Stock Exchanges. He takes responsibility for the overall coordination of Olympus’ strategic planning as Executive Chairman and Director of Olympus. He has seventeen years business experience in Vietnam and over 25 years in the mining industry. David Seton is the brother of John Seton.

Jon Morda

Jon Morda has a Bachelor of Arts degree from the University of Toronto (1975) and is a member of the Institute of Chartered Accountants of Ontario (1980). He has over 20 years’ experience in the mining industry, with several positions as Chief Financial Officer of mineral exploration and gold producing companies listed on the Toronto Stock Exchange. Mr. Morda is presently Chief Financial Officer of Alamos Gold Inc. in Toronto, a mineral exploration and gold producing company listed for trading on the Toronto Stock Exchange.

John A.G. Seton

John Seton, a lawyer, is a former President of Olympus Pacific, and has extensive Business experience in Vietnam, serving at one time as Chairman of the Vietnam/New Zealand Business Council. He is or has been a director of a number of companies listed on the Australian Stock Exchange and the New Zealand Stock Exchange. He is currently the chairman of The Mud House Wine Group Limited and chairman and director of Australian-listed Zedex Minerals Limited and a Director of New Zealand-listed SmartPay Limited. John Seton is the brother of David Seton.

T. Douglas Willock

Douglas Willock has over 20 years of experience in the investment banking industry having co-led the Canadian mining groups of National Bank Financial (formerly, Lévesque Beaubien Geoffrion Inc.) and Deutsche Bank Securities Inc. He was a vice-president of Scotia Capital Markets and an assistant vice-president at CIBC World Markets. Doug is currently the President and Chief Executive Officer and a Director of Polar Star Mining Corporation, a TSX Venture listed company. From May 2001 to December 2006, he acted for Exall Resources Limited (now known as Gold Eagle Mines Ltd.), initially as Vice President, Corporate Development and later as a Director. Doug has a Bachelor of Arts (History) from the University of British Columbia and a Masters of Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

Kevin Flaherty

Kevin Flaherty has considerable Board experience with successful publicly traded Canadian mining and exploration companies. Mr. Flaherty is based in Canada and presently is Chairman and Chief Executive Officer of Celtic Minerals Ltd. He is currently a director of Meritus Minerals Ltd.

Table of Contents

since 2005; Keeper Resources Inc. since 2004; and Linear Gold Corp. since 2003. Kevin Flaherty is independent Director of Olympus Pacific Minerals, Inc. and Chairman of Corp. Governance, member of Audit Committee, and member of Compensation Committee. Kevin has BA in Economics and MBA from University of Calgary.

Colin D. Patterson

Mr. Colin Patterson is a professional engineer and brings over thirty years’ experience in the mining industry to the Applicant. He holds degrees in Mining Engineering from the University of Witwatersrand and Business Economics and Finance from the University of South Africa. In addition to having held senior positions, including Emperor Mines, Pan Palladium and Zedex Minerals Limited., Mr. Patterson has also owned and managed a consulting firm involved in numerous projects worldwide. He is a fellow of the Australian Institute of Mining and Metallurgy, a Chartered Professional Mining Engineer (Australia. Colin spends about 90% of his time on Olympus Pacific Minerals Inc. Colin is a director of Odin Mining and Exploration Ltd., listed on the TSX-Venture exchange, and Phoenix Gold Fund and provides gen eral advisory work for a selected few business colleagues.

Peter Tiedemann

Peter Tiedemann received a Bachelor of Commerce degree from the University of Auckland and has considerable financial and consulting experience spanning some 40 years. His involvement with chief financial officer responsibilities has covered a wide range of companies including Fortune 500 corporations: Canon NZ, Pitney Bowes NZ and DRG New Zealand Ltd. Peter spends about 80% of his time on Olympus Pacific Minerals Inc. Peter is a partner in Tiedemann & Partners and a director of Wholesale Products Trading Limited, both private enterprises. Tiedemann & Partners provides business consulting to clients and Wholesale Products Trading Limited performs non-mining joint venture and project management services.

Pamela Campagnoni

Ms. Campagnoni received a Bachelor of Commerce degree from the University of Toronto. She went on to successfully obtain her CA designation in 1997 and received her CPA (Illinois) in 2000. Ms. Campagnoni spent 10 years in the Assurance practice with Ernst & Young LLP, leaving as a senior audit manager and two years with Barrick Gold Corp. as senior manager leading the Accounting Policy and Continuous Disclosure Group.

Charles Barclay

Charles Barclay is a former member of the association of Mine Managers of South Africa. He has 35 years experience in the gold mining sector, of which 25 years have been in senior management roles in developing and ‘third world’ jurisdictions. Since leaving the role of COO of Emperor Mines, Fiji, in 2000, he has worked in Malaysia and Papua New Guinea as an independent consultant designing mines and constructing one before joining Olympus in February 2006.

T. Rod P. Jones

T. Rod P. Jones received his B.Sc. (Hons) Geology from Leicester, UK and is a Fellow of the Australasian Institute of Mining and Metallurgy. Rod has a wealth of experience in the base and precious metals industry spanning some 40 years. He has held key management positions as Chief Geologist, Field Geologist and Operations Manager throughout his career.

Louis Montpellier

Mr. Montpellier is a legal advisor to the mining industry with over 25 years experience in structuring mineral exploration and development companies. Mr. Montpellier is identified in the Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada, the Lexpert Guide to the

Table of Contents

Leading 100 Industry Specialists in Canada, Who’s Who Legal, the International Who’s Who of Mining Lawyers, and The Best Lawyers in Canada, as one of Canada’s leading mining lawyers. Through his directorships, Mr. Montpellier also has direct experience in the mineral exploration and development business and in its related M&A transactions.

James Hamilton

James Hamilton has an Ontario Associate Diploma in Agriculture from the University of Guelph (1972). He has 30 years’ experience in sales and marketing and has held several senior sales positions throughout his career. Prior to joining the Company, he was Sales Manager for UAP Canada Inc. where he led sales and marketing efforts for this agribusiness company. Mr. Hamilton spent several years in the Canadian potash industry and was the Canadian Sales Manger for the Potash Co. of America, Div. Rio Algom Ltd.from 1983 through 1993. Mr. Hamilton also served the Potash Corporation of Saskatchewan from 1978 to 1983 as their Eastern Canadian Sales Manager. James was active with his industry association serving, The Canadian Fertilizer Institute (CFI) as Chairman of the Transportation Committee and Vice Chairman for one term.

Russell Graham

Russell Graham received his B. Comm. (Accounting Major) from University of Otago, Dunedin, NZ in 1987. He went on to receive his chartered accountancy designation from the Institute of Chartered Accounts NZ in 1991 and completed a Post Graduate Diploma in Business in 2003 – 2005 (University of Auckland, NZ). Russell spent 1992 to 1999 in the United Kingdom gaining valuable experience in finance control, management of inter-company operating expenses and, upon leaving Schroder Investment Management Ltd. UK in 1999, he was Manager, Business Area Profitability. Russell served four years as Business Manager in Auckland NZ where he managed a medical and surgical portfolio.


6B.	Compensation


Table No. 6:	Compensation of Directors, Management and Employees for the years ended December 31

Name and
Principal
Position

Year⁽¹⁾

Annual Compensation

Long Term Compensation

All Other
Compen-
sation
($)

Salary
($)⁽²⁾

Bonus
($)

Other
Annual
Compen-
sation
($)

Awards

Payouts

Securities
Under Options/
SARs Granted
(#)⁽³⁾

Restricted
Shares or
Restricted
Share Units
($)

LTIP
Payouts
($)

David A. Seton⁽⁴⁾
Executive Chairman

2007
2006
2005

180,000
174,375
164,822

137,874
70,319
40,608

N/A
N/A
N/A

3,000,000
Nil
2,000,000

N/A
N/A
N/A

Peter Tiedemann
CFO & Corporate Secretary ⁽⁸⁾

2007
2006
2005

133,826
65,742
N/A

33,918
N/A
N/A

N/A
N/A
N/A

1,000,000
100,000
N/A

N/A
N/A

N/A
N/A
N/A

Colin Patterson⁽⁵⁾
CEO

2007
2006
2005

247,825
192,710
119,603

180,186
70,319
39,554

N/A
N/A
N/A

1,000,000
Nil
2,000,000

N/A
N/A
N/A

Charles Barclay⁽⁶⁾
VP Operations

2007
2006
2005

150,479
176,907
N/A

56,739
33,557
N/A

N/A
N/A
N/A

500,000
1,000,000
N/A

N/A
N/A
N/A

Rodney Jones
VP Exploration

2007
2006
2005

62,500⁽⁷⁾
N/A
N/A

31,875
N/A
N/A

N/A N/A
N/A

600,000
N/A
N/A

N/A
N/A
N/A

Table of Contents

NOTES:

(1)	Financial years ended December 31.

(2)	Amounts converted to Canadian dollars using Bank of Canada exchange rates at end of December for each respective year rounded to the nearest dollar.

(3)	Figures represent options granted during a particular year; see ‘‘Aggregate Option’’ table for the aggregate number of options outstanding at year end.

(4)	Mr. Seton was appointed as CEO on February 4, 2008,

(5)	Mr. Patterson was appointed Corporate Technical Advisor on February 4, 2008.

(6)	Mr. Barclay was appointed Chief Operating Officer on March 17, 2008.

(7)	Mr. Jones joined as VP — Exploration on August 6, 2007.

(8)	Mr. Tiedemann was appointed VP – Corporate Affairs of the Company on March 17, 2008. Prior to that, he was the CFO and Corporate Secretary.


6B.1.	Termination Agreements for Directors and Senior Officers

The Company currently has the following arrangement set forth below in place with respect to remuneration received or that may be received by the executive officers or directors of the Company in respect of compensating such officer or director in the event of termination of employment (as a result of resignation, retirement, change of control, etc.) or a change in responsibilities following a change of control.

Under the terms of a management services agreement dated July 16, 2005, (the ‘‘Management Services Agreement’’), between the Company and Orangue Holdings Limited (‘‘Orangue’’), a company associated with David A. Seton, Chairman and Chief Executive Officer the Company, it was agreed that Orangue would provide David A. Seton to serve as Chief Executive Officer of the Company for a period of two years at a rate of US$150,000 per year with annual bonus up to a maximum of $150,000 measured against objectives set by the Board. Under the Management Services Agreement, the Consultant received 1,000,000 fully vested stock options of the Company and an additional 1,000,000 vesting on achievement of set objectives. The Company can terminate the Management Services Agreement by paying a severance to Orangue equal to three months or six months of services depending if the termination occurs within the first 12 mo nths or the last 12 months of the Management Services Agreement, respectively. The Company agrees that if Mr. Seton elects to terminate his services based on the sole reason that there has been a Takeover of Control, the Company shall be obligated to provide Mr. Seton with a severance payment following the date of resignation consisting of the following:


	(a)	Fees through to the date of resignation, reimbursable expenses, plus any unpaid awards;


	(b)	In lieu of further fee for periods subsequent to the date of resignation, an amount equivalent to one year’s fee, calculated on the basis of the:


	(i)	monthly fee at the highest rate in effect during the six month period immediately preceeding the date of resignation multiplied by twelve, and


	(ii)	highest half yearly bonus paid in the previous 24 months multiplied by 2;


	(c)	In lieu of common shares of the Company issuable upon exercise of options, if any, previously granted and remaining unexercised, which options shall be cancelled upon the payment referred to herein, a cash amount equal to the aggregate spread between the exercise price of all vested and unvested options held by the Consultant and the higher of:


	(i)	the average of the closing prices of the Company’s common shares as reported on the TSX (or such other stock exchange on which the Company’s share may be listed) for 30 days preceeding the date of resignation or


	(ii)	the average price actually paid for the most highly priced one percent (1%) of the Company’s common shares; and

Table of Contents


	(d)	Mr. Seton can elect to waive the application of (c). With the waiver election, Mr. Seton’s options on shares of the Company shall remain in full force and effect for one year from the date of termination.

On March 22, 2007, an extension and amendment of the existing July 16, 2005 contract was signed. The extension period covers from July 16, 2007 to July 16, 2009. Main amendments to the contract:


	(i)	$180,000 CAD per annum and half-yearly bonus of up to 50% of the annual fee each January and July at the discretion of the Board with no performance critera;


	(ii)	grant of 3,000,000 five-year share options exercisable (subject to TSX approval) at CAD 0.75 a share. The share options will be vested over 2 years (1/3 immediately, 1/3 on 16 July 2008 and 1/3 on the earlier of 16 July 2009 and completion of contract;


	(iii)	‘‘takeover of control’’ definition to include an involuntary change in composition of the majority board.

In addition to his role as Executive Chairman, Mr. David Seton has been appointed as Chief Executive Officer effective February 4, 2008. The terms of his new contract are being finalized. Effective February 4, 2008, Colin Patterson has taken on the role of Senior Technical Advisor to the Board with his contract extending to June 2009 in order for the Company to focus on achieving technical success in its major exploration and development projects. After the first six months as Senior Technical Advisor, the salary will be changed to equal 50% of the then current salary for the next twelve months. Under the terms of the original management services agreement dated July 16, 2005 between the Company and Momentum Resources International Pty Ltd., a company owned by Colin Patterson, it was agreed that Colin Patterson would provide two years of service as President of the Company with the following details:


	(i.)	For an annual fee of US$156,000 per year;


	(ii.)	Half-yearly incentive bonus up to a maximum of 50% of the annual fee based on Board review and approval of set objectives;


	(iii.)	On two occasions, options to purchase 1,000,000 shares at a specified price; and


	(iv.)	The Company can terminate the agreement by paying a severance amount equal to three months or six months of services depending if the termination occurs within the first 12 months or the last 12 months of the Management Services Agreement, respectively.

On March 22, 2007, an extension and amendment of the existing July 16, 2005 contract was signed. The extension period covers from July 16, 2007 to July 16, 2009. Main amendments to the contract:


	i	an annual fee of $250,000 USD per annum;


	ii	grant of 1,000,000 five-year share options exercisable (subject to TSX approval) at CAD 0.65 a share. The share options will be vested over two years (1/3 immediately, 1/3 on 16 July 2008 and 1/3 on the earlier of 16 July 2009);


	iii	‘‘takeover of control’’ definition to include an involuntary change in composition of the majority board;


	iv	amendment to providing for six month’s pay in lieu of the current three months for termination without cause; and


	v	bonus paid out at discretion of Board based on amended guidelines as agreed upon by Mr. Patterson, Chairman of the Board and Chairman of the Compensation Committee.

If Mr. Patterson resigns as a result of a takeover of control, the Company must pay the following:


	(i)	his fees from notice of resignation to the date of the resignation plus any awards previously made available that are unpaid at the time;

Table of Contents


	(ii)	in lieu of further fees subsequent to date of resignation, one year’s fee and bonus based on Mr. Patterson’s highest monthly fees in effect during the previous six months period immediately preceeding the date of resignation multiplied by twelve and highest half year bonus paid in the previous 24 months multiplied by 2;


	(iii)	in lieu of common shares of the Company issuable upon exercise of options, if any, previously granted and remaining unexercised, these options shall be cancelled upon the payment referred to herein, a cash amount equal to the aggregate spread between the exercise price of all vested and unvested options held by Mr. Patterson, and the higher of:


	1.	the average of the closing prices of the Company’s common shares as reported on the TSX or


	2.	the average price actually paid for the most highly priced one percent (1%) of the Company’s common shares, however and for whatever reason by any person who achieves control of the Company;


	(iv)	Mr. Patterson can elect to waive (iii) resulting in Mr. Patterson’s options on shares of the Company remaining in full force and effect for one year from the date of termination.

Effective February 4, 2008, Charles Barclay was appointed Chief Operating Officer. The terms of his new contract are being finalized. Under the terms of the original management services agreement dated June 5, 2006 between the Company and Action Management Ltd., a company owed by Charles Barclay, VP Operations, it was agreed that Mr. Barclay would provide two years of service as VP Operations:


	(i.)	at an annual fee of US$151,800.


	(ii.)	With a semi-annual bonus of up to a maximum of 25% of the annual fee based on Board review and approval of set objectives.


	(iii.)	Options to purchase 1,000,000 shares at a specified price based on specific criteria.


	(iv.)	The Company can terminate the agreement by paying a severance amount equal to three months or six months of services depending if the termination occurs within the first three months or after the first three months of the Management Services Agreement, respectively.

If Mr. Barclay resigns as a result of a takeover of control, the Company must pay the following:


	i.	his fees from notice of resignation to the date of the resignation plus any unpaid awards previously made available;


	ii.	in lieu of further fees subsequent to date of resignation, one year’s fee and bonus based on Mr. Barclay’s highest monthly fees in effect during the previous six months period immediately preceeding the date of resignation multiplied by twelve and highest half year bonus paid in the previous 24 months multiplied by 2;


	iii.	in lieu of common shares of the Company issuable upon exercise of options, if any, previously granted to Mr. Barclay under the Company’s incentive programs and remaining unexercised, which options shall be cancelled upon the payment referred to herein, a cash amount equal to the aggregate spread between the exercise price of all options held by Mr. Barclay, whether or not then fully exercisable, and the higher of (a) the average of the closing prices of the Company’s common shares as reported on the TSX or (b) the average price actually paid for the most highly priced one percent (1%) of the Company’s common shares, and


	iv.	Mr. Barclay can elect to waive the application of (iii) whereupon Mr. Barclay’s options on shares of the Company shall remain in full force and effect for one year from the date of termination.

Under the terms of the service agreement dated March 1, 2005 between the Company and Roger Dahn, VP Exploration, it was agreed that Mr Dahn would provide three years of service as VP

Table of Contents

Exploration at an annual fee of $150,000 with a cash bonus of up to a maximum of one-third of the annual fee and would receive an annual options grant of no less than 300,000 options per annum. The Company can terminate the agreement by giving the service provider one lump sum equal to the term remaining on the agreement. Effective August 1, 2007, Mr. Dahn became a consultant to the Company instead of a direct employee.

Effective March 17, 2008, Mr. Tiedemann transitioned from his role as Chief Financial Officer and Corporate Secretary to that of VP — Corporate Affairs. Pamela Campagnoni assumed the role of Chief Financial Officer and Louis Montpellier of Gowlings Lafleur Henderson LLP became the Corporate Secretary effective the same date. The terms of Mr. Tiedemann’s new contract are being finalized. Under the terms of the original service agreement dated April 1, 2007 between the Company and Wholesale Products Trading Limited, a company associated with Peter Tiedemann, it was agreed that Mr Tiedemann was to serve as Chief Financial Officer of the Company effective on the date of the agreement until terminated. Mr. Tiedemann, As Chief Financial Officer was compensated as follows:


	(i)	Paid at a monthly fee of US$11,250 (yielding an annual fee of US$135,000), subject to adjustments made pursuant to the terms of the agreement;


	(ii)	Half-yearly reviews of performance to be carried out on February 1 and August 1 2008 which will be measured against Set Objectives; which based on this review, the Board may at its discretion, pay a half-yearly incentive bonus of up to 12.5% of the Annual Fee each January and July for as long as Mr. Tiedemann continues to provide service to the Company;


	(iii)	On the date of the Agreement and subject to regulatory acceptance, Mr. Tiedemann will receive options to purchase capital in the Company at any time up to and including a date five years from the date of this Agreement 1,000,000 shares at $0.65 per share and will vest 1/3 on issue, 1/3 at the end of year one and 1/3 at the end of two years.


	(iv)	This service agreement may be terminated by Mr. Tiedemann by giving the Company at least six weeks written notice, provided that the Company shall have the right to give written notice to Mr. Tiedemann that the Company is waiving the full notice period and is permitting this Agreement and the services of Mr. Tiedemann to be terminated upon a date that is less than six weeks after the date of Mr. Tiedemanns’s Termination Notice as determined by the company and further provided that all fees, benefits, and bonuses payable to Mr. Tiedemann and all other obligations of the Company to Mr. Tiedemann shall cease upon such termination. The Company may terminate this agreement and the engagement of Mr. Tiedemann without cause, in which event, the Company is obligated to provide Mr. Tiedemann with a severance pay shall be payable following the notice of the termination and shall consist of the following amounts:


	(a)	Mr. Tiedemann’s full fee though the date of, plus any unpaid awards previously made;


	(b)	in lieu of further fee for the periods subsequent to the date of Company’s Notice of Termination, a severance payment equal to six (6) months of then existing annual fee;


	(c)	options on shares of the Company shall remain in full force and effect for the balance of the term of such options and the option agreements shall be deemed to have been amended, to the extent required, to the effect that any of such provision which would otherwise delay the vesting of such options or terminate such options as a result of the termination of Mr. Tiedemann’s services shall be null and void.

The Company agrees that if Mr. Tiedemann elects to terminate his services based on the sole reason that there has been a Takeover of Control, then the Company shall be obligated to provide Mr. Tiedemann with a severance payment which shall consist of:


	(a)	Mr. Tiedemann’s full fee through to the Date of Resignation plus any unpaid awards previously made;


	(b)	in lieu of further fee for periods subsequent to the Date of Resignation, an amount equivalent to one year’s fee,

Table of Contents


	(c)	in lieu of common shares of the Company issuable upon exercise of options, if any, previously granted to Mr. Tiedemann and remaining unexercised. These options shall be cancelled upon the payment equal to the aggregate spread between the exercise price of all options held by Mr. Tiedemann whether or not fully exercisable, and the higher of (i) the average closing prices of the Company’s common shares as reported on the TSX (or such other stock exchange on which the Company’s share may be listed) for 30 days preceeding the Date of Resignation or (ii) the average price actually paid for the most highly priced one percent (1%) of the Company’s common shares.


	(d)	Mr. Tiedemann has the right to elect to waive (c). As a result of the waiver, his options shall remain in full force and effect for one year from the date of termination.

Under the terms of the service agreement dated August 6, 2007 between the Company and Mr. T. Rodney P. Jones, VP Exploration, it was agreed that engagement of Mr. Jones will commence on the date of this Agreement and continue until terminated. As VP Exploration, Mr. Jones will be paid a monthly fee of $12,500 (yielding an annual fee of $150,000). For as long as Mr. Jones continues to provide services to the Company pursuant to this Agreement, the Board or Committee will carry out half-yearly reviews of his performance which will be measured against Set Objectives. Based on this review, the Board may at its discretion pay a half-yearly incentive bonus of up to 50% of the Annual fee each January and July. On the date of this Agreement and subject to regulatory acceptance, Mr. Jones will receive options to purchase capital in the Company at any time up to and including a date five years from the date of th is Agreement 600,000 shares in the capital of the Company at a price set on the day of the Board Approval. The options will be non-transferable except to an entity controlled by Mr. Jones and will vest as to 1/6 on issue, 1/3 at the end of one year and the remaining 1/2 at the end of two years. In an amendment to his contract included in exhibit 3.25, the options will vest 1/3 on issue and 1/3 at the end of one year and 1/3 at the end of two years. Mr. Jones may terminate this Agreement and by giving the Company at least six (6) weeks written notice (the ‘‘Manager’s Termination Notice’’), provided that the Company shall have the right to give written notice to Mr. Jones that the Company is waiving the full notice period and is permitting this Agreement and the services of Mr. Jones to be terminated upon a date that is less than six (6) weeks after the date of Mr. Jones’ Termination Notice. Any monies owed by Mr. Jones to the Com pany up to the date of termination shall then be paid by Mr. Jones to the Company.

The Company may terminate this agreement and the engagement of Mr. Jones without cause, in which event the Company shall be obligated to provide Mr. Jones with a severance payment in lieu of notice equal to:


	(a)	Mr. Jones’ full Fee through to the date of termination plus an amount equal to that amount, if any, of any awards previously made which have not been paid;


	(b)	in lieu of further fee for periods subsequent to the date of the Company’s Notice of Termination, a severance payment equal to six (6) months of Mr. Jones’ then existing annual fee; and


	(c)	Mr. Jones’ options on shares of the Company shall remain in full force and effect for the balance of the term of such options and the option agreements shall be deemed to have been amended.

If Mr. Jones elects to terminate his services based on the sole reason that there has been a Takeover of Control, the Company shall be obligated to provide the Manager with a severance payment which shall consist of the following amounts:


	(a)	The Manager’s full fee through to the Date of Resignation, plus any unpaid awards previously made to the Manager;


	(b)	In lieu of further fee for periods subsequent to the Date of Resignation, an amount equivalent to one year’s fee;

Table of Contents


	(c)	In lieu of common shares of the Company issuable upon exercise of options, if any, previously granted and remaining unexercised. These options shall be cancelled upon the payment referred to herein, a cash amount equal to the aggregate spread between the exercise price of all options held by the Manager, whether or not then fully exercisable, and the higher of:


	•	The average of the closing prices of the Company’s common shares as reported on the TSX for 30 days preceding the Date of Resignation; or


	•	The average price actually paid for the most highly priced one percent (1%) of the Company’s common shares, however and for whatever reason by any person who achieves Takeover of Control of the Company; and


	(d)	The Manager can elect to waive the application of (c) resulting in the options on shares of the Company remaining in full force and effect for one year from the date of termination.


6B.2.	Stock Option Plan

On September 12, 2003, the Company adopted a stock option plan which was re-approved by its shareholders on June 16, 2006. On June 7, 2007, the shareholders approved a new stock option plan to replace the existing plan. Under the plan, options to purchase shares of the Company may be granted to directors, officers, employees and consultants of the Company. The maximum number of shares that may be issued under the plan is 12% (on a non-diluted basis) of the Company’s issued and outstanding shares. Options granted under the plan have a maximum term of five years and vesting dates are determined by the Board of Directors on an individual basis at the time of granting.


	1.	The maximum number of options that can be issued at any one time cannot be higher than 12% of the Company’s issued and outstanding share capital (on a non-diluted basis).


	2	Options are subject to an accelerated expiry term (the ‘‘Accelerated Term’’) for those options held by individuals who are no longer associated with the Company. The Accelerated Term requires that options held by individuals who resign or are terminated from the Company expire on the earlier of: (i) the original expiry term; or (ii) 90 days from the date of resignation or termination; or (ii) the date provided for in the employment or consulting agreement between participant and the Company; however, shareholder approval is required if this would cause the options to extend beyond original expiry.


	3.	The maximum number of shares that may be reserved for option grant to any one individual insider in any 12 month period may not exceed 5% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant;


	4.	The maximum number of shares that may be reserved for issuance to insiders of the Company may not exceed 10% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant;


	5.	The maximum number of shares that may be issued to insiders, as a group, within a one year period may not exceed 10% of the common shares issued and outstanding (on a non-diluted basis) on the date of issuance;


	6.	The maximum number of shares that may be issued to any non-employee directors, as a group, during any 12 month period shall not exceed 5% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant;


	7.	Subject to the policies, rules and regulations of any lawful authority having jurisdiction (including Exchange), the Board may, at any time, without further action by its shareholders, amend the Plan or any Option granted hereunder in such respects as it may consider advisable. The Board may not, however, without the consent of the Participant, alter or impair any of the rights or obligations under an Option theretofore granted. No Common Shares shall be issued under any amendment to this Plan unless and until the amended Plan has been approved by the Exchange. The Plan may be abandoned or terminated in whole or in part at any time by the Board, except with respect to any Option then outstanding under the Plan

Table of Contents


	8.	The Option Price of any Option granted shall be determined by the Board but shall not be less than the volume weighted average trading price of the common shares on the Exchange, or another stock exchange where the majority of the trading volume and value of the listed shares occurs, for the 5 trading days immediately prior to the date of grant (or, such other price required by the Exchange) (calculated by dividing the total value by the total volume of securities traded for the relevant period) (‘‘Market Price’’).


	9.	Upon the announcement of any form of transaction (a ‘‘Change of Control Transaction’’) which, if completed, would constitute a Change of Control and under which Common Shares of the Company are to be exchanged, acquired or otherwise disposed of, including a take-over bid, or tender offer made for all or any of the issued and outstanding common shares, the Company shall, as soon as practicable following the announcement of such Change of Control Transaction, notify each Participant currently holding an Option of the Change of Control Transaction, and all Options of the Participant which have not vested shall be deemed to be fully vested and exercisable solely for purposes of permitting the Participant to exercise such Options in or der to participate in the Change of Control Transaction in respect of the Common Shares (the ‘‘Optioned Shares’’) thereby acquired.

During the year ended December 2007, 8,950,000 [2006 – 1,965,000; 2005 – 8,420,000] options were granted and were valued at $2,716,750 [2006 – $428,628; 2005 – $1,306,520]. The total stock-based compensation expense recognized during the year ended December 31, 2007 for stock options granted in the current and prior years but vesting during 2007 was $1,849,504 [2006 – $524,197; 2005 – $961,075] using the fair value method and was credited to contributed surplus. Compensation cost for 2007 has been calculated using the Black-Scholes pricing model with the following average assumptions: fair value of each option granted of $0.312 (2006 – $0.194; 2005-$0.155), expected life of options of 3 years, expected stock price volatility of 82% (2006 and 2005 – 78.7%);, expected dividend yield of 0% and risk-free interest rate of 4% (2006 and 2005 – 2.98%).


6C.	Board Practices

The directors are serving staggered terms with a 1-3 year term range, renewable at the annual shareholder meeting. Zedex has right to nominate two directors. Zedex had nominated John Seton and H. David Kennedy. H. David Kennedy had resigned and Zedex chose not to replace Mr. Kennedy. John Seton is the part-time executive Chairman of Zedex. John Seton does not hold directly or indirectly any shares of Zedex.

The Company has an Audit Committee, which recommends to the Board of Directors the engagement of the independent auditors of the Company and reviews with the independent auditors the scope and results of the Olympus’ audits, the Company’s internal accounting controls, and the professional services furnished by the independent auditors to the Company. The current members of the Audit Committee, each of whom is independent, are as follows: Jon Morda (Chairman), Kevin Flaherty, and T. Douglas Willock.

The Company’s Compensation Committee is comprised of three independent directors: T. Douglas Willock (Chairman), Kevin Flaherty and Jon Morda.

Corporate Governance Committee is comprised of Kevin Flaherty (Chairman), John Seton and T. Douglas Willock.


6D.	Employees


	2005		2006		2007
Vietnam		79		340		471
Toronto		5		5		6
Total		84		345		477

In 2007, on average, there was also approximately 91 contract workers that were engaged in Vietnam that are not included in the above average employee headcount.

Table of Contents


6E.	Share Ownership

The following table shows the shareholdings of the Directors and Senior Management, as at December 31, 2007.


6.E.1	Details of Share Ownership

Table No. 7: Shareholdings of Directors and Senior Management as December 31, 2007


Title of Class	Name of Beneficial Owner	Shares Held		Options Vested or Vesting within 60 days		Beneficial Ownership		Percent of Class
Common	David A. Seton		23,334		3,100,000		3,123,334		1.33
Common	John A. G. Seton		144,245		933,333		1,077,578		0.46
Common	Jon Morda		13,500		296,667		310,167		0.13
Common	Peter G. Meredith		Nil		700,000		700,000		0.30
Common	T. Douglas Willock		91,000		325,667		416,667		0.18
Common	Kevin Flaherty		Nil		125,000		125,000		0.05
Common	Peter Tiedemann		20,000		433,333		453,333		0.19
Common	Colin D. Patterson		155,000		2,333,333		2,488,333		1.06
Common	Charles Barclay		Nil		1,166,667		1,166,667		0.50
Common	Rod Jones		Nil		200,000		200,000		0.09
Common	Pam Campagnoni		22,500		150,000		172,500		0.07
Common	Russell Graham		Nil		50,000		50,000		0.02

Table of Contents

The following table sets forth the Company’s outstanding stock options as at December 31, 2007 of Directors and Senior Management:

Table No. 8: Stock Options Outstanding as at December 31, 2007

Name

Number of
Common-voting
Shares

Exercise Price

Grant Date

Expiration Date

David A. Seton

100,000
1,000,000
1,000,000
3,000,000

0.50
0.32
0.32
0.75

Jan 6, 2003
Aug 31, 2005
Sept 29, 2005
Mar 5, 2007

Jan 6, 2008
Aug 31, 2010
Sept 29, 2010
Mar 5, 2012

John A. G. Seton

100,000
500,000
1,000,000

0.50
0.32
0.75

Jan 6, 2003
Aug 31, 2005
Mar 5, 2007

Jan 6, 2008
Aug 31, 2010
Mar 5, 2012

Jon Morda

180,000
350,000

0.32
0.65

Aug 31, 2005
Mar 5, 2007

Aug 31, 2010
Mar 5, 2012

Peter G. Meredith

200,000
500,000

0.44
0.32

Apr 19, 2004
Aug 31, 2005

Apr 19, 2009
Aug 31, 2010

T. Douglas Willock

159,000
500,000

0.55
0.65

Feb 16, 2006
Mar 5, 2007

Feb 16, 2011
Mar 5, 2012

Kevin Flaherty

250,000

0.75

May 2, 2007

May 2, 2012

Peter Tiedemann

100,000
1,000,000

0.51
0.65

Jul 18, 2006
Mar 5, 2007

Jul 18, 2011
Mar 5, 2012

Colin D. Patterson

1,000,000
1,000,000
1,000,000

0.32
0.32
0.65

Aug 31, 2005
Sept 29, 2005
Mar 5, 2007

Aug 31, 2010
Sept 29, 2010
Mar 5, 2012

Charles Barclay

500,000
500,000
500,000

0.36
0.43
0.65

Jan 25, 2006
Nov 3, 2006
Aug 15, 2007

Jan 25, 2011
Nov 3, 2011
Aug 15, 2012

Rod P Jones

600,000

0.65

Aug 15, 2007

Aug 15, 2012

Pam Campagnoni

100,000
250,000

0.51
0.65

Jul 18, 2006
Aug 15, 2007

Jul 18, 2011
Aug 15, 2012

Russell Graham

150,000

0.65

Aug 15, 2007

Aug 15, 2012

Table of Contents


ITEM 7:	Major Shareholders and Related Party Transactions


7A.	Major Shareholders

To the knowledge of the directors and senior officers of the Company, the only persons or companies who beneficially own, directly or indirectly or exercise control or direction over shares carrying more than 5% of the voting rights attached to all outstanding shares of the Company are as at December 31, 2007:

Name

No. of Shares

Percentage

Dragon Capital Group Limited
Ho Chi Minh City, Vietnam

76,679,601⁽¹

⁾

33.00

Zedex Minerals Limited
Auckland, New Zealand

31,356,849⁽²

⁾

13.49

Notes:

(1)

Of these securities 39,369,227 shares are registered in the name of Vietnam Growth Fund Limited, 19,708,500 shares are registered in the name of Vietnam Enterprise Investments Limited, 16,131,874 are registered in the name of Vietnam Dragon Fund Limited, 1,270,000 shares are registered in the name of Dragon Capital Markets Limited and 200,000 shares are registered in the name of Dragon Capital Management Limited.

(2)	Mr. John A. G. Seton, director, is an insider and part-time executive chairman of Zedex Minerals Limited.

Beginning in October 2004, the Dragon Capital Group Limited started to acquire an interest in the Company and has continued to increase its ownership over 2005 and 2006, resulting in an ownership percentage of 39.05% as at September 30, 2006. As a result of share issuances, the percentage ownership by the Dragon Capital Group Limited of the Company has decreased from 37.61% at June 30, 2007 to 33% at December 31, 2007.

As a result of share issuances, the percentage ownership by Zedex Minerals Limited of the Company has decreased from 16.39% as at September 30, 2006 to 13.49% as at December 31, 2007.

As at December 31, 2002, Ivanhoe Mines Ltd. owned 18% of the Company which increased to 19% in 2004 as a result of the Vend-In Agreement. On May 25, 2005, Ivanhoe Mines Ltd. entered into an agreement to sell their interest in the Company to the Vietnam Growth Fund Limited, part of the Dragon Capital Group Limited, and as a result, Ivanhoe Mines Limited holds no shares in the Company.

As at March 26, 2008, the Company was aware of 512 record holders in the United States, the host country, representing ownership of 2.5 per cent of the outstanding shares of the Company.


7B.	Related Party Transactions

During the years ended December 31, 2007, 2006 and 2005, the Company entered into the following transactions with related parties:


	(a)	Paid $17,260 to Zedex Minerals in 2005 for a short-term loan of $1,500,000, bearing 10% interest. The loan was entered into and repaid during the third quarter of 2005. The Company also paid $3,852 to Zedex in 2005 as reimbursement of office expenses. The Company paid $126,371 to Zedex in 2004; comprised mainly of a refund of exploration contribution as stipulated in the Vend-In Agreement, net of amounts due by Zedex to the Company at the time of payment. In 2003, an amount of $115,108 was receivable from Zedex for their share of the exploration expense on the Phuoc Son project offset by a $52,989 accounts payable. One director of the Company is related to Zedex; namely John Seton.


	(b)	Paid or accrued $1,228,499 in 2007 [2006 – $581,396; 2005 – $420,597; 2004 – $453,611; 2003 – $387,229] for management fees and $249,591 in 2007 [2006 – $147,377; 2005 – $214,702] in reimbursement of expenses incurred on behalf of the Company to companies controlled by officers of the Company. The companies that were paid for management fees and reimbursement of expenses include the following: Bractea Enterprises Limited (previously

Table of Contents


		named EHM Accounting) associated with Erik Martin in 2006, and 2005; Orangue Holdings Limited associated with David Seton in 2007, 2006, and 2005; Momentum Resources International Pty Ltd associated with Colin Patterson in 2007, 2006 and 2005; Action Management Limited associated with Charles Barclay in 2007 and 2006; Wholesale Products Trading Limited associated with Peter Tiedemann in 2007 and 2006; Expenses that were reimbursed include the following costs: airfare, accommodation, meals, car rental, telecommunications, computer, courses, conferences and licenses.


	(c)	Paid or accrued $133,839 in 2007 [2006 – $83,371; 2005 – $26,536] for consulting and legal fees. The companies that were paid for consulting fees include the following: Jura Trust (‘‘Jura’’) associated with John Seton, a director of the Company; Claymore Law (‘‘Claymore’’) where John Seton is a principal. The services provided are not under contract as the consulting and legal services are provided on an ad hoc basis based on requests by the Company


	(d)	On January 1, 2006, Zedex was assigned the 2% gross production royalty less incremental costs when Ivanhoe assigned to Zedex all its rights, title and interest in and to the debt, gross production royalties and royalty agreement. Refer to Exhibit 3.19 for the Assignment Agreement. Paid or accrued $112,336 in 2007 [2006 – $47,960] to royalties for Zedex, a shareholder of the Company. The royalty is calculated as 2% of the net sales amount equal to the revenues for gold and silver less refining and delivery costs.


	(e)	Paid $320,380 (US$261,537) in 2005 to Dragon Capital Management (‘‘Dragon’’) in arrangement fees in regards to the equity financing closed on January 12, 2005 and the debt financing entered into on June 7, 2005. Dragon was granted 1,270,000 warrants exercisable at $0.40/unit for a period of one year from the date of closing. In December 2004, Dragon Capital Markets Limited (‘‘Dragon’’) offered debt financing of U.S.$2,000,000 (the ‘‘Loan’’) and equity financing of up to 12.7 million common shares of Olympus at C$0.40 per share subject to an over-allotment option. The term of the loan was two years bearing an interest rate equal to 8.5% per annum. Securit y for the loan consisted of a pledge over Bogomin’s inventory and equipment and assignment of rights and interests in the Refining Contract. Olympus paid Dragon an arrangement fee of $320,380 and one non-transferable share purchase warrant for every 10 common shares sold under the equity financing allowing Dragon to purchase a share of Olympus at $0.40 per share for a period of one year from the date of closing of the equity financing. Refer to Item 7B(f) for repayment details on this loan.


	(f)	On June 7, 2005, the Company entered into a US$2.0 million debt financing with Vietnam Growth Funds (a fund controlled by Dragon). The loan was repaid in full on October 13, 2005. Refer to Item 7B(e) for details on the Loan.


	(g)	Vend-In Agreement in 2004 with Zedex and Ivanhoe as referred to as an exhibit in Section 10C under material contracts. As at December 31, 2004, Ivanhoe owned 19.6% of the outstanding common shares of the Company. One director of the Company, Peter Meredith, is a senior officer of Ivanhoe.


	(h)	On March 19, 2007, the Company completed a non-brokered private placement of common shares of 21,528,571 at $0.56 per share with the net proceeds of $11,967,772. Of the $12,000,000 placement, $2,400,000 and $2,400,000 of common shares were purchased at $0.56 per share by Vietnam Growth Fund Limited and Vietnam Dragon Fund Limited (funds controlled by Dragon) and $2,450,000 of common shares at $0.56 per share were purchased by Zedex.


	(i)	On August 10, 2007, the Company completed an offering of 38,461,538 Units of the Company at a price of $0.65 per unit for net proceeds of $22,891,000. Of the $25,000,000 of gross proceeds, $2,500,000 of Units were purchased at $0.65 per share by funds controlled by Dragon..

These transactions were in the normal course of operation and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.

Table of Contents

These transactions were equivalent to terms agreed upon in similar transactions with non-affiliated parties. The transactions described under (b), (c) and (d) are expected to continue in the future whereas the transactions described under (a), (e), (f) (g) and (h) are completed and not expected to continue.


7C.	Interests of Experts and Counsel

Not applicable.


ITEM 8:	Financial Information


8A.	Consolidated Statements and Other Financial Information

Reference is made to Item 17 Financial Statements for the financial statements included in this Annual Report on Form 20-F.

There are no legal proceedings of a material nature pending against the Company, or its subsidiaries. The Company is unaware of any legal claim known to be contemplated by any governmental authorities.

The Company has never paid a dividend and it is unlikely that the Company will declare or pay a dividend until warranted.


8B.	Significant Changes

In addition to his role as Executive Chairman, Mr. David Seton was appointed as Chief Executive Officer effective February 4, 2008. Concurrently, Colin Patterson has taken on the role of Corporate Technical Advisor to the Board with his contract extending to June 2009 in order for the Company to focus on achieving technical success in its major exploration and development projects.

Effective March 17, 2008, Peter Tiedemann transitioned from his role of Chief Financial Officer and Corporate Secretary to that of Vice President — Corporate Affairs. Effective March 17, 2008, Pamela Campagnoni assumed the role of Chief Financial Officer and Louis Montpellier of Gowlings Lafleur Henderson LLP became the Corporate Secretary.

Effective March 17, 2008, Charles Barclay has been appointed Chief Operating Officer and Jim Hamilton has been appointed as Vice President — Investor Relations.


ITEM 9:	The Offer and Listing


9A.	Common Share Trading Information

The Company’s shares trade on the Toronto Stock Exchange (‘‘TSX’’) in Canada, under the symbol ‘‘OYM’’. The initial listing date was effective on the TSX on April 3, 2006. Prior to April 3, 2006, the Company traded on the TSX Venture in Canada.

Table No.10 lists the high and low sales prices on the TSX and the TSX Venture (‘‘TSXV’’) for actual trades of the Company’s shares. The Company’s shares started trading on the TSX on April 3, 2006 and prior to that they were listed on the TSXV. As of December 31, 2007, the closing price for a Share was $0.45.

Table of Contents

Table No. 9: TSX and TSX-V Common-Voting Shares Trading Activity


Period Ended	High (CAD$)			Low (CAD$)
Monthly:
29-Feb-08		$	0.48		$	0.42
31-Jan-08		$	0.50		$	0.44
31-Dec-07		$	0.50		$	0.40
30-Nov-07		$	0.59		$	0.44
31-Oct-07		$	0.61		$	0.50
30-Sep-07		$	0.60		$	0.52
Quarterly
31-Dec-07		$	0.61		$	0.40
30-Sep-07		$	0.78		$	0.44
30-Jun-07		$	1.20		$	0.55
31-Mar-07		$	0.72		$	0.46
31-Dec-06		$	0.57		$	0.37
30-Sep-06		$	0.56		$	0.30
30-June-06		$	0.94		$	0.45
31-Mar-06		$	0.74		$	0.31
Annual (Fiscal Year):
Ended December 31, 2007		$	1.20		$	0.40
Ended December 31, 2006		$	0.94		$	0.30
Ended December 31, 2005		$	0.45		$	0.215
Ended December 31, 2004		$	0.57		$	0.28
Ended December 31, 2003		$	0.87		$	0.27

On April 3, 2006, the Company started trading its common shares on the Toronto Stock Exchange under the symbol ‘‘OYM’’ and, consequently, no longer trades on TSX Venture Exchange. Effective March 5, 2008, the Company’s shares began trading on the over the counter bulletin board in the United States under the symbol OLYMF. On March 26, 2008, the closing price of OLYMF was US$0.365.


9B.	Plan of Distribution

Not applicable.


9C.	Markets

See 9A. above.


9D.	Selling Shareholders

Not applicable.


9E.	Dilution


	Not	applicable.


9F.	Expenses of the Issue


	Not	applicable.


ITEM 10:	Additional Information


10A.	Share Capital

Not applicable.

Table of Contents


10B.	Memorandum and Articles of Association

Common shares

The Company is authorized to issue an unlimited number of Common Shares (‘‘Shares’’), with no par value.

The holders of the Shares are entitled to one vote per Share at any meeting of the shareholders of the Corporation and to receive, out of all profits or surplus available for dividends, any dividend declared by the Corporation on the Shares. Any dividend declaration by the Company will require consent from Macquarie Bank as indicated in the MLB facility agreement which is described in detail under Item 5B. In the event of liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of Shares are entitled to receive the remaining property of the Corporation. All shares presently outstanding are duly authorized, validly issued and fully paid. Shares have no preference, conversion, exchange, pre-emptive or cumulative voting rights.

Provisions as to the modification, amendment or variation of such rights and provisions are contained in the Business Companies Act (Ontario) (the ‘‘Act’’) and the regulations promulgated thereunder. Certain fundamental changes to the articles of the Company will require the approval of two-thirds of the votes cast on a resolution submitted to a special meeting of the Company’s shareholders called for the purpose of considering the resolution. These items include (i) an amendment to the provisions relating to the outstanding capital of the Company, (ii) a sale of all or substantially all of the assets of the Company, (iii) an amalgamation of the Company with another company, other than a subsidiary, (iv) a winding-up of the Company, (v) a continuance of the Company into another jurisdiction, (vi) a statutory court approved arrangement under the Act (essentially a corporate reorganization such as an amalgamation, sale of assets, wind ing-up, etc.), and (vii) a change of name.

Although the Act does not specifically impose any restrictions on the repurchase or redemption of shares, under the Act a corporation cannot repurchase its shares or declare dividends if there are reasonable grounds for believing that (a) the corporation is, or after payment would be, unable to pay its liabilities as they become due, or (b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of (i) its liabilities and (ii) its stated capital of all classes of its securities. Generally, stated capital is the amount paid on the issuance of a share.

Articles and By-laws

The following presents a description of certain terms and provisions of the Company’s articles and by-laws.

General

The Company was incorporated in the Province of Ontario on July 4, 1951 under the name of Meta Uranium Mines Limited. The Company’s name was changed to Metina Developments Inc. on August 24, 1978 and then continued from Ontario into British Columbia under Company Act (B.C.) under the name Olympus Holdings Ltd. on November 5, 1992 under No. C-435269. The name was then changed to Olympus Pacific Minerals Inc. on November 29, 1996 and the Company was continued from B.C. into the Yukon under the Business Corporations Act (Yukon) on November 17, 1997 under No. 26213. The Company was continued from the Yukon into a Canadian Business Corporation under the Canadian Business Corporations Act (CBCA) on July 13, 2006 under Certificate of Continuance Number 659785-8.

The Company’s corporate objectives and purpose are unrestricted.

Table of Contents

Directors

Pursuant to section 3.12 of the by-laws of the Company (the ‘‘By-Laws’’) and section 120(1) of the Canada Business Corporation Act (the ‘‘CBCA’’), a director or an officer of the Company shall disclose to the Company, in writing or by requesting to have it entered in the directors’ meeting minutes or the directors’ committee meeting minutes, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with the Company, if the director or officer: (a) is a party to the contract or transaction; (b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or (c) has a material interest in a party to the contract or transactio n. Section 3.12 of the By-Laws also provides that such a director or officer shall not vote on any resolution to approve such a contract or transaction except as provided under the CBCA. Section 120(5) of the CBCA permits sucha director to vote on any resolution to approve a contract or transaction if it: (a) relates primarily to his or her remuneration as a director, officer, employee or agent of the Company or an affiliate; (b) is to indemnify or insure a current or former director or officer, or another individual who acts or has acted at the Company’s request as a director or officer, or an individual acting in a similar capacity, of another entity; or (c) is with an affiliate.

If a quorum of directors is present, the directors are entitled to vote compensation to themselves. Section 125 of the CBCA provides that subject to the By-Laws, the articles or a unanimous shareholder agreement, the directors may fix the remuneration of directors, officers and employees of the Company. Section 3.13 of the By-Laws provides that the directors shall be paid such remuneration for their services as the board of directors may from time to time determine.

Section 189 of the CBCA provides that unless the By-Laws, the articles or a unanimous shareholder agreement provide otherwise, the directors may, without authorization of the shareholders: (a) borrow money on the credit of the Company; (b) issue, reissue, sell or pledge debt obligations of the Company; (c) give a guarantee on behalf of the Company to secure the performance of an obligation of any person; and (d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Company, owned or subsequently acquired, to secure any obligation of the Company.

There are no provisions in the By-Laws or the CBCA relating to the retirement or non-retirement of directors under an age limit requirement. Pursuant to section 105(2) of the CBCA, a director need not be a shareholder. Pursuant to section 3.3 of the By-Laws and section 105(3) of the CBCA, at least twenty-five per cent of the directors of the Company must be resident Canadians. However, if the Company has less than four directors, at least one director must be a resident Canadian. Section 102(2) of the CBCA requires that the Company shall have no fewer than three directors, at least two of whom are not officers or employees of the Company or of any of the Company’s affiliates.

Annual and special meetings

The annual meeting and special meetings of shareholders are held at such time and place as the board of directors shall determine. Notice of meetings is sent out to shareholders not less than 10 days nor more than 50 days before the date of such meeting. All shareholders at the record date are entitled to notice of the meeting and have the right to attend the meeting. The directors stand for reelection at staggered intervals.

There are no provisions in either the Company’s Articles of Incorporation or Bylaws that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or its subsidiary, except for one of our provisions that limits how many directors may be appointed between annual meetings which could delay a change of control. There are no by-law provisions governing the ownership threshold above which shareholder ownership must be disclosed.

On June 25, 2007, the Company’s Board of Directors approved the adoption of a Shareholder Rights Plan subject to TSX and shareholder approval. The purpose of the Rights Plan was to provide

Table of Contents

shareholders and the Company’s Board of Directors with adequate time to consider and evaluate any unsolicited bid made for the Company, to provide the Board with adequate time to identify, develop and negotiate value-enhancing alternatives, if considered appropriate, to any such unsolicited bid, to encourage the fair treatment of shareholders in connection with any take-over bid for the Company and to ensure that any proposed transaction is in the best interests of the Company’s shareholders. On December 21 2007, the shareholders did not ratify and approve the amended and restated shareholders rights plan agreement by the required vote; and, therefore, the amended Rights Plan was terminated in accordance with its terms.


10C.	Material Contracts

The following material contracts have been entered into by the Company within the past two years:


	1)	Debt Finance Facility Agreement between Olympus Pacific Minerals Inc., Bong Mieu Gold Mining Company Limited, Formwell Holdings Limited and Macquarie Bank Limited, dated February 8, 2006. Refer to Item 5B for details on this agreement.


	2)	Joint Venture Agreement between Mien Trung Industrial Company (‘‘Minco’’) and New Vietnam Mining Corp (‘‘NVMC’’), dated March 5, 2003. Refer to Item 4A for details on this agreement.


	3)	Vend-In Agreement on March 1, 2004 and Extension of Vend-In Agreement on June 21, 2004 between the Company, Invanhoe Mines Ltd. and Zedex Minerals Limited. Refer to Item 4A for details on these agreements.


	4)	Agreement for Fulfilment of Contract, dated September 16, 2006, between Phuoc Son Gold Co. Ltd. and Huong Toan Company Ltd. This contract was cancelled on November 26, 2006. Refer to Item 4D.1 for details on this contract and cancellation.


	5)	Purchase Contract CE0780, dated January 24, 2005, between the Company and Gekko System Pty. Ltd. of Australia. The purpose of the agreement is for the purchase of the grinding module, gravity and flotation circuits and for an Inline Leach Reactor required to bring the Ho Gan deposit on the Company’s 80% owned Bong Mieu Gold Property into production.


	6)	Mining License No 116/GP-BTNMT — dated January 23, 2006. Refer to Item 4D.1 (a) for details on this license.


	7)	Gold Export Certificate — dated January 25, 2006, January 5, 2007 and December 12, 2007. Refer to Item 4D.2(a) for details on this license.


	8)	Memorandum of Agreement and Supplement — November 24, 2006 — Refer to Item 4A for details on this agreement.


	9)	Certificate of Incorporation and Articles of Incorporation — May 31, 2007, refer to Item 4A for details on this document.


	10)	Contract for the supply of explosives, dated November 20, 2007, between Bong Mieu Gold Mining Company Limited and Gaet Company — Ministry of Defense. Refer to item 5A for details on the contract.


	11)	Contract for the supply of explosives, technical and blasting services dated June 11, 2007, between Phuoc Son Gold Company Limited and Gaet Company — Ministry of Defense. Refer to item 4D.1 for the details on the contract.


	12)	Annex of the Drilling Contract, dated May 31, 2007, between Phuoc Son Gold Company Limited and Intergeo Division. Refer to Item 4D.1 for the details of this contract.


10D.	Exchange Controls

There are no laws, governmental decrees or regulations in Canada that restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to

Table of Contents

non-resident holders of our shares, other than the withholding tax requirements (Reference is made to Item 10E) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires that persons and entities report the importation or exportation of currency or monetary instruments of a value equal to or greater than $10,000 to Canadian customers officers in the prescribed form and manner.

There are no limitations under the laws of Canada or the Province of Ontario, or in our constituting documents, with respect to the right of non-resident or foreign owners to hold or vote Shares other than those imposed by the Investment Canada Act.

The Investment Canada Act is a federal Canadian statute which regulates the acquisition of control of existing Canadian businesses and the establishment of new Canadian businesses by an individual, government or entity that is a ‘‘non-Canadian’’ as defined in the Investment Canada Act. Such investments are generally reviewable under the Investment Canada Act by the Minister, designated as being responsible for the administration of the Investment Canada Act. Reviewable investments, generally, may not be implemented prior to the Minister’s determining that the investment is likely to be of ‘‘net benefit to Canada’’ based on the criteria set out in the Investment Canada Act. Generally investments by non-Canadians consisting of the acquisition of control of Canadian businesses which are otherwise non-reviewable and the establishment of new Canadian businesses are subject to certain notification requirements under the Investment Canada Act in the prescribed form and manner.

Management of the Company believes that it is not currently a ‘‘non-Canadian’’ for purposes of the Investment Canada Act and therefore it is not subject to the Act. However, if the Company were to become a ‘‘non-Canadian’’ in the future, acquisitions of control of Canadian businesses by the Company would become subject to the Investment Canada Act. Generally, the direct acquisition by a ‘‘non-Canadian’’ of an existing Canadian business with gross assets of $5 million or more is reviewable under the Inves tment Canada Act, unless the business is acquired by a WTO investor in which the thresholds are $250 million and $265 million for transactions closing in 2005 and 2006, respectively. Generally, indirect acquisitions of existing Canadian businesses (with gross assets over $50 million) are reviewable under the Investment Canada Act, except in situations involving ‘‘WTO investors’’ where indirect acquisitions are generally not reviewable but are nonetheless subject to notification. In transactions involving Canadian businesses engaged in the production of uranium, providing financial services, providing transportation services or which are cultural businesses, the benefit of the higher ‘‘WTO investor’’ thresholds do not apply.

Acquisitions of businesses related to Canada’s cultural heritage or national identity (regardless of the value of assets involved) may also be reviewable under the Investment Canada Act. In addition, investments to establish new, unrelated businesses are not generally reviewable but are nonetheless subject to nofication. An investment to establish a new business that is related to the non-Canadian’s existing business in Canada is not subject to notification under the Investment Canada Act unless such investment relates to Canada’s cultural heritage or national identity.

Any proposed take-over of the Company by a ‘‘non-Canadian’’ would likely only be subject to the simple notification requirements of the Investment Canada Act, as in all likelihood that non-Canadian would be a ‘‘WTO investor’’ for purposes of the Investment Canada Act provided that the high WTO threshold is not met. Generally, a ‘‘WTO investor’’ is an individual, other than a Canadian, who is a national of a country that is a member of the World Trade Organization or a business entity controlled by such an individual. Virtually all countries of the Western world are members of the World Trade Organizat ion. The Company would have to have a gross asset base of at least $5 million for a direct acquisition, and at least $50 million for an indirect acquisition, before the reviewable transaction provisions of the Investment Canada Act would apply to a third party non-Canadian acquirer that is not a WTO investor.

Table of Contents


10E.	Taxation


10E.1.	Certain Canadian Federal Income Tax Consequences — General

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of the common-voting shares of the Company (a ‘‘ Holder’’) who deals at arm’s length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the ‘‘Act’’) and the Canada — United States Income Tax Convention (the ‘‘Treaty’’), is at all relevant times resident in the United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a Business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on Business in Canada and elsewhere.

Under the Act and the Treaty, a. Holder of the common-voting shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares. The withholding tax rate is 5% where the Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some Holders such as qualifying pension funds and charities. Reference is made to ‘‘Item 10E.4 — United States Taxation’’ for a more detailed discussion of the United States tax considerations relating to an investment in the Shares.


10E.2.	Dividends

A Holder will be subject to Canadian withholding tax (‘‘Part XIII Tax’’) equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-U.S. Income Tax Convention (1980) as amended by the Protocols signed on 6/14/1983, 3/28/1984, 3/17/1995, and 7/29/1997 (the ‘‘Treaty’’), the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, shall not exceed 15%. If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, the withholding tax rate is reduced to 5% and, in all other cases, the tax rate is 15% of the gross amount of the dividend (under the provisions of the Canada — US Income Tax Convention). The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.


10E.3.	Disposition of Common Shares

A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted ‘‘taxable Canadian property’’ as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a prescribed stock exchange unless the Holder or persons with whom the Holder did not deal at arm’s length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. The TSX is a prescribed stock exchange under the Tax Act. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties, (b) the common share formed part of the Business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or (c) the Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include one-half of the capital gain (taxable capital gain) in computing the

Table of Contents

Holder’s taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one-half of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.


10E.4.	United States Taxation

The following summary is a general discussion of the material United States Federal income tax considerations to US holders of our Shares under current law. It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our shares is not effectively connected with the conduct of a trade or Business in the United States, shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation, shareholders who hold their stock as ordinary assets and not capital assets and any other non-US holders.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), Treasury Regulations, published Internal Revenue Service (‘‘IRS’’) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. This discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation that, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of our shares and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders an d prospective holders of our shares should consult their own tax advisors about the Federal, state, local, estate and foreign tax consequences of purchasing, owning and disposing of our shares.

US Holders

As used herein, a ‘‘US Holder’’ includes a holder of shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity that is taxable as a corporation for US tax purposes and any other person or entity whose ownership of our shares is effectively connected with the conduct of a trade or Business in the United States. A US Holder does not include persons subject to special provisions of Federal income tax law, such as tax exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our shares is not effectively connected with conduct or trade or Business in the United States, shareholders who acquired their stock thr ough the exercise of employee stock options or otherwise as compensation and shareholders who hold their stock as ordinary assets and not as capital assets.

Distributions on our Shares

US Holders receiving dividend distributions (including constructive dividends) with respect to our shares are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that we have current or accumulated earnings and profits as defined under US Federal tax law, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the US Holder’s United States Federal income tax liability or, alternatively, may be deducted in computing the US Holder’s United States Federal taxable income by those who itemize deductions.

Table of Contents

(See more detailed discussion at ‘‘Foreign Tax Credit’’ below). To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the US Holder’s adjusted basis in the shares and thereafter as gain from the sale or exchange of the shares. Preferential tax rates for net capital gains are applicable to a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a US Holder that is a corporation.

With effect from January 1, 2003 and ending December 31, 2010, the United States reduced the maximum tax rate on certain qualifying dividend distributions to 15% (tax rate for low income holders is 5% until 2007 and 0% for 2008 and thereafter). In order for dividends paid by foreign corporations to qualify for the reduced rates, (1) the foreign corporation must meet certain requirements, including that it not be classified as a foreign investment company or a passive foreign investment company for United States federal income tax purposes in either the taxable year of the distribution or the preceding taxable year, and (2) the US Holder must meet the required holding period. In order to meet the required holding period, the US Holder must hold our Common Shares for at least 60 days during the 121-day period beginning 60 days before the ex-dividend date.

Dividends paid on our shares will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A US Holder that is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from us (unless we qualify as a ‘‘foreign personal holding company’’ or a ‘‘passive foreign investment company’’, as defined below) if such US Holder owns shares representing at least 10% of our voting power and value. The availability of this deduction is subject to several complex limitations that are beyond the scope of this discussion.

In the case of foreign currency received as a dividend that is not converted by the recipient into US dollars on the date of receipt, a US Holder will have a tax basis in the foreign currency equal to its US dollar value on the date of receipt. Generally, any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for US dollars, will be ordinary income or loss. However, for tax years after 1997, an individual whose realized foreign exchange gain does not exceed US$200 will not recognize that gain, to the extent that there are not expenses associated with the transaction that meet the requirement for deductibility as a trade or Business expense (other than travel expenses in connection with a Business trip or as an expense for the production of income).

Foreign Tax Credit

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

Disposition of our Shares

A US Holder will recognize a gain or loss upon the sale of our shares equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the

Table of Contents

shareholder’s tax basis in our shares. This gain or loss will be a capital gain or loss if the shares are a capital asset in the hands of the US Holder, and will be a short-term or long-term capital gain or loss depending upon the holding period of the US Holder. Preferential tax rates for long-term gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. Corporate capital losses (other than losses of corporations electing under Subchapter S or the Code) are deductible to the extent of capital gains. Non-corporate taxpayers may deduct net capital losses, whether short-term or long-term, up to US$3,000 a year (US$1,500 in the case of a married individual filing separately). For US Holders which are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For US Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against cap ital gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of our shares:

Passive Foreign Investment Company

As a foreign corporation with US Holders, we could potentially be treated as a passive foreign investment company (‘‘PFIC’’), as defined in Section 1296 of the Code, if 75% or more of our gross income in a taxable year is passive income, or the average percentage of our assets (by value) during the taxable year which produce passive income or which are held for production of same is at least 50%. Passive income is generally defined to include gross income in the nature of dividends, interest, royalties, rents and annuities; excess of gains over losses from certain transactions in any commodities not arising inter alia from a PFIC whose Business is actively involved in such commodities; certain foreign currency gains; and other similar types of income. US Holders owning shares of a PFIC are subject to an additional tax and to an interest charge based on the value of deferral of tax for the period during which the shares of the PFIC are own ed, in addition to treatment of any gain realized on the disposition of shares of the PFIC as ordinary income rather than as a capital gain. However, if the US Holder makes a timely election to treat a PFIC as a qualified electing fund (‘‘QEF’’) with respect to such shareholder’s interest therein, the above-described rules generally will not apply. Instead, the electing US Holder would include annually in his gross income his pro rata share of the PFIC’s ordinary earnings and any net capital gain regardless of whether such income or gain was actually distributed. A US Holder of a QEF can, however, elect to defer the payment of United States Federal income tax on such income inclusions. Special rules apply to US Holders who own their interests in a PFIC through intermediate entities or persons.

The IRS has issued proposed regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by a Non-Electing US Holder that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases, the basis of our shares in the hands of the transferee and the basis of any property received in the exchange for those shares would be increased by the amount of gain recognized. A US Holder who has made a timely QEF election (as discussed below) will not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferee’s basis in this case will depend on the manner of the transfer. The specific tax effect to the US Holder and the transferee may vary based on the manner in which our shares are transferred. Each US Holder should consult a tax advisor with respect to h ow the PFIC rules affect their tax situation.

Table of Contents

Shareholder Election

These adverse tax consequences may be avoided, if the US Holder has elected to treat the PFIC as a qualified electing fund (a ‘‘QEF’’) with respect to that US Holder effective for each of the PFIC’s taxable years beginning on or after January 1, 1987, which include any portion of the US Holder’s holding period.

The procedure a US Holder must comply with in making an effective QEF election will depend on whether the year of election is the first year in the US Holder’s holding period in which we are a PFIC. If the US Holder makes a QEF election in such first year (i.e. a timely QEF election), then the US Holder may make the QEF election by simply filing the appropriate documents at the time the US Holder files his tax return for such first year. If, however, we qualified as a PFIC in a prior year and the QEF election was not made by the US Holder, then in addition to filing documents, the US Holder must generally recognize gain as if it had sold the QEF stock on the first day of the taxable year in which the QEF election is made, if (i) the US Holder holds stock in the PFIC on that day, and (ii) the US Holder can establish the fair market value of the PFIC stock on that day. The US Holder will treat that deemed sale transaction as a disposition of P FIC stock and will, thereafter, be subject to the rules described below applicable to US shareholders of a QEF.

In general, US shareholders of a QEF are taxable currently on their pro rata share of the QEF’s ordinary income and net capital gain regardless of whether such income or gain was actually distributed. A US Holder of a QEF can, however, elect to defer the payment of United States Federal income tax on such income inclusions.

Mark to Market Election

Effective for tax years of US Holders beginning after December 31, 1997, US Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a ‘‘mark-to-market election’’). If such an election is made, such US Holder will not be subject to the special taxation rules of PFIC described above for the taxable years for which the mark-to-market election is made. A US Holder who makes such an election will include in income for the taxable year an amount equal to the excess, if any, of the fair market value of our shares as of the close of such tax year over such US Holder’s adjusted basis in such shares. In addition, the US Holder is allowed a deduction for the lesser of (i) the excess, if any, of such US Holder’s adjusted tax basis in the shares over the fair market value of such shares as of the close of the tax year, o r (ii) the excess, if any of (A) the mark-to-market gains for our shares included by such US Holder for prior tax years, including any amount which would have been included for any prior year but for Section 1291 interest on tax deferral rules discussed above with respect to a US Holder, who has not made a timely QEF election during the year in which he holds (or is deemed to have held) our shares and we are a PFIC (‘‘Non-Electing US Holder’’), over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years. A US Holder’s adjusted tax basis in our shares will be increased or decreased to reflect the amount included or deducted as a result of mark-to-market election. A mark-to-market election will apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the revocation of the election.

The PFIC and QEF election rules are complex. US Holders should consult a tax advisor regarding the availability and procedure for making the QEF election as well as the applicable method for recognizing gains or earnings and profits under the foregoing rules.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of stock or the total value of our stock is owned, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own 10% or more of the total combined voting power of all classes of our stock (‘‘United States shareholder’’), we could be treated as a ‘‘controlled foreign corporation’’ under Subpart F of the

Table of Contents

Code. This classification would cause many complex results including the required inclusion by such United States shareholders in income of their pro rata share of our ‘‘Subpart F income’’ (as specially defined by the Code). If we are both a PFIC and controlled foreign corporation, we will generally not be treated as a PFIC with respect to United States shareholders of the controlled foreign corporation. This rule generally will be effective for our taxable years ending with or within such taxable years of United States shareholders. In addition, under Section 1248 of the Code, a gain from the sale or exchange of shares by a US Holder who is or was a United States shareholder at any time during the five year period ending with the sale or exchange is treated as ordinary dividend income to the extent of our earnings and profits attributable to the stock sold or exchanged. Because of the complexity of Subpart F, and because it is not clear that Subpart F would apply to the US Holders of our shares, a more detailed review of these rules is outside of the scope of this discussion.


10F.	Dividends and Paying Agents

Not applicable


10G.	Statements by Experts

Not applicable.


10H.	Documents on Display

Copies of the documents referred to in this document may be inspected during normal business hours, at the offices of the Company at Suite 500, 10 King Street East, Toronto, Ontario, Canada. Its telephone number is (416) 572-2525.


10I.	Subsidiary Information

Not applicable.


ITEM 11:	Quantitative and Qualitative Disclosures about Market Risk

Not applicable.


ITEM 12:	Description of Securities other than Equity Securities

Not Applicable.

Table of Contents

Part II


ITEM 13:	Defaults, Dividend Arrearages and Delinquencies

None.


ITEM 14:	Material Modifications to the Rights of Security Holders and Use of Proceeds

None.


ITEM 15:	Controls and Procedures

15.T.1(a) Disclosure Controls and Procedures of the Company’s Chief Executive Officer

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

The Company’s executive officers, including our Chief Executive Officer and Chief Financial Officer, have established and maintained disclosure controls and procedures for the Company in order to provide reasonable assurance that material information relating to the Company is made known to it in a timely manner, particularly during the period in which the annual filings are being prepared. Based on evaluation of effectiveness of the Company’s disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer believe them to be effective in providing such reasonable assurance.

15T.2(b) Management’s Annual Report on Internal Control Over Financial Reporting

In 2006, management, including the Chief Executive Officer and Chief Financial Officer, carried out an assessment of the design of the Company’s internal controls over financial reporting and disclosed the following weaknesses in the MD&A in the 2006 Annual Report:


	•	Need to enhance the documentation of the evidence indicating the performance of critical control procedures.


	•	Improve the segregation of duties between the operational processes, authorization and recording of transactions.


	•	A weakness in the information technology controls related to management over changes to systems and supporting infrastructure, security and access controls.


	•	Need to establish and document control monitoring procedures to ensure ongoing effective controls.


	•	Need to further communicate company standards and policies such as the code of conduct and set up a monitoring system to ensure compliance with company standards.

During 2007, management worked on remediation of the following areas:


	•	Documentation regarding internal controls over financial reporting;


	•	Segregation of duties between operational processes, authorization and recording of transactions;

Table of Contents


	•	Design, documentation and implementation of change management, security and access controls over its information technology;


	•	Ongoing communication of Company policies and standards; and


	•	Establish and document control monitoring procedures.

Management engaged external consultants to perform additional procedures and provide results of their work to enable management to determine the nature and extent of any further remediation that is required until it is completed. Internal control testing on the third and fourth quarter of 2007 at our Vietnam and Toronto office has been completed.

Olympus’ executive officers have evaluated the effectiveness of the company’s design and operational effectiveness of its internal controls over financial reporting as of December 31, 2007 based on framework provided by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’), pursuant to the requirements of Multilateral Instrument 52-109 and Sarbanes — Oxley. Based on this evaluation, Olympus’ executive officers believe that the company’s design and operation of internal controls over financial reporting provides reasonable assurance regarding the reliability of the company’s financial reporting and the preparation of the company’s financial statements for external purposes in accordance with (Canadian and US) GAAP.

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


ITEM 16:	Audit Committee

16A. Audit Committee Financial Expert

The Company’s Audit Committee is independent and all members are considered financially literate under Canadian regulatory standards. The Audit Committee is composed of Jon Morda, Kevin Flaherty and T. Douglas Willock. The Company considers that the Audit Committee has at least one member, Jon Morda, who would be considered a financial expert.

16B. Code of Ethics

The Company has a Code of Business Conduct and Ethics that was approved by the Company’s Board of Directors on September 19, 2006 which is posted on the following websites: www.olympuspacific.com and www.sedar.com


Refer	to Exhibit 3.25 for the Code of Business Conduct and Ethics.

16C. Principal Accountant Fees and Services

The aggregate fees billed by the Company’s external auditors in each of the last two fiscal years are as follows:


Financial Year Ending	Audit Fees⁽¹⁾			Audit Related Fees⁽²⁾			Tax Fees⁽³⁾	All Other Fees⁽⁴⁾
2007		$	125,000		$	60,000	Nil		$	270,000
2006		$	159,000		$	40,000	Nil		$	55,000

(1)	The aggregate audit fees billed.

(2)	The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements which are not included under the heading ‘‘Audit Fees’’.

(3)	The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.

(4)	The aggregate fees billed for products and services other than as set out under the headings ‘‘Audit Fees’’, ‘‘Audit Related Fees’’ and ‘‘Tax Fees’’.

Table of Contents

The Audit Committee must approve in advance any non-audit related services provided by the auditor to the Company, and the fees for such services, with a view to ensure independence of the Auditor, and in accordance with applicable regulatory standards, including applicable stock exchange requirements with respect to approval of non-audit related services performed by the auditors; and as necessary, taking or recommending that the Board take appropriate action to oversee the independence of the auditors.

16D. Exemptions From the Listing Standards for Audit Committees

Not Applicable

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

None

Table of Contents

Part III


ITEM 17:	Financial Statements

1. Consolidated Balance Sheets of Olympus Pacific Minerals Inc. as at December 31, 2007 and 2006, Consolidated Statements of Operations and Deficit and Cash Flows for each of the three years ended December 31, 2007, 2006, and 2005, reported on by Ernst & Young LLP, Chartered Accountants. These statements are prepared in accordance with Canadian generally accepted accounting principles, which differ in certain respects from United States generally accepted accounting principles. See Note 16 to the consolidated financial statements.


ITEM 18:	Financial Statements

See Item 17. Financial Statements.


ITEM 19:	Exhibits

Reference is made to the Amended Registration Statement of Form 20-F-A dated June 29, 2007, submitted to the Securities and Exchange Commission on June 29, 2007 for exhibits 19B.1 — 19B.3.24 except for 19B.3.4, 19B.3.13 and 19B.3.17. Reference is made to the Amended Registration Statement of Form 20-F-A dated July 13, 2007 for exhibit 19B3.25 and November 13, 2007 for exhibits 19B.3.26 and 19B.3.27.

19A. Financial Statements

1. Consolidated Balance Sheets of Olympus Pacific Minerals Inc. as at December 31, 2007 and December 31, 2006, Consolidated Statements of Operations and Deficit and Cash Flows for each of the three years ended December 31, 2007, 2006, and 2005, reported on by Ernst & Young LLP, Chartered Accountants. These statements are prepared in accordance with Canadian generally accepted accounting principles, which differ in certain respects from United States generally accepted accounting principles. See Note 16 to the consolidated financial statements.

19B. Exhibits


	1.	Articles of Incorporation and By Laws


	1.1.	Certificates of Status, Amendment, Continuance


	1.2.	Bylaws as currently in effect.


	2.	Instruments defining the rights of holders of equity — refer to exhibit 1 under 19B.


	3.	Material Contracts


	3.1.	Mining Permit — dated July 22, 1992


	3.2.	Right to Use Land Certificate — dated October 9, 1993


	3.3.	Investment License — No: 140 / GP, dated March 5, 1991 and Amendments


	3.4.	Gold Export Certificates — dated January 25, 2006, January 5, 2007 and December 12, 2007.


	3.5.	Debt Finance Facility Agreement — dated February 8, 2006


	3.6.	Mining License No 116/GP — BTNMT — dated January 23, 2006


	3.7.	Investment License No. 2355/GP — dated October 20, 2003


	3.8.	Joint Venture Agreement — dated March 5, 2003.


	3.9.	Agreement for Fulfilment of Contract, dated September 16, 2006 and cancellation of agreement on November 27, 2006.

Table of Contents


	3.10.	Memorandum of Agreement and Supplement — November 24, 2006


	3.11.	Stock Option Plan — September 12, 2003


	3.12.	Management service agreement with Orangue Holdings Limited — dated July 16, 2005


	3.13.	Management service agreement with Momentum Resources International Pty Ltd. — dated July 16, 2005 and amendment dated January 28, 2008.


	3.14.	Management service agreement with Action Management Limited — dated June 5, 2006


	3.15.	Service agreement with R. Dahn — dated March 1, 2005 and amendments August 2006


	3.16.	Consulting agreement with Mr. Baylis — dated July 15, 2005


	3.17.	Argor Heraeus Refining Contract — dated January 11, 2005


	3.18.	Dragon Equity and Debt Financing dated December 17, 2004


	3.19.	Assignment Agreement among Ivanhoe Mines Ltd., Zedex Minerals Limited, and Olymous Pacific Minerals, Inc. dated January 1, 2006


	3.20.	Certificate to Incorporation and Articles of Incorporation of Kadabra Mining Corp — May , 2007.


	3.21.	Management Service Agreement with Wholesale Products Limited dated April 1, 2007


	3.22.	Share Placement Documents dated March 19, 2007


	3.23.	Shareholders Rights Plan — dated June 25, 2007


	3.24.	Stock Option Plan — dated June 7, 2007


	3.25.	Code of Ethics — September 19, 2006


	3.26.	Management Service Agreement with Thomas Rodney Pervical Jones dated August 6, 2007 and amendment dated October 3, 2007.


	3.27.	Framework of Laos and Cambodia Joint Venture Agreement, July 17, 2007.


	3.28.	Exploration License dated January 10, 2008


	3.29.	Contract for the supply of explosives, dated November 20, 2007, between Bong Mieu Gold Mining Company Limited and Gaet Company — Ministry of Defense.


	3.30.	Contract for the supply of explosives, technical and blasting services dated June 11, 2007, between Phuoc Son Gold Company Limited and Gaet Company — Ministry of Defense.


	3.31.	Annex of the Drilling Contract, dated May 31, 2007, between Phuoc Son Gold Company Limited and Intergeo Division.


	4.	List of Subsidiaries

- None -


	5.	Consents


	5.1.	Consent of Terra Mining Consultants and Stevens & Associates


	5.2.	Consent of Watts, Griffis and McOuat Limited


	12.	Certifications


	12.1	Certification of Chief Executive Officer


	12.2	Certification of Chief Financial Officer


	13.	Certifications


	13.1	Certification of Chief Executive Officer


	13.2	Certification of Chief Financial Officer

Table of Contents

SIGNATURES

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

Date: March 28, 2008

Report of Independent Auditors

To the Shareholders of
Olympus Pacific Minerals Inc.

We have audited the consolidated balance sheets of Olympus Pacific Minerals Inc. as at December 31, 2007 and 2006, and the consolidated statements of operations and comprehensive loss, and cash flows for each of the years in the three-year period ended December 31, 2007. 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 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. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 signifi cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Olympus Pacific Minerals Inc. as at December 31, 2007 and 2006, and the results of its operations and its cash flows for the each of the three years in the period ended December 31, 2007 in conformity with Canadian generally accepted accounting principles.

Ernst & Young LLP
Chartered Accountants
Licensed Public Accountants

Toronto, Canada
March 5, 2008

F-1

OLYMPUS PACIFIC MINERALS INC.

Consolidated Balance Sheets


As at (Canadian dollars)	December 31 2007				December 31 2006
ASSETS
Current
Cash		$	26,656,146			$	4,101,536
Accounts receivable and prepaid expenses			1,079,598				1,703,984
Inventory (note 12)			1,293,463				617,043
			29,029,207				6,422,563
Long-term
Property, plant and equipment (note 6)			11,094,563				10,697,757
Mineral properties (note 3)			9,818,923				10,015,755
Deferred financing costs			—				695,773
Deferred exploration and development costs (note 3)			21,707,466				13,724,846
			42,620,952				35,134,131
			71,650,159				41,556,694
LIABILITIES
Current
Accounts payable and accrued liabilities			3,163,155				1,899,646
Capital lease obligations (note 11)			388,390				412,894
Loan facility (note 5)			—				2,330,800
Asset retirement obligation (note 4)			135,333				59,173
			3,686,878				4,702,513
Long-term
Asset retirement obligation (note 4)			721,686				890,322
			721,686				890,322
			4,408,564				5,592,835
Commitments and contractual obligations (note 9)
SHAREHOLDERS’ EQUITY
Share capital (note 7a)			104,159,423				66,074,507
Contributed surplus (notes 7a)			6,482,499				4,347,990
Deficit			(43,400,327	)			(34,458,638	)
			67,241,595				35,963,859
		$	71,650,159			$	41,556,694


	‘‘signed’’	‘‘signed’’
On behalf of the Board of Directors	David A. Seton Executive Chairman & Chief Executive Officer	Jon Morda Director & Chairman of Audit Committee

See accompanying notes to the Consolidated Financial Statements

F-2

OLYMPUS PACIFIC MINERALS INC.

Consolidated Statements of Operations and Comprehensive Loss


For the years ended December 31 (Canadian dollars)	2007				2006				2005
Sales – Gold		$	6,996,257			$	1,644,040			$	—
Cost and expenses
Cost of sales			5,523,193				1,535,891				—
Amortization			1,925,458				596,176				19,858
Management fees and salaries			2,770,770				1,515,417				877,288
Professional fees			782,058				353,402				187,540
Travel			574,569				425,895				370,805
Investor relations and promotion			527,466				256,207				184,519
Consulting fees			393,438				315,763				149,790
Office and general administrative			417,526				508,269				230,900
Transfer agent and regulatory fees			161,409				189,237				25,555
Royalty expense			112,336				47,960				—
Shareholders’ information			80,492				37,767				33,266
General exploration			74,442				158,700				(37,392	)
Stock-based compensation (note 7b)			2,272,717				617,071				961,075
			15,615,874				6,557,755				3,003,204
Other (income) expense
Interest income			(694,985	)			(272,156	)			(21,029	)
Interest expense			130,615				127,262				23,203
Write-off of deferred exploration costs (note 3)			—				438,931				—
Write-off of deferred transaction costs			265,488				—				—
Impairment Charge (note 3)			—				4,280,000				—
Debt extinguishment costs (note 5)			54,060				—				—
Foreign exchange loss/(gain)			566,894				(8,865	)			(236,917	)
			322,072				4,565,172				(234,743	)
Loss and comprehensive loss for the year		$	8,941,689			$	9,478,887			$	2,768,461
Basic and diluted loss per common share		$	0.04			$	0.06			$	0.02
Weighted average number of common shares outstanding			200,364,897				164,678,791				116,581,239

OLYMPUS PACIFIC MINERALS INC.

Consolidated Statements of Deficit


For the years ended December 31 (Canadian dollars)	2007			2006		2005
Deficit
Balance, beginning of year		$	34,458,638		24,979,751		22,211,290
Loss for the year			8,941,689		9,478,887		2,768,461
Deficit, end of the year		$	43,400,327		34,458,638		24,979,751

See accompanying notes to the Consolidated Financial Statements

F-3

OLYMPUS PACIFIC MINERALS INC.

Consolidated Statements of Cash Flows


For the years ended December 31 (Canadian dollars)	2007				2006			2005
Operating activities
Loss for the year			(8,941,689	)		(9,478,887	)		(2,768,461	)
Items not affecting cash
Amortization			1,925,458			596,176			19,858
Amortization of deferred financing costs			—			81,090			—
Stock-based compensation expense			2,272,717			617,071			961,075
Write-off of deferred transaction costs			265,488			—			—
Accretion expense			37,211			29,097			—
Write off of deferred exploration costs			—			438,931			—
Impairment charge			—			4,280,000			—
Foreign exchange			231,101			10,286			(39,944	)
Reclamation costs			(79,388	)		—			—
Changes in non-cash working capital balances
Accounts receivable and prepaid expenses			624,385			(1,452,499	)		(43,238	)
Accounts payable and accrued liabilities			961,315			292,661			1,147,817
Inventory			(676,418	)		(357,529	)		(259,514	)
Cash used in operating activities			(3,379,820	)		(4,943,603	)		(982,407	)
Investing activities
Deferred exploration and development costs			(7,612,887	)		(5,072,261	)		(4,666,219	)
Acquisition of property, plant and equipment			(1,627,525	)		(3,747,249	)		(6,335,240	)
Deferred transaction costs			—			(209,238	)		—
Cash used in investing activities			(9,240,412	)		(9,028,748	)		(11,001,459	)
Financing activities
Shares issued			36,829,000			16,543,966			11,881,771
Warrants issued			1,092,963			—			—
Shares issued on warrants exercised			2,394,987			—			—
Repayment of debt			(2,156,497	)		—			(2,706,227	)
Repayable loan			—			2,314,200			2,706,227
Share issue cost			(2,068,049	)		(1,195,261	)		(410,546	)
Decrease in subscription received in advance			—			—			(4,680,000	)
Capital lease payments			(367,800	)		—			—
Cash provided by financing activities			35,724,604			17,662,905			6,791,225
Increase in cash during the year			23,104,372			3,690,554			(5,192,641	)
Cash – beginning of the year			4,101,536			404,987			5,597,628
Effect of foreign exchange rate changes on cash			(549,762	)		5,995			—
Cash – end of the year		$	26,656,146			4,101,536			404,987

See accompanying notes to the Consolidated Financial Statements

F-4

Table of Contents

OLYMPUS PACIFIC MINERALS INC.
Notes to Consolidated Financial Statements
Dcember 31, 2007
All dollar amounts are in Canadian Dollars unless Otherwise stated

1. Nature of Operations

Olympus Pacific Minerals Inc. (the ‘‘Company’’ or ‘‘Olympus’’) and its subsidiaries are engaged in the acquisition, exploration, development and mining of gold bearing properties in Southeast Asia. The Company focuses its activities on two multi-project properties located in Central Vietnam – the Bong Mieu Gold property and the Phuoc Son Gold property and an exploration project in the Philippines – Capcapo.

The Company is considered to be in the development stage as a significant amount of the available funding is directed towards exploration activities and developing projects.

2. Basis of Presentation and Significant Accounting Policies

Basis of presentation and consolidation

These audited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These policies are consistent with accounting principles generally accepted in the United States in all material respects except as outlined in note 16. The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant inter-company balances and transactions have been eliminated.

Change in Accounting Policies

The Company has adopted the following CICA guidelines effective for the Company’s first quarter commencing January 1, 2007:

Section 3855 – Financial Instruments – Recognition and Measurement. Section 3855 requires that all financial assets, except loans and receivables and those classified as held to maturity, and derivative financial instruments, must be measured at fair value. Financial liabilities must be measured at fair value when they are classified as held for trading; otherwise, they are measured at amortized cost. Investments classified as available for sale are reported at fair market value (or marked to market) based on quoted market prices with unrealized gains or losses excluded from earnings.

The Company, as required by CICA Handbook Section 3855, has adopted this section prospectively as of January 1, 2007 and this adoption had no effect on the Company’s financial statements except for the prospective reclassification of deferred financing costs from long-term assets to net against the loan facility.

On adopting this section, we have designated certain financial assets and liabilities and adopted the following new accounting policies:

Cash

Cash is classified as held-for-trading and recorded at fair value.

Accounts receivable, accounts payable, accrued liabilities, and capital leases

These are classified as loans and receivables or as other financial liabilities all of which are measured at amortized cost. Our December 31, 2006 carrying values for leases or receivables and financial liabilities were recorded at amortized cost, and no adjustments were made to the opening values.

Long-term debt

All of our long-term debt is classified as other than held-for-trading and is accounted for at amortized cost. We previously capitalized any costs spent to issue debt to Deferred Financing Costs in

F-5

Table of Contents

long-term assets. Effective January 1, 2007, we recorded transaction costs related to issuing debt against the loan facility. After this reclassification, our long-term debt approximated amortized cost, and no other adjustments were made to the opening values (note 5).

Other balance sheet accounts

Other balance sheet accounts, such as inventories, prepaid expenses, and capital assets are not within the scope of the new accounting standards as they are not financial instruments.

Section 1530 – Comprehensive Income. Comprehensive income is the change in the Company’s net assets that result from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that would not normally be included in net earnings such as unrealized gains or losses on available-for-sale investments. Other comprehensive income includes the holding gains and losses from available-for-sale securities which are not included in net income (loss) until realized. The adoption of Section 1530 had no effect on the Company’s financial statements.

Section 1506 – Accounting Changes. Section 1506 requires that: (a) a voluntary change in accounting principles can be made if, and only if, the changes result in more reliable and relevant information, (b) changes in accounting policies are accompanied with disclosures of prior period amounts and justification for the change, and (c) for changes in estimates, the nature and amount of the change should be disclosed. The Company has not made any voluntary change in accounting principles since the adoption of the revised standard.

The CICA has also recently issued new accounting pronouncements:

In December 2006, the CICA issued Handbook Section 3862, Financial Instruments – Disclosure and Section 3863, Financial Instruments – Presentation. Section 3862 replaces the disclosure portion of Section 3861. It places increased emphasis on disclosing the nature and extent of risks arising from both recognized and unrecognized financial instruments, and how these risks are managed. Section 3863 carries forward the presentation requirements from Section 3861.

Additionally in December 2006, the CICA issued Handbook Section 1535, Capital Disclosures. This Section establishes standards for disclosing qualitative and quantitative information about an entity’s capital and how it is managed in order to enable users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

In May 2007, the CICA issued amended Handbook Section 1400, General Standards of Financial Statement Presentation. The section provides revised guidance related to management’s responsibility to assess the ability of the entity to continue as a going concern.

The main features of the changes are as follows:


	•	Management is required to make an assessment of an entity’s ability to continue as a going concern;


	•	In making its assessment, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date;


	•	Financial statements must be prepared on a going concern basis unless management intends to liquidate the entity, to cease trading or cease operations, or has no realistic alternative but to do so;


	•	Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern; and


	•	When financial statements are not prepared on a going concern basis, that fact should be disclosed, together with the basis on which the financial statements are prepared and the reason the entity is not regarded as a going concern.

In June 2007, the CICA issued Handbook Section 3031, Inventories. This Section requires inventory to be recorded at the lower of cost or net realizable value, which is our current accounting

F-6

Table of Contents

policy. The section also clarifies the allocation of fixed production overhead, requires consistent use of either first-in, first-out or weighted average to measure the cost of inventories, and requires that any previous write-downs be reversed when the value of inventories increases. The amount of the reversal is limited to the amount of the original write-down.

The above standards will become effective for the Company beginning on January 1, 2008. The Company is reviewing these standards, and has not yet determined the impact, if any, on the consolidated financial statements.

In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible assets, replacing Section 3062, Goodwill and other Intangible assets and Section 3450, Research and development costs. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. This standard will become effective for the Company beginning January 1, 2009. The Company is reviewing this standard, and has not yet determined the impact, if any, on the consolidated financial statements.

Significant Accounting Policies

Estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from these estimates.

Cash

Cash is comprised of cash deposited in interest bearing bank deposit accounts.

Mineral properties

The Company records its interests in mineral properties and areas of geological interest at cost. All direct and indirect costs, comprised of cash paid and/or the assigned value of share consideration, relating to the acquisition of these interests are capitalized on the basis of specific claim blocks or areas of geological interest until the project to which they relate is placed into production, sold or where management has determined impairment. The capitalized cost of the mineral properties is tested for recoverability whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognized if it is determined that the carrying amount is not recoverable and exceeds fair value. The net proceeds from the sale of a portion of a mineral project which is sold before that project reaches the production stage will be credited against the cost of the overall project. The sale of a portion of a mineral project which has reached the production stage will result in a gain or loss recorded in the statement of operations.

Mineral properties are amortized on the basis of units produced in relation to the proven and probable reserves available on the related project following commencement of commercial production. The recorded amount may not reflect recoverable value as this will be dependent on the development program, the nature of the mineral deposit, commodity prices, adequate funding and the ability of the Company to bring its projects into production.

Asset Retirement Obligations

The Company recognizes the fair value of an asset retirement obligation as a liability, in the period of disturbance or acquisition associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company

F-7

Table of Contents

concurrently recognizes a corresponding increase in the carrying amount of the related long-lived asset that is depreciated over the life of that asset. The fair value of the asset retirement obligation is estimated using the expected cash flow approach discounted at a credit-adjusted risk-free interest rate. Subsequent to the initial measurement, the asset retirement obligation is adjusted to reflect the passage of time or changes in the estimated future cash flows underlying the obligation. Changes in the obligation due to the passage of time are recognized in income as an operating expense using the interest method. Changes in the obligation due to changes in estimated cash flows are recognized as an adjustment of the carrying amount of the long-lived asset that is depreciated over the remaining life of the asset.

Deferred exploration and development costs

The Company defers all exploration and development expenses relating to mineral projects and areas of geological interest until the project to which they relate is placed into production, sold or where management has determined impairment. These costs will be amortized over the proven and probable reserves available on the related property following commencement of production.

Foreign currency translation

The monetary assets and liabilities of the Company that are denominated in currencies other than the Canadian dollar are translated at the rate of exchange at the balance sheet date and non-monetary items are translated at historical rates. Revenues and expenses are translated at the average exchange rate for the year. Exchange gains and losses arising on translation are included in the statement of operations.

Property, plant and equipment

The Company records building, plant, equipment, and infrastructure at cost. Buildings, plant, equipment, and infrastructure involved in service, production and support are amortized, net of residual value, using the straight-line method, over the estimated productive life of the asset. Productive lives for these assets range from 3 to 10 years, but the productive lives do not exceed the related estimated mine life based on proven and probable reserves. Computer hardware and software is amortized using the straight-line method over three years.

In the normal course of our business, the Company has entered into certain leasing arrangements whose conditions meet the criteria for the leases to be classified as capital leases. For capital leases, the Company records an asset and an obligation at an amount equal to the present value at the beginning of the lease term of minimum lease payments over the lease term. In the case of all our leasing arrangements, there is transfer of ownership of the leased assets to the Company at the end of the lease term and therefore the Company amortizes these assets on a basis consistent with other owned assets.

Asset impairment – Long-lived assets

The Company reviews and evaluates the carrying value of its mineral properties, property, plant and equipment and deferred exploration and development costs for impairment when events or changes in circumstances indicate that the carrying amounts of related assets or groups of assets might not be recoverable. In assessing the impairment for these assets, if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset, an impairment loss is measured and recorded on a discounted basis. All long-lived assets at a particular operation or project are combined for purpose of performing the recoverability test and estimating future cash flows. Future cash flows are based on management’s best estimates of future recoverable mine production, expected sales prices (considering current and historical prices), production levels and costs and further expenditures. These cash flows are subject to significant measurement u ncertainty and material write-downs could occur if actual results differed from the estimates and assumptions used.

Stock-based compensation

The Company uses the fair-value method of accounting for stock options granted to employees and directors. Under this method, the fair value of stock options is estimated at the grant date and is

F-8

Table of Contents

recognized as an expense over the vesting period. The majority of the Company’s stock options vest on the passage of time and continued service requirements. For some of the stock options granted, the options vest based on meeting two of three criteria: (a) specified production levels, (b) specified minimum share price and market capitalization and /or (c) minimum threshold of ounces of gold geological resources for the Company. Compensation expense is recognized for these options based on the best estimate of the number of options that are expected to eventually vest and the estimate is revised, if necessary, if subsequent information indicates the expected number of options that vest are likely to differ from initial estimates. The Company applies an estimated forfeiture rate when calculating the expense. Any consideration paid upon the exercise of stock options or warrants plus any previously recognized amounts in contributed surplus is credited to common shares.

The Company has a bonus share program that allows employees to elect to take their bonus in either cash or double the cash amount in common shares. If the employee chooses the share bonus, the common shares will be received one year after the last day of the bonus period. If the employee chooses the cash bonus, the cash is received within the same fiscal year. If an employee terminates employment before the one year of service, the bonus reverts back to cash without double up and is paid out on termination. The cash portion of the bonus is recognized as a liability, on a quarterly basis, as the employee services are performed. If the employee elects to be paid in common shares, a further share based equity award is recognized based on the market price of the Company’s shares at the date of grant and is recognized over the one year additional service period as compensation expense and contributed surplus. On the issuance of the shares, the liability plus am ounts in contributed surplus are credited to common shares.

Loss per share

Basic loss per share is calculated using the weighted-average number of common shares outstanding during the year.

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings per share is determined assuming that proceeds received on exercise would be used to purchase common shares at the average market price during the period. As there is currently a loss per share, there is no dilutive effect from any of the outstanding options and warrants.

Future income taxes

Future income taxes are recorded using the liability method. Under the liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.

Stripping Costs

Stripping costs incurred during the production phase of a mine are accounted for as variable production costs that are included in the costs of the inventory produced during the period that the stripping costs are incurred.

Revenue Recognition

Revenue from the sale of gold and by-products, such as silver, are recognized when; (i) the significant risks and rewards of ownership have been transferred, (ii) reasonable assurance exists regarding the measurement of the consideration that will be derived from the sales of goods, and the extent to which goods may be returned, and (iii) ultimate collection is reasonably assured. The risks

F-9

Table of Contents

and rewards of ownership for the gold and silver reside with the mine site until gold and silver reaches the Zurich airport and the doré bars are consigned for transport to the refinery. Consequently, revenue is recognized when the gold and silver reaches the refinery. The realized sales price per troy ounce of gold is the AM-fixing of the London Bullion Market in US dollars as prescribed under the sales contract.

For accounting purposes, the refining and transport charges are classified as part of cost of sales and revenues from by-products are netted against cost of sales.

Inventory

Inventory is comprised of ore in stockpiles, operating supplies, dore bars and gold in circuit and is recorded at the average cost, determined from the weighted average of the cost of similar items at the beginning of a month and the cost of similar items added during the month. Dore bars and gold in circuit inventory cost includes the laid-down cost of raw materials plus direct labour and an allocation of applicable overhead costs. Gold in circuit inventory represents gold in the processing circuit that has not completed the production process, and is not yet in a saleable form.

Ore in stockpiles is measured by estimating the number of tonnes added and removed from the stockpile, the number of contained ounces (based on assay data) and estimated metallurgical recovery rates (based on the expected processing method). Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at the stockpiles average cost per recoverable unit.

We value finished goods and ore in stockpiles at the lower of cost or net realizable value.

Interest Cost Accounting

Interest cost is considered an element of the historical cost of an asset when a period of time is necessary to prepare it for its intended use. The Company capitalizes interest costs to assets under development or construction while development or construction activities are in progress. Capitalizing interest costs ceases when construction of the asset is substantially complete and it is ready for its intended use. In that case, the specific interest rate is used as well as the weighted average interest rate on other obligations if the asset expenditures exceed the specific borrowing.

3. Mineral Properties and Deferred Exploration and Development Costs


	Mineral Properties		Deferred Exploration and Development Costs
	December 31, 2007	December 31, 2006	December 31, 2007	December 31, 2006
Phuoc Son	$6,116,904	$6,116,904	$14,834,584	$9,527,650
Bong Mieu	3,944,000	3,944,000	6,535,527	9,167,689
Capcapo	—	—	678,541	—
	10,060,904	10,060,904	22,048,652	18,695,339
Accumulated amortization(1) Write-off (2) Impairment charge (3)	(241,981) — —	(45,149) — —	(341,186) —	(251,562) (438,931) (4,280,000)
Total	$9,818,923	$10,015,755	$21,707,466	$13,724,846

(1) Accumulated amortization relates to the Bong Mieu Central Gold mine which commenced commercial production on October 1, 2006.

(2) Write-off of $438,931 of Deferred Exploration costs in 2006 relates to certain areas of the Bong Mieu property where exploration activities did not produce positive results.

(3) During the fourth quarter of 2006, management determined that the Bong Mieu Central Gold mine was not reaching originally estimated future throughput. Consequently, an impairment charge of $4,280,000 was taken on the Bong Mieu Central Gold mine deferred exploration and development costs.

F-10

Table of Contents

Bong Mieu Gold Property

The Company holds Mining and Investment Licences covering 30 square kilometres within the Bong Mieu gold property area. The Investment Licence covers three deposits: Bong Mieu Central Gold mine (an open pit), Bong Mieu Underground (an underground deposit) and Bong Mieu East (a potentially open-pit deposit). Olympus acquired this project in 1997. Olympus owns 80 percent and the Company’s Vietnamese partner owns 20 percent of the Bong Mieu property. The Company constructed the Bong Mieu Central open pit mine and associated infrastructure in 2005 and 2006, and commercial gold production commenced in the fourth quarter of 2006. The Company pays a 2 percent royalty based on 80 percent of the revenues of Bong Mieu Central to Zedex Minerals Limited. Once the Vietnamese partner meets its share of the funding requirements, the Company would pay a 3 percent net smelter return royalty equal to 3 percent of the sales price when the gold is smelted in Vietnam . Until such time as the Vietnamese partner meets its funding requirement no amount has been accrued for the royalty.

Phuoc Son Gold Property

The Company holds an 85 percent interest in the Phuoc Son Gold Project with a focus of exploration, development and production of gold and other potential minerals in the specified project area, located in Phuoc Son and Nam Giang districts in the Quang Nam Province. In 2003, the Company’s subsidiary, New Vietnam Mining Company (‘‘NVMC’’), entered into a joint venture with Mien Trung Industrial Company (‘‘Minco’’), a mining company controlled by the local provincial government, to form the Phuoc Son Gold Company (‘‘PSGC’’). PSGC has an investment license on the Phuoc Son property. NVMC’s initial interest in PSGC is 85 percent and Minco has a 15 percent interest. After five years, from the end of the period in which PSGC makes a profit for 12 consecutive months, Minco can increase its interest by 15 percent to 30 percent if Minco chooses to acquire such interest from NVMC by paying fair market value. After 20 years, Minco can increase its interest to a total of 50 percent if Minco chooses to acquire such additional 20 percent interest from NVMC by paying fair market value. Fair market value shall be determined by using an independent accounting firm to perform the fair market value assessment and that assessment will be considered final and binding for both parties. If Minco does not proceed on exercising its right of acquisition within three months from the dates of entitled acquisition, Minco will be considered as having waived its right to acquire the interest.

4. Asset Retirement Obligation


	December 31, 2007				December 31, 2006
Balance, beginning of the year		$	949,495			$	382,509
Liabilities incurred			94,059				515,545
Liabilities settled			(79,388	)			—
Foreign exchange			(144,358	)			22,344
Accretion			37,211				29,097
Balance, end of the year			857,019				949,495
Current portion			135,333				59,173
Non-current portion		$	721,686			$	890,322

The asset retirement obligation relates to the Bong Mieu and Phuoc Son properties in Vietnam. The Company estimated the cost of rehabilitating the sites at US$1,082,000 over the next 9 years. Such estimated costs have been discounted using a credit adjusted risk-free rate of 6.9 percent.

The US$1,082,000 will be spent as follows: 2008 – US$149,000; 2009 – US$202,000; 2010 – US$154,000; 2011 – US$380,000; 2012 – US$68,000; and 2013 and thereafter – US$129,000.

F-11

Table of Contents

5. Loan Facility

On June 27, 2007 the US$2 million Non-Revolving Debt Facility (the ‘‘Facility’’) with Macquarie Bank Limited (‘‘MBL’’) of Sydney, Australia was repaid in full. Concurrently, MBL elected to exercise its share purchase warrants to acquire 5,376,092 common shares of the Company at a price of $0.4347 for gross proceeds of $2,336,987.

6. Property, Plant & Equipment


	December 31, 2007									December 31, 2006
	Cost			Accumulated depreciation			Net book value			Cost			Accumulated depreciation			Net book value
Building		$	866,835		$	221,481		$	645,354		$	502,412		$	47,161		$	455,251
Leasehold improvements			103,005			46,088			56,917			103,005			13,333			89,672
Machinery and equipment			6,706,032			1,284,822			5,421,210			5,613,823			281,354			5,332,469
Office equipment, furniture and fixtures			1,097,257			509,395			587,862			867,883			292,234			575,649
Vehicles			400,711			222,128			178,583			376,548			153,956			222,592
Infrastructure			3,737,315			547,073			3,190,242			2,047,585			69,855			1,977,730
Capital Assets in progress			1,014,395			—			1,014,395			2,044,394			—			2,044,394
		$	13,925,550		$	2,830,987		$	11,094,563		$	11,555,650		$	857,893		$	10,697,757

7. Capital Stock

a) Common Shares

The Company is authorized to issue an unlimited number of common shares with one vote per share and no par value per share. The following table shows movements in the capital stock of the Company for the years-ended December 31, 2005, 2006 and 2007.


	Number of Shares		Amount $
Common shares, January 1, 2005		97,748,660		$	38,749,225
Private placements		32,645,000			11,063,500
Issued upon exercise of warrants		1,452,540			435,762
Share issue costs		—			(538,816	)
Common shares, January 1, 2006		131,846,200			49,709,671
Private placement (1)		27,000,000			15,660,000
Issued upon exercise of options		1,155,833			558,067
Issued upon exercise of warrants		1,270,000			636,270
Issued upon debt repayment		3,406,758			1,174,480
Share issue costs (1)		—			(1,663,981	)
Common shares, December 31, 2006		164,678,791		$	66,074,507
Private placement (2)		21,428,571			12,000,000
Prospectus offering (3)		38,461,538			23,846,154
Issued upon exercise of options		1,978,565			1,231,986
Issued upon exercise of warrants		5,476,092			3,393,060
Issued on exercise of over-allotment (3)		216,394			134,164
Bonus common shares issued		137,060			86,090
Share issue costs (1 and 4)		—			(2,606,538	)
Common shares, December 31, 2007		232,377,011		$	104,159,423

F-12

Table of Contents

The following table shows movements in contributed surplus of the Company for years ended December 31, 2007, 2006 and 2005.


	December 31, 2007				December 31, 2006				December 31, 2005
Balance, beginning of the year		$	4,347,990			$	2,656,679			$	1,567,334
Options granted			1,849,504				524,197				961,075
Bonus common shares granted			34,930				31,912				—
Valuation of Warrants, net of issue costs (3 and 4)			1,092,963				1,445,573				128,270
Options and warrants exercised			(1,381,376	)			(310,371	)			—
Agents’ compensation options and warrants granted (4)			538,488				—				—
Balance, end of the year		$	6,482,499			$	4,347,990			$	2,656,679

(1) On March 31, 2006, the Company completed a brokered private placement of $15,660,000. The Company issued 27,000,000 common shares at $0.58 per share. Agents for the Offering were paid a cash commission equal to 7 percent of the gross proceeds and were issued 1,890,000 compensation warrants. Each compensation warrant is exercisable for one common share at $0.58 and expires on March 31, 2008.

(2) On March 19, 2007, the Company completed a non-brokered private placement of 21,428,571 shares at a price of $0.56 per share, for gross proceeds of $12,000,000 and net proceeds of $11,967,772.

(3) On August 10, 2007, the Company completed an Offering (the ‘‘Offering’’) of 38,461,538 Units of the Company at a price of $0.65 per unit for gross proceeds of $25,000,000 and net proceeds of $22,891,000. Each Unit consisted of one common share and one-half of one common share purchase warrant. The Units were separated into common shares [a total of 38,461,538] and common share purchase warrants [a total of 19,230,769] immediately following the closing of the Offering. Of the Offering price of $0.65 per Unit, the Company has, for accounting purposes, allocated $0.62 to each common share and $0.03 to each one-half common share purchase warrant. Each whole common share purchase warrant is exercisable for one common share of the Company at $0.80 and expires August 9, 2009.

The Company also granted the Agents an over-allotment option to purchase additional Shares at a price of $0.62 and additional whole common share purchase warrant at a price of $0.06 for a period of 30 days from closing. The over-allotment option was partially exercised on September 7, 2007 and as a result, a total of 216,394 common shares of the Company at $0.62 and 323,947 whole common share purchase warrants at $0.06 were issued for gross proceeds of $153,601 and net proceeds of $144,385.

(4) Agents for the August 10, 2007, Offering were paid a cash commission equal to 6 percent of the gross proceeds and were granted non-transferable compensation options to acquire 2,307,692 Agents units. Each compensation option is exercisable for one Agent’s unit at $0.65 and expires on August 10, 2009. Each Agents’ Unit consists of one common share of the Company and one-half of one common share purchase warrant. Each whole Agents’ common share purchase warrant will entitle the holder to acquire one common share of the Company at a price of $0.80 per common share and will expire on August 10, 2009.

b) Stock Options

On September 12, 2003, the Company adopted a stock option plan which was re-approved by its shareholders on June 16, 2005. On June 7, 2007, the shareholders approved a new stock option plan to replace the existing plan. Under the plan, options to purchase shares of the Company may be granted to directors, officers, employees and consultants of the Company. The maximum number of shares that may be issued under the plan is 12 percent (on a non-diluted basis) of the Company’s issued and outstanding shares. Options granted under the plan have a maximum term of five years and vesting dates are determined by the Board of Directors on an individual basis at the time of granting.

F-13

Table of Contents

The following table provides a summary of the stock option activity for the years ended December 31, 2007, 2006 and 2005.


	December 31, 2007						December 31, 2006						December 31, 2005
	Number of Options			Weighted Average Exercise Price			Number of options			Weighted Average Exercise Price			Number of options			Weighted Average Exercise Price
Outstanding, beginning of the year		11,477,500			$	0.39		11,298,667			$	0.37		4,244,500			$	0.52
Granted		8,950,000				0.70		1,965,000				0.45		8,420,000				0.33
Exercised		(1,978,565	)			0.43		(1,155,833	)			0.33		—				—
Cancelled/ Expired		(856,601	)			0.58		(630,334	)			0.44		(1,365,833	)			0.51
Outstanding, end of the year		17,592,334				0.53		11,477,500				0.39		11,298,667				0.39
Options exercisable at the end of the year		14,249,925						9,619,793						7,980,333

The following table summarizes information about the stock options outstanding for the year ended December 31, 2007.


OPTIONS OUTSTANDING							OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding As at December 31, 2007		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable As at December 31, 2007		Weighted Average Exercise Price
$0.30 – 0.36		6,030,000		2.73		0.32		6,030,000		0.32
$0.40 – 0.45		1,828,334		1.57		0.42		1,823,833		0.42
$0.50 – 0.55		784,000		1.83		0.51		765,944		0.51
$0.60 – 0.65		4,700,000		4.36		0.65		2,801,970		0.65
$0.75		4,250,000		4.19		0.75		2,828,178		0.75
		17,592,334						14,249,925

During the year ended December 31, 2007, 8,950,000 [2006 – 1,965,000] options were granted and were valued, for accounting purposes, at $2,716,750 [2006 – $428,628] using the Black-Scholes model. The weighted average assumptions for the 2007 – granted stock option series were; a 3-year term, 82 percent volatility, a risk free rate of 4 percent, and no expected dividends. The exercise prices were determined based on the Volume Weighted Average Price (VWAP) which is the listing of the stock activities for five business days from the grant date. The vesting periods of these options: 1/3 of the shares were vested on the date of the grant; 1/3 vest 12 months after the grant date and another 1/3 vest 24 months after the grant date.

The total share compensation expense recognized for stock options in 2007 was $1,849,504 [2006 – $524,197].

c) Warrants

The following table shows movements in number of warrants of the Company for the years ended December 31, 2007 and December 31, 2006.


	December 31, 2007						December 31, 2006
	Number of Warrants			Weighted Average Exercise Price			Number of Warrants			Weighted Average Exercise Price
Outstanding, beginning of the year		7,266,092			$	0.47		1,270,000			$	0.40
Granted (see note 7a)		19,554,716				0.80		7,266,092				0.47
Exercised (see note 5)¹		(5,476,092	)			0.43		(1,270,000	)			0.40
Outstanding, end of the year		21,344,716				0.78		7,266,092				0.47

1.	100,000 of the total warrants exercised related to the March 31, 2006 private placement.

F-14

Table of Contents

The following is a summary of the warrants outstanding as at December 31, 2007.


Exercise Prices	Number Outstanding As at December 31, 2007		Expiry date
$0.58		1,790,000	March 31, 2008
$0.80		19,230,769	August 10, 2009
$0.80		323,947	September 7, 2009
		21,344,716

d) Bonus Share Program

In 2007, employees who opted for their bonus to be paid in common shares are entitled to receive, subject to 1 year service requirement, 469,850 common shares in 2008. On the grant date, the fair value of the 2007 incremental share award including the cash bonus is $258,124.

Employees who opted for their bonus to be paid in common shares in 2006 received, in the first quarter of 2007, 137,060 common shares of the 191,330 shares they were eligible to receive (based on the one year service requirement). On the grant date, the fair value of the 2006 incremental share award including the cash bonus was $128,071.

The total compensation expense recognized for the bonus share program for the year ended December 31, 2007 was $423,213 [2006 – $92,874] which includes $165,089 cash bonus accrual for a new bonus period.

F-15

Table of Contents

8. Related Party Transactions

The Company entered into the following related party transactions during the 2007 year:


	Year-to-date December 31
			2007		2006
Consulting and legal fees		$	133,839	$	83,371
Management fees		$	1,228,499	$	581,396
Reimbursement of expenses		$	249,591	$	147,377
Royalties		$	112,336	$	47,960

Legal and consulting fees

Consulting services provided by Jura Trust which is associated with John Seton, a director of the Company. Legal services provided by Claymore Law where John Seton is a principal. The services provided are not under contract as the consulting and legal services are provided as required.

Management fees and reimbursement of expenses

Management fees and reimbursement of expenses incurred on behalf of the Company to companies controlled by officers of the Company. The companies that were paid for management fees and reimbursement of expenses include the following: Orangue Holdings Limited associated with David Seton in 2007 and 2006; Momentum Resources International Pty Limited associated with Colin Patterson in 2007 and 2006; Wholesale Products Trading Limited associated with Peter Tiedemann in 2007 and 2006; Action Management Limited associated for Charles Barclay in 2007 and 2006; and Bractea Enterprises Limited (previously named EHM Accounting) associated with Erik Martin in 2006. Expenses that were reimbursed include the following costs: airfare, accommodation, meals, car rental, telecommunications, computer, courses, conferences and licenses.

Royalties

On January 1, 2006, Zedex (a significant shareholder of the Company) was assigned a 2 percent gross production royalty, on the Bong Mieu sales, less incremental costs when Ivanhoe assigned to Zedex all its rights, title and interest in and to the debt, gross production royalties and royalty agreement. The royalty is calculated as 2 percent of the net sales amount equal to the revenues for gold and silver less refining and delivery costs.

These transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.

Other non-recurring transactions


	a)	On March 19, 2007 the Company completed a non-brokered private placement of common shares of 21,428,571 at $0.56 per share for net proceeds of $11,967,772. Of the $12,000,000 gross proceeds, $7,250,000 of common shares were purchased at $0.56 per share by shareholders who own over 5 percent of the Company.


	b)	On August 10, 2007, the Company completed an offering of 38,461,538 Units (see note 7) of the Company at a price of $0.65 per unit for net proceeds of $22,891,000. Of the $25,000,000 of gross proceeds, $2,500,000 of Units were purchased at $0.65 per share by shareholders who own over 5 percent of the Company.

F-16

Table of Contents

9. Commitments and Contractual Obligations

As at December 31, 2007


Payments Due	Total			Less than One Year			2 – 10 Years
Capital lease obligations			388,390			388,390			—
Operating leases			1,316,671			891,143			425,528
Purchase obligations – supplies and services			3,239,153			3,239,153			—
Purchase obligations – capital			2,214,365			2,214,365			—
Asset retirement obligations			1,072,931			147,572			925,359
Total		$	8,231,510		$	6,880,623		$	1,350,887

10. Financial Instruments

The Company’s financial instruments consist of cash, receivables, accounts payable and accrued liabilities, capital lease obligations. The carrying amount of cash, receivables and capital leases, payables and accruals is a reasonable approximation of fair value due to their short-term maturities.

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest rate or credit risks arising from these financial instruments.

Currency risk

The Company is primarily exposed to currency fluctuations relative to the US dollar and Vietnamese Dong as a significant portion of the Company’s operating and development costs are denominated in these foreign currencies. Monetary assets and liabilities denominated in foreign currencies are also exposed to foreign currency fluctuations. These potential currency fluctuations could have an impact on expenditures, production costs and Company profitability. At present, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

The foreign exchange loss for the year ended December 31, 2007 was mainly the result of foreign exchange fluctuations impacting the value of cash denominated in US dollars.

Interest rate risk

The Company was previously exposed to interest rate risk as interest on the variable interest rate US$2 million loan facility fluctuated due to changes in the LIBOR market interest rates. The loan was repaid in full on June 27, 2007.

There were no derivative instruments related to interest rates outstanding as at December 31, 2007 and December 31, 2006.

Market risk

The profitability of the operating mine of the Company is related to the market price of gold and silver. At present, the Company does not use derivative instruments.

Concentration of credit risk

For the year ended December 31, 2007, one customer accounts for all sales and accounts receivable. Credit risk exposure is mitigated because the Company can sell the gold doré bars it produces to many different refineries and payment from the refinery is typically received within one week of shipment.

F-17

Table of Contents

11. Capital Lease Obligation

The Company has capital leases for projects related to the Bong Mieu and Phuoc Son properties.


	December 31, 2007			December 31, 2006
Total minimum lease payment		$	388,390		$	412,894
Less: current portion			388,390			412,894
		$	—		$	—

12. Inventory


	December 31, 2007			December 31, 2006
Dore Bars		$	293,829		$	73,047
Ore in stockpiles			126,311			76,337
Gold in circuit			115,388			18,800
Mine operating supplies			757,935			448,859
Total		$	1,293,463		$	617,043

13. Income Taxes

A reconciliation of income taxes at statutory rates with reported taxes is as follows:


	2007				2006				2005
Loss		$	(8,942,000	)		$	(9,479,000	)		$	(2,768,000	)
Expected tax benefit of 34.12 percent			(3,051,000	)			(3,223,000	)			(945,000	)
Issue costs			(345,000	)			(215,000	)			(105,000	)
Foreign tax differential			(843,000	)			1,418,000				(268,000	)
Non deductible expenses			2,129,000				116,000				596,000
Benefit of current year loss not recognized			2,110,000				1,904,000				722,000
Total income tax recovery			—				—				—

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


	2007				2006				2005
Non-capital losses carried forward		$	5,731,000			$	4,189,000			$	2,415,000
Issue costs			760,000				616,000				263,000
Capital assets			53,000				25,000				25,000
Resource related deductions			636,000				692,000				641,000
Future income tax asset			7,180,000				5,522,000				3,344,000
Valuation allowance			(7,180,000	)			(5,522,000	)			(3,344,000	)
Net future income tax asset			—				—				—

The company has non-capital loss carry forwards of $24,520,000 (2006 -$16,280,000), the benefit of which have not been recognized in these financial statements and which can be used to reduce future taxable income in the years up to and including 2027.

F-18

Table of Contents


Non-capital loss carry forwards	Year of loss		Note	Amount			Expiry Date
Canada		2007	*		$	5,458,000		2027
Vietnam		2007	**			1,411,000		2012
Canada		2006	*			2,789,000		2026
Vietnam		2006	**			8,470,000		2011
Canada		2005	***			1,143,000		2015
Canada		2004	***			2,431,000		2014
Canada		2003	****			858,000		2010
Canada		2002	****			1,225,000		2009
Canada		2001	****			735,000		2008
Total non-capital loss carry forwards					$	24,520,000


*	– Loss carryforward of 20 years


**	– Vietnam has a loss carryforward of 5 years


***	– Loss carryforward of 10 years


****	– Loss carryforward of 7 years

Subject to certain restrictions, the Company also has resources expenditures available to reduce taxable income in future years. Future tax benefits which may arise as a result of these non-capital losses and resources expenditures have not been recognized in these consolidated financial statements.

14. Memorandum of Agreement

On November 23, 2006, a Memorandum of Agreement and Supplement to Memorandum of Agreement (collectively, the ‘‘MOA’’) was signed with Abra Mining and Industrial Corporation (‘‘AMIC’’) and Jabel Corporation (‘‘Jabel’’) which allows the Grantee (defined as the Company and ‘‘a Philippine national corporation to be identified by the Company’’) to acquire an option to earn a 60 percent interest in the Capcapo Property (as defined below) upon completing a specified level of expenditures on the Capcapo Property. The property covered by the MOA (the Capcapo Property.) consists of Mineral Production Sharing Agreement (MPSA) No. 144-99-CAR (MPSA 144), which covers 756 hectares in Capcapo, Licuan-Baay, Abra Province, Philippines, and a two-kilometre radius buffer zone around MPSA 144, with an area of about 3,500 hectares, which falls under a neighbouring Exploration Pe rmit Application (EXPA). Jabel holds the Capcapo Property in its name and is a minority shareholder in AMIC. AMIC has an operating agreement with Jabel in respect of the Capcapo Property.

The MOA is a binding agreement that was conditional on the Company’s completion of due diligence program to validate historical drilling information (completed in the third quarter of 2007). Under the MOA, once the due diligence procedures are complete with the drilling information being validated and a formal agreement is signed, a cash payment of US $200,000 will be made by the Grantee to AMIC. Under the MOA, the parties will form a joint venture corporation (Newco) that will develop, manage and conduct mining operations on the Property. Newco and Jabel will become co-holders of the titles to the Property. Although Jabel’s name will remain on the Capcapo Property titles, Jabel’s only economic interest in the Property will be a royalty. Aside from the royalty, any revenues from the Capcapo Property will be received and distributed by Newco.

On May 31, 2007, the Company registered a Philippine corporation with the Republic of the Philippines Securities and Exchange Commission under the corporate name of Kadabra Mining Corp (Kadabra). Kadabra has an authorized and outstanding stock of 30,000,000 Philippine pesos (equivalent to $700,000 Canadian dollars) and is 100 percent beneficially owned by the Company.

Upon full exercise of the option described in the MOA, Newco will be 40 percent owned by Kadabra, 20 percent owned by a Philippine national that the Company will identify (Philco), and 40 percent owned by AMIC. Collectively, the 40 percent ownership of Kadabra and the 20 percent ownership of Philco in Newco represent the 60 percent interest in the Property that is the subject of the MOA.

F-19

Table of Contents

Under Philippine law, an entity holding a MPSA must be at least 60 percent owned by Philippine nationals. A corporation is considered a Philippine national if at least 60 percent of its outstanding shares is owned by Filipinos or Philippine entities that are themselves at least 60 percent owned by Filipinos. Since Newco will be a co-holder of the Property, this restriction applies to Newco. However, Newco’s structure complies with this restriction because the total of Philco’s and AMIC’s shares in Newco will, upon exercise of the option, meet the minimum 60 percent Philippine national ownership requirement.

Further details on the MOA are as follows. Under the terms of the MOA, six months after the signing of a formal agreement, the Grantee will cause Olympus to issue common shares to AMIC with a total value of US$350,000 based on the average of the trading price of the Company’s common shares for the five trading days preceding the date of the signing of the formal agreement. Once the Grantee has spent US$3 million on exploration and development work on the Capcapo Property, the Grantee will cause the Company to issue to AMIC further common shares of the Company with a total value of US$450,000 based on the average of the trading price of the Company’s common shares for the five trading days preceding their date of issuance.

For the Grantee to earn a 60 percent interest in the Capcapo Property, a cumulative spending of US$6 million by the Grantee on exploration and development must occur by the end of the fifth year after the signing of the formal agreement. The Grantee earns a 20 percent interest after the first US$1 million is spent, an additional 20 percent interest after an additional US$2 million has been spent and an additional 20 percent interest after an additional US$3 million has been spent. Once the 60 percent interest has been earned, Newco will be formed as described above. On the other hand, if the Grantee obtains less than the 60 percent interest, the Grantee would proportionately share in less than 60 percent of the results of the joint venture.

One year after full commercial production is achieved on the Capcapo Property, the royalty mentioned above would be paid to Jabel. The royalty would be equal to either 3 percent of gross value of production or 6 percent of annual profit of Newco, as defined in the MOA, whichever is higher. The MOA also provides the Company with a right of first refusal over MPSA No. 141-99-CAR (another Jabel tenement in the vicinity) and the area of the neighbouring EXPA that is in excess of the two-kilometer radius buffer zone. If exploration results are favourable, then the focus would be to construct a mine in order to extract, process and produce gold, with the future impact on the Company of higher capital expenditures associated with mine construction and upon completion of the mine construction, increased production and sales.

15. Comparative Consolidated Financial Statements

The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2007 consolidated financial statements.

16. Differences from Generally Accepted Accounting Principles

These consolidated financial statements have been prepared in accordance with Canadian GAAP. A reconciliation of our income statement, balance sheet and statements of cash flows between US GAAP and Canadian GAAP is presented below together with a description of the significant measurement differences affecting these financial statements.


a)	Exploration and development expenditures

For Canadian GAAP purposes, the Company capitalizes exploration and development costs incurred on our properties after proven and probable reserves have been found as well as on properties where the Company has found non-reserve material that do not meet all the criteria required for classification as proven or probable reserves. The determination as to whether the existence of non-reserve material should result in the capitalization of mine exploration and development costs is based on various factors, including: the existence and nature of known mineralization; the location of the property (for example, whether the presence of existing mines and

F-20

Table of Contents

ore bodies in the immediate vicinity increases the likelihood of development of a mine on the property); the results of recent drilling on the property; and the existence of a pre-feasibility or feasibility study or other analysis to demonstrate that mineralization is expected to be commercially recoverable. Under US GAAP, exploration and development expenditures incurred on properties where mineralization has not been classified as a proven and probable reserve under Securities Exchange Commission (‘‘SEC’’) Industry Guide No.7 are expensed as incurred. Accordingly, certain expenditures are capitalized for Canadian GAAP purposes but expensed under US GAAP. Accordingly, any amortization, impairment charges or write-offs on deferred development and exploration costs under Canadian GAAP would be reversed under US GAAP as these costs have already been expensed.


b)	Production Start Date

Different criteria are applied under Canadian GAAP as compared to U.S. GAAP for determining the production start date of a mine for accounting purposes. The production start date for the Bong Mieu Central Open pit (Ho Gan) mine, which began producing gold during 2006, was July 1, 2006 under U.S. GAAP and October 1, 2006 under Canadian GAAP. Once a mine is considered to be in the production stage, sales, cost of sales, depreciation and amortization and inventory are recorded. As a result, under Canadian GAAP, these sales, cost of sales, depreciation and amortization and inventory were capitalized to deferred development costs for the three months ended September 30, 2006. This results in a further difference in amortization expense as a result of the differing carrying value of the mineral properties and capital assets.

Under U.S. GAAP, the production start date is determined by a number of factors including when all major capital expenditures have been completed for a mine, completion of a reasonable period of testing, the ability to produce gold in a saleable form and whether production/sales and extraction prior to production start date are considered de minimus. Under Canadian GAAP, the production start date is based on whether all major capital expenditures have been made, anticipated activity levels have been reached such as recovery rate, mining, crushing and processing tonnes per day and the ability to consistently extract and produce gold. Under Canadian GAAP, incidental revenue does not necessarily infer that production stage has been reached. The criteria that resulted in the accounting difference would be the de minimus sales/production and extraction criteria resulting in the earlier production start date under U.S. GAAP.


c)	Asset Impairment – Long-Lived Assets

Under US GAAP, the Company’s impairment analysis of the US GAAP carrying values of its mineral properties and property, plant and equipment determined that no impairment had occurred as the estimated probability weighted undiscounted cash flows associated with these assets exceeded the respective carrying values.

F-21

Table of Contents


For the years ended December 31		2007									2006
	Notes	Canadian GAAP			Adjustments			US GAAP			Canadian GAAP			Adjustments			US GAAP
Current assets			$	29,029,207		—			$	29,029,207		$	6,422,563		—			$	6,422,563
Long-term assets
Mineral properties	(b)			9,818,923		(37,500	)			9,781,423			10,015,755		(37,500	)			9,978,255
Capital assets(ii)	(b)			11,094,563		(79,332	)			11,015,231			10,697,757		(79,332	)			10,618,425
Deferred Financing Costs (i)				—		—				—			695,773		(486,537	)			209,236
Deferred exploration and development costs	(a)			21,707,466		(21,707,466	)			—			13,724,846		(13,724,846	)			—
				42,620,952		(21,824,298	)			20,796,654			35,134,131		(14,328,215	)			20,805,916
Total Assets				71,650,159		(21,824,298	)			49,825,861			41,556,694		(14,328,215	)			27,228,479
Total Liabilities (i)				4,408,564		—				4,408,564			5,592,835		(486,537	)			5,106,298
Total Shareholders’ equity				67,241,595		(21,824,298	)			45,417,297			35,963,859		(13,841,678	)			22,122,181
Total liabilities and Shareholders’ equity			$	71,650,159		(21,824,298	)		$	49,825,861		$	41,556,694		(14,328,215	)		$	27,228,479


	(i)	Under US GAAP, deferred financing costs are netted against the loan.


	(ii)	Under Canadian GAAP, capitalized interest is recorded as an addition to deferred development costs and under US GAAP, capitalization interest is recorded as an addition to capital assets.

d) Reconciliation of consolidated net income


For the years ended December 31	Notes	2007			2006				2005
Net loss under Canadian GAAP			$	8,941,689		$	9,478,887			$	2,768,461
Sales	(b)			—			(1,193,954	)			—
Cost and expenses	(a) & (b)			—			1,536,989				—
Exploration and development expenditures	(a)			7,982,620			5,128,332				4,666,219
Reverse impairment charge	(a)			—			(4,280,000	)			—
Reverse write-down	(a)			—			(438,931	)			—
Net loss and comprehensive loss under US GAAP			$	16,924,309		$	10,231,323			$	7,434,680
Basic and diluted loss per share			$	0.08		$	0.06			$	0.06

e) Consolidated statements of cash flow under US GAAP

Exploration and development expenditures that were capitalized under Canadian GAAP, but expensed under US GAAP represent the differences in cash flows from operating and investing activities between US GAAP and Canadian GAAP.


For the years ended December 31	2007				2006				2005
Activities
Operating		$	(10,992,707	)		$	(10,015,864	)		$	(5,648,626	)
Investing			(1,627,525	)			(3,956,487	)			(6,335,240	)
Financing			35,724,604				17,662,905				6,791,225
Cash at the beginning of year			4,101,536				404,987				5,597,628
Effect of foreign exchange rate changes on cash			(549,762	)			5,995				—
Cash at end of year		$	26,656,146			$	4,101,536			$	404,987

The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the December 31, 2007 consolidated financial statements.

F-22

Table of Contents

f) US GAAP Recent Developments

(i) In December 2007, the FASB issued SFAS No. 141 (revised), Business Combinations (‘‘SFAS 141R’’), which replaces SFAS No. 141, Business Combinations. Under the standard, an acquiring entity is required to record assets acquired and liabilities assumed in a business combination at fair value on the date of acquisition. Earn-out payments and other forms of contingent consideration will also be recorded at fair value on the acquisition date. The standard also requires fair value measurements to be used when recording non-controlling interests and contingent liabilities. In addition, the standard requires all costs associated with the business combination, including restructuring costs, to be expensed as incurred. For the Company, SFAS 141R is effective prospectively for business combinations having an acquisition date on or after January 1, 2009, with the exception of the accounting for valuati on allowances on deferred taxes and acquired contingencies. SFAS 141R amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to January 1, 2009 would also apply the provisions of SFAS 141R. The Company has not yet evaluated the potential impact of SFAS 141R on our consolidated financial statements.

(ii) In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements (‘‘SFAS 160’’), which amends ARB No. 51, Consolidated Financial Statements. This standard requires a non-controlling interest in a subsidiary to be reported in equity on the consolidated financial statements separate from the parent’s equity. The standard also requires transactions that do not impact a parent’s controlling ownership and do not result in the deconsolidation of the subsidiary to be recorded as equity transactions, while those transactions that do result in a change in ownership and a deconsolidation of the subsidiary to be recorded in net income (loss) with the gain or loss measured at fair value. For the Company, SFAS 160 is effective January 1, 2009 and should be applied prospectively with the exception of the presentation and disclosure requirements which shall be applied retrospectively for all periods presented. The Company at this time has not evaluated the potential impact, if any, of SFAS 160 on our consolidated financial statements.

(iii) In June 2007, the EITF ratified EITF Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (‘‘EITF 06-11’’). Under EITF 06-11 a realized tax benefit from dividends or dividend equivalents that are charged to retained earnings and paid to employees for equity classified non-vested equity shares, non-vested equity share units, and outstanding share options should be recognized as an increase to additional paid-in-capital. For the Company, EITF 06-11 is effective, prospectively, as of January 1, 2008. The Company does not expect the adoption of EITF 06-11 to have a material impact on our consolidated financial statements.

(iv) In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (‘‘SFAS 159’’), which permits an entity to measure certain financial assets and financial liabilities at fair value. Under SFAS 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. For the Company, SFAS 159 is effective as of January 1, 2008. The Company is in the process of currently evaluating the impact, if any, of the adoption of SFAS 159 on our consolidated financial statements.

(v) In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (‘‘SFAS 157’’), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. Under the standard, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity operates. The standard clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the standard establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the rep orting entity’s own data. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. For the Company, SFAS 157 is effective as of January 1, 2008. In February 2008, the FASB issued Staff Positions No. 157-1 and No. 157-2

F-23

Table of Contents

which partially defer the effective date of SFAS 157 for one year for certain non-financial assets and liabilities and remove certain leasing transactions from its scope. The Company is in the process of evaluating the impact, if any, of the adoption of SFAS 157 on our consolidated financial statements.

END OF NOTES TO FINANCIAL STATEMENTS

F-24

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Avg

Olympus Pacific Minerals Inc.

/s/ Pamela Campagnoni

Pamela Campagnoni
Chief Financial Officer