Esperanza Resources 20F 2007 Annual report

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

[X]

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

For the fiscal year endedDecember 31, 2007

[ ]

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

For the transition period from ____________ to __________

[ ]

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

Date of event requiring this shell company report ………………………………

Commission File Number:

0-50824

ESPERANZA SILVER CORPORATION

(Exact name of Registrant as specified in its charter)

__________British Columbia, Canada_____________

(Jurisdiction of incorporation or organization)

Suite 300, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

(Address of principal executive offices)

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

Title of each class Name on each exchange on which registered

None None

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

Common Shares, without par value

(Title of Class)

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

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 46,326,821

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes_X_ No ____

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

Large accelerated filer ___Accelerated filer Non-accelerated filer X

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP [ ]

International Financial Reporting Standards as issued

Other [ X]

by the International Accounting Standards Board [ ]

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

Item 17 X Item 18 ___

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

Yes No X N/A

Page 1 of 100

Index to Exhibits on Page 74

ESPERANZA SILVER CORPORATION

FORM 20-F ANNUAL REPORT

TABLE OF CONTENTS

	PART I	Page

Item 1.	Identity of Directors, Senior Management and Advisors	5
Item 2.	Offer Statistics and Expected Timetable	7
Item 3.	Key Information	7
Item 4.	Information on the Company	13
Item 5.	Operating and Financial Review and Prospects	30
Item 6.	Directors, Senior Management and Employees	43
Item 7.	Major Shareholders and Related Party Transactions	53
Item 8.	Financial Information	55
Item 9.	The Offer and Listing	56
Item 10.	Additional Information	58
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	71
Item 12.	Description of Other Securities Other Than Equity Securities	71

	PART II


Item 13.	Defaults, Dividend Arrearages and Delinquencies	71
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	71
Item 15.	Controls and Procedures	72
Item 16.	Reserved	72
Item 16A.	Audit Committee Financial Expert	72
Item 16B.	Code of Ethics	72
Item 16C.	Principal Accountant Fees and Services	73
Item 16D.	Exemptions from Listing Standards for Audit Committees	73
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	73

	PART III

Item 17.	Financial Statements	73
Item 18.	Financial Statements	74
Item 19.	Exhibits	74

INTRODUCTION

Esperanza Silver Corporation (“Esperanza”, the “Company” or the “Issuer”) was formed by the amalgamation under the British Columbia Act on December 1, 1990 of Magellan Resources Corp. (“Magellan”), Goldsil Resources Ltd. (“Goldsil”) and International Mahogany Corp. (“Mahogany”) into one company known as “International Mahogany Corp.”

Magellan was incorporated under the British Columbia Act on May 4, 1983. Goldsil was incorporated under the British Columbia Company Act on May 18, 1983. Mahogany was incorporated under the British Columbia Company Act on March 17, 1980 as “Mahogany Mining Company Ltd.” and changed its name to “Mahogany Mineral Resources Inc.” on November 10, 1981. On July 7, 1987 Mahogany amalgamated with Canadian Premium Resource Corporation into one company known as “Mahogany Mineral Resources Inc.”. On September 8, 1988 Mahogany changed its name to “International Mahogany Corp.”.

Effective June 2, 2000 the Issuer consolidated its common shares on the basis of 10 old shares for one new share and the name of the Issuer was changed to “Reliant Ventures Ltd.”. On May 29, 2003 the name of the Issuer was changed to “Esperanza Silver Corporation.

BUSINESS OF ESPERANZA SILVER CORPORATION

Esperanza Silver Corporation is principally a mineral company engaged in the acquisition and exploration of mineral properties.

There are no known proven reserves of minerals on the Issuer’s properties. The Issuer does not have any commercially producing mines or sites, nor is the Issuer in the process of developing any commercial mines or sites. The Issuer has not reported any revenue from operations since incorporation. As such, the Issuer is defined as an “exploration-stage company”.

FINANCIAL AND OTHER INFORMATION

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (“CDN$” or “$”). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

FORWARD-LOOKING STATEMENTS

This Registration Statement on Form 20-F contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, principally in ITEM #4, “Information on the Company” and ITEM #5, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These statements may be identified by the use of words like “plan”, “expect”, “aim”, “believe”, “project”, “anticipate”, “intend”, “estimate”, “will”, “should”, “could” and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, events or trends. In particular, these include statements about the Issuer’s strategy for growth, property exploration, mineral prices, future performance or results of current or anticipated mineral production, interest rates, foreign ex change rates, and the outcome of contingencies, such as acquisitions and/or legal proceedings.

Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, among other things, the factors discussed in this Registration Statement under ITEM #3, “Key Information, Risk Factors” and factors described in documents that we may furnish from time to time to the Securities and Exchange Commission. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

1.A.1. Directors

Table No. 1 lists as of 06/10/2008 the names of the Directors of the Issuer.

Table No. 1

Directors

______________________________________________________________________________

Name	Age	Date First Elected of Appointed

William J. Pincus (4)	55	September 30, 2002
Brian E. Bayley (1)(2)(3)(5)	56	December 14, 1999
Michael H. Halvorson (1) (2) (3)(6)	63	April 8, 2003
Steve Ristorcelli (2)(3)(7)	52	June 2, 2005

(1)

Member of Audit Committee.

(2)

Member of the Compensation Committee

(3)

Member of Corporate Governance Committee

(4)

Suite 680 – 1580 Lincoln Avenue, Denver, Colorado, 80203-1501

(5)

Suite 1028-550 Burrard Street, Vancouver, B.C. V6C 2B5

(6)

7928 Rowland Road, Edmonton, AB T8A 3W1

(7)

393 Fricke Ct., Gardenville, NV 89460

______________________________________________________________________________

1.A.2. Senior Management

Table No. 2 lists, as of 06/10/2008, the names of the Senior Management of the Company. The Senior Management serves at the pleasure of the Board of Directors.

Table No. 2

Senior Management

______________________________________________________________________________

Name and Position	Age	Date of First Appointment

William J. Pincus, President & CEO	55	September 30, 2002
Kim Casswell, Corporate Secretary	51	April 2, 2004
William Bond, Vice President, Exploration	56	August 1, 2003
David L. Miles, Chief Financial Officer	57	June 10, 2004
J Stevens Zuker, Senior Vice-President	54	September 23, 2005
Paul Bartos, Vice President, Chief Geologist	50	January 22, 2007

Mr. Pincus’s business functions, as President of the Company and Chief Executive Officer, include strategic planning, business development, operations, financial administration, accounting, liaison with auditors-accountants-lawyers-regulatory authorities-financial community/ shareholders; and preparation/payment/organization of the expenses/taxes/ activities of the Company, and reporting to the Board of Directors.

Ms. Casswell’s business functions, as Corporate Secretary, include attending and being the secretary of all meetings of the Board, shareholders and committees of the Board and entering or causing to be entered in records kept for that purpose minutes of all proceedings thereat; gives or causes to be given, as and when instructed, all notices to shareholders, Directors, officers, auditors and members of committees of the Board; is the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Company and of all books, records and instruments belonging to the Company, except when some other officer or agent has been appointed for that purpose; and in the future can have such other powers and duties as the Board of the chief executive officer may specify. Ms. Caswell may delegate all or part of her duties as Corporate Secretary to a nominee from time to time.

Mr. Bond’s business functions, as Vice President Exploration, include responsibility for overseeing all of the Issuer’s exploration efforts. This includes hiring additional consultants to assist in exploration efforts; planning future exploration work on the Issuer’s mineral properties; assessing exploration reports; and, budgeting exploration expenses. Mr. Bond reports directly to Mr. Pincus.

Mr. Miles’ business functions, as Chief Financial Officer, include responsibility for overseeing all of the Issuer’s financial administration, accounting, liaison with auditors-accountants and preparation/payment/ organization of the expenses/taxes/ activities of the Company, and reporting to the Board of Directors. Mr. Miles may delegate all or part of his duties as Chief Financial Officer to a nominee from time to time.

Mr Zuker’s business functions, as Senior Vice President include responsibility for assisting the President in investor relation activity, management of all technical databases related to exploration information, supervision of new generative exploration activities and assistance in day to day management of the issuer’s business. Mr Zuker reports directly to Mr. Pincus.

Mr. Bartos’s business functions as Vice President, Chief Geologist include responsibility for assisting the President.

1.B. Advisors

The Company’s Canadian Legal Counsel:

Northwest Law Group

Contact: Michael Provenzano

650 West Georgia Street, Suite 950

Vancouver, British Columbia V6B 4N8

Telephone: 604-687-5792

Facsimile: 604-687-6650

The Company’s bank is:

Bank of Montreal

First Bank Tower, Bentall 3

595 Burrard Street

Vancouver, British Columbia V7X 1L7

Contact: Rick Crame

Telephone: 604-665-2602

Facsimile: 604-668-1450

1.CAuditors

The Company’s auditor is: De Visser Gray, Chartered Accountants

401 – 905 West Pender Street

Vancouver, B.C. CANADA V6C 1L6

Telephone: 604-687-5447

Facsimile: 604-687-6737

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

--- No Disclosure Necessary ---

ITEM 3. KEY INFORMATION.

3.A.1. Selected Financial Data

3.A.2. Selected Financial Data

The selected financial data of the Company for Fiscal 2007/2006/2005 ended December 31^st was derived from the financial statements of the Company that have been audited by De Visser Gray, independent Chartered Accountants, as indicated in their audit reports, which are included elsewhere in this Registration Statement.

The selected financial data as at and for the three-month periods ended 3/31/2008 and 3/31/2007 have been derived from the unaudited financial statements of the Issuer, included herein and, in the opinion of management include all adjustments (consisting solely of normally recurring adjustments) necessary to present fairly the information set forth therein.

The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Registration Statement.

The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain all available funds for use in its operations and the expansion of its business.

Table No. 3 is derived from the financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP) and Canadian/USA Generally Accepted Auditing Standards (GAAS). All material numerical differences between Canadian GAAP and US GAAP, as applicable to the Company, are described in footnotes to the financial statements.

Table No. 3

Selected Financial Data

(CDN$ in 000, except per share data)

________________________________________________________________________________

	3 Months	3 Months	Year	Year	Year	Year	Year
CANADIAN GAAP	Ended 03/31/08	Ended 03/31/07	Ended 12/31/07	Ended 12/31/06	Ended 12/31/05	Ended 12/31/04	Ended 12/31/03

Revenue	$ Nil	$ Nil	$ Nil	$ Nil	$ 5	$ 23	Nil
Income (Loss) for the Period	($1,409)	($679)	($2,839)	($1,573)	($7,631)	($910)	($837)
Basic Income (Loss) Per Share	($0.03)	($0.02)	($0.06)	($0.04)	($0.27)	($0.04)	($0.05)
Dividends Per Share	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Wtd. Avg. Shares (000)	46,959	42,686	44,550	36,716	27,990	22,886	15,622
Period-end Shares	47,257	44,633	46,327	40,007	33,506	26,650	21,900

Working Capital	$13,502	$18,229	$15,037	$ 5,091	$ 3,544	$ 1,410	$ 1,068
Mineral Properties	$10,913	$ 5,804	$ 9,567	$ 4,848	$ 1,176	$ 6,986	$ 6,209
Long-Term Debt	Nil	$ Nil	NIL	Nil	Nil	Nil	Nil
Capital Stock	$34,450	$32,314	$34,013	$18,012	$11,707	$ 8,105	$ 6,293
Shareholders’ Equity	$24,539	$24,109	$24,742	$ 9,985	$ 4,749	$ 8,404	$ 7,277
Total Assets	$24,893	$24,673	$25,818	$10,209	$ 4,926	$ 8,487	$ 7,373

US GAAP
Net Loss	N/A	N/A	$ 7,386	($3,641)	($1,718)	($1,648)	($7,045)
Loss Per Share	N/A	N/A	($0.18)	($0.10)	($0.06)	($0.07)	($0.45)
Mineral Properties	N/A	N/A	$ 1,918	$ 1,746	$ 142	$ Nil	Nil
Shareholders’ Equity	N/A	N/A	$17,093	$ 6,883	$ 3,715	$ 1,457	$ 1,068
Total Assets		N/A	$18,169	$ 7,108	$ 3,892	$ 1,540	$ 1,164

(1)

Cumulative Net Loss since incorporation through 12/31/2007 under US GAAP was ($21,823).

(2) a) Under US GAAP, options granted to non-employees as compensation for

services provided are fair valued and an expense recorded.

b) Under SEC interpretation of US GAAP, all costs related to exploration-

stage properties are expensed in the period incurred.

________________________________________________________________________________

3.A.3. Exchange Rates

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

Table No. 4 sets forth the exchange rates for the Canadian Dollar at the end of five most recent fiscal years ended December 31^st, the average rates for the period, and the range of high and low rates for the period. The data for each month during the most recent six months is also provided along with the data for the fiscal quarters ended 3/31/2008 and 3/31/2007.

For 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 No. 4

U.S. Dollar/Canadian Dollar

______________________________________________________________________________

Period	Average	High	Low	Close

May 2008	1.00	1.02	0.98	0.99
April 2008	1.01	1.03	1.00	1.01
March 2008	1.00	1.03	0.98	1.03
February 2008	1.00	1.02	0.97	0.98
January 2008	1.01	1.03	0.99	1.00
December 2007	1.00	1.02	0.99	0.99

Fiscal Quarter Ended 3/31/2008	1.00	1.03	0.97	1.03
Fiscal Quarter Ended 3/31/2007	1.17	1.19	1.15	1.15
Fiscal Quarter Ended 3/31/2006	1.16	1.18	1.13	1.17

Fiscal Year Ended 12/31/2007	1.07	1.19	0.92	0.99
Fiscal Year Ended 12/31/2006	1.13	1.18	1.09	1.17
Fiscal Year Ended 12/31/2005	1.21	1.27	1.14	1.16
Fiscal Year Ended 12/31/2004	1.30	1.40	1.17	1.20
Fiscal Year Ended 12/31/2003	1.39	1.58	1.29	1.29

______________________________________________________________________________

3.B. Capitalization and Indebtedness

Table No. 5 sets forth the capitalization and indebtedness of the Company as of 3/31/2008. As of 3/31/2008, the Company has cash and cash equivalents totaling $13,079,908 and short-term investments totaling $Nil. The Company has no significant debt outstanding as of 3/31/2008 and had issued and outstanding common shares of 47,256,821.

Table No. 5

Capitalization and Indebtedness

______________________________________________________________________________

SHAREHOLDERS’ EQUITY
47,256,821 shares issued and outstanding	$34,450,378
Contributed Surplus	$5,671,115
Retained Earnings (deficit)	($15,582,066)
Net Stockholders’ Equity	$24,539,427

Stock Options Outstanding (At May 31, 2007):	4,348,500
Warrants Outstanding (May 31, 2007)(includes Agent’s Warrants):	2,055,000
Preference Shares Outstanding:	Nil
Capital Leases:	Nil
Guaranteed Debt	Nil
Secured Debt:	Nil

______________________________________________________________________________

3.C. Reasons For The Offer And Use Of Proceeds

--- No Disclosure Necessary ---

3.D. Risk Factors

Cumulative Unsuccessful Exploration Efforts By Esperanza Personnel Could Result In the Company Having to Cease Operations:

The expenditures to be made by Esperanza in the exploration of its properties as described herein may not result in discoveries of mineralized material in commercial quantities. Most exploration projects do not result in the discovery of commercially mineable ore deposits and this occurrence could ultimately result in Esperanza having to cease operations.

Esperanza Has No Reserves on the Properties in Which It Has an Interest and If Reserves Are Not Defined the Company Could Have to Cease Operations:

The properties in which Esperanza has an interest or the concessions in which Esperanza has the right to earn an interest are in the exploratory stage only and are without a known body of ore. If Esperanza does not ultimately find a body of ore, it would have to cease operations.

Mineral Prices May Not Support Corporate Profit for Esperanza:

The resource exploration industry is intensely competitive and even if commercial quantities of mineral resources are developed (which is not guaranteed), a profitable market may not exist for the sale of same. If a profitable market does not exist, Esperanza could have to cease operations.

Esperanza Has Minimal Positive Cash Flow and No Recent History of Significant Earnings and Is Dependent Upon Public and Private Distributions of Equity to Obtain Capital in Order to Sustain Operations. Public distributions of capital result in dilution to existing shareholders:

None of the Issuer’s properties have advanced to the commercial production stage and the Issuer has no history of earnings or positive cash flow from operations. The cumulative loss since the Issuer’s inception of the development stage, according to U.S. GAAP, is ($21,822,569). The Issuer does not know if it will ever generate material revenue from mining operations or if it will ever achieve self-sustaining commercial mining operations. Historically, the only source of funds available to the Issuer has been through the sale of its common shares or by seeking joint venture partners to share in the cost of project development. Any future additional equity financing would cause dilution to current stockholders.

Esperanza currently has 4,348,500 share purchase options outstanding and 2,055,000 share purchase warrants outstanding. If all of the share purchase warrants, share purchase options, and share purchase agent’s warrants were exercised, the number of common shares issued and outstanding would increase from 47,256,821 (as of June 10, 2008) to 53,660,321.

This represents an increase of 13.55% in the number of shares issued and outstanding and would result in significant dilution to current shareholders.

The Amount of Capital Necessary to Meet All Environmental Regulations Associated with the Exploration Programs of the Issuer Could Be In An Amount Great Enough to Force Esperanza to Cease Operations:

The current and anticipated future operations of the Issuer, including further exploration activities require permits from various Mexican, Bolivian and Peruvian Federal and state governmental authorities. Such operations 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. 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 there under, 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.

Large increases in capital expenditures resulting from any of the above factors could force Esperanza to cease operations.

Operating Hazards and Risks Associated with the Mining Industry Could Result in Esperanza Having to Cease Operations:

Resource exploration activities generally involve a high degree of risk. Hazards such as unusual or unexpected formations and other conditions are involved. Operations in which the Issuer has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of precious and base metals, any of which could result in work stoppages, damage to or destruction of exploration facilities, damage to life and property, environmental damage and legal liability for any or all damage. Esperanza may become subject to liability for cave-ins and other hazards for which it cannot insure or against which it may elect not to insure where premium costs are disproportionate to the Company’s perception of the relevant risks. The payment of such insurance premiums and of such liabilities would reduce the funds available for exploration activities and could force Esperanza to cease operations.

The Risks Associated with Penny Stock Classification Could Affect the Marketability of the Common Stock of Esperanza And Shareholders Could Find It Difficult to Sell Their Stock:

The Issuer’s stock is subject to “penny stock” rules as defined in 1934 Securities and Exchange Act rule 3a51-1. The Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. The Issuer’s common shares are subject to these penny stock rules. Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities. Penny stocks generally are equity securities with a price of less than U.S. $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

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

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

Esperanza is Dependent on Key Personnel and the Absence of Any of These Individuals Could Result in the Company Having to Cease Operations:

While engaged in the business of exploiting mineral properties, the nature of Esperanza’s business, its ability to continue its exploration of potential exploration projects, and to develop a competitive edge in the marketplace, depends, in large part, on its ability to attract and maintain qualified key management personnel. Competition for such personnel is intense and the Company may not be able to attract and retain such personnel. Esperanza’s growth will depend on the efforts of its Senior Management particularly its President, William Pincus; its Senior Vice President, Mr. J. Stevens Zuker; its Chief Financial Officer, Mr. David Miles; its Vice President - Exploration, Mr. William Bond; its Vice President - Exploration, and Vice President - Chief Geologist, Dr. Paul Bartos and its Corporate Secretary, Ms. Kim Casswell. The issuer also relies on Mr. Steve Ristorcelli, a member of the Board of Directors, for advice pertaining to exploration work. In the area of capital issues, the Issuer relies on both Brian Bayley and Michael Halvorson because of their expertise in this area. Loss of these individuals could have a material adverse effect on the Company. Esperanza has no key-man life insurance with the Senior Officers or the Directors. Esperanza does have consulting agreements with William Pincus, the President/CEO and a Director of the Issuer.

Dilution Through Employee/Director/Consultant Options Could Adversely Affect Esperanza’s Stockholders

Because the success of Esperanza is highly dependent upon its respective employees, the Company has granted to some or all of its key employees, Directors and consultants options to purchase common shares as non-cash incentives. To the extent that significant numbers of such options may be granted and exercised, the interests of the other stockholders of the Company may be diluted. There are currently 4,348,500 share purchase options outstanding which, if exercised, would result in an additional 4,348,500 common shares being issued and outstanding. (For a breakdown of dilution, refer to the risk factor entitled: “Esperanza Has Minimal Positive Cash Flow and No Recent History of Significant Earnings and Is Dependent Upon Public and Private Distributions of Equity to Obtain Capital in Order to Sustain Operations. Public distributions of capital result in dilution to existing shareholders”)

U.S. Investors May Not Be Able to Enforce Their Civil Liabilities Against Us or Our Directors, Controlling Persons and Officers

It may be difficult to bring and enforce suits against Esperanza. The Issuer is a corporation incorporated in the province of British Columbia under the British Columbia Company Act (the “Old Act”). Effective March 29, 2004, theBusiness Corporations Act(British Columbia) (the “New Act”) replaced the Old Act. As a consequence, all British Columbia companies are now governed by the New Act. There are no residency requirements for directors under the New Act, however, half of the Company's directors are residents of Canada, and all or substantial portions of their assets are located outside of the United States, predominately in Canada. As a result, it may be difficult for U.S. holders of our common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them. In addition, a shareholder should not assume that the cour ts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.

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. Also, a Canadian court would generally recognize a judgment obtained in a U.S. Court except, for example:

where the U.S. court where the judgment was rendered had no jurisdiction according to applicable Canadian law;

the judgment was subject to ordinary remedy (appeal, judicial review and any other judicial proceeding which renders the judgment not final, conclusive or enforceable under the laws of the applicable state) or not final, conclusive or enforceable under the laws of the applicable state;

the judgment was obtained by fraud or in any manner contrary to natural justice or rendered in contravention of fundamental principles of procedure;

a dispute between the same parties, based on the same subject matter has given rise to a judgment rendered in a Canadian court or has been decided in a third country and the judgment meets the necessary conditions for recognition in a Canadian court;

the outcome of the judgment of the U.S. court was inconsistent with Canadian public policy;

the judgment enforces obligations arising from foreign penal laws or laws that deal with taxation or the taking of property by a foreign government; or

there has not been compliance with applicable Canadian law dealing with the limitation of actions.

As a "foreign private issuer”, Esperanza is exempt from the Section 14 proxy rules and Section 16 of the 1934 Securities Act May Result in Shareholders Having Less Complete and Timely Data

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data. The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

Introduction

The Issuer’s executive office is located at:

Suite 300, 570 Granville Street

Vancouver, British Columbia, Canada V6C 3P1

Telephone: (604) 685-2242

Facsimile: (604) 688-1157.

Website: www.esperanzasilver.com

Email: kcasswell@explgp.com

The contact person is: Mr. William Pincus, President and Chief Executive Officer.

The Issuer's fiscal year ends December 31^st.

The Issuer's common shares trade on the TSX Venture Exchange under the symbol: “EPZ”.

Effective June 6, 2005, the authorized capital of the Issuer was changed to an unlimited number of common shares without par value. At 12/31/2007, the end of the Company's most recent fiscal year, there were 46,326,821 common shares issued and outstanding. At 3/31/2008, the end of the Company’s most recently completed fiscal quarter; there were 47,256,821 common shares issued and outstanding.

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).

Incorporation and Name Changes

Esperanza Silver Corporation (“Esperanza” or the “Issuer”) was formed by the amalgamation under the British Columbia Act on December 1, 1990 of Magellan Resources Corp. (“Magellan”), Goldsil Resources Ltd. (“Goldsil”) and International Mahogany Corp. (“Mahogany”) into one company knows as “International Mahogany Corp.”

Financings

The Company has financed its operations through funds raised in loans, public/private placements of common shares, shares issued for property, shares issued in debt settlements, and shares issued upon exercise of stock options and share purchase warrants.

________________________________________________________________________________ ___________________________________________________________________________

Fiscal Year	Nature of Share Issuance	Number of Shares	Amount

Fiscal 1999	Private Placement (1)	82,000,000	$758,000
Fiscal 2000	Nil
Fiscal 2001	Exercise of Share Purchase Warrants (2)	4,100,000	$615,000
Fiscal 2002	Nil
Fiscal 2003	Issued for property option (3) Private Placement (4) Private Placement (5) Finder’s Fee (5) Issued for property (6) Exercise of Share Purchase Warrants (7)	25,000 2,140,000 1,100,000 77,200 4,000,000 200,000	$6,250 $535,000 $935,000 $65,620 $4,000,000 $80,000
Fiscal 2004	Issued for property option(3) Exercise of Share Purchase Warrants (7) Private Placement (8) Finder’s Fees (8)	25,000 603,000 3,750,000 174,650	$6,250 $321,200 $1,500,000 $69,860
Fiscal 2005	Issued for property option (3) Exercise of Share Purchase Warrants (7) Exercise of Share Purchase Warrants (9) Private Placement (10) Finder’s Fees (11)	40,000 839,000 218,562 5,660,000 98,933	$10,000 $335,600 $120,209 $3,396,000 $59,359
Fiscal 2006	Private Placement (12) Finder’s Fee (12) Issued for property option (3) Issued for property option (3) Exercise of Share Purchase Warrants (8) Exercise of Broker Share Purchase Warrants (10) Exercise of Share Purchase Warrants (10) Exercise of Stock Options (16) Exercise of Stock Options (17) Exercise of Stock Options (18) Issued for Property Option (3) Exercise of Stock Options (20) Exercise of Warrants (21) Exercise of Broker Warrants (22) Exercise of Broker Warrants (23) Exercise of Stock Options (16) Exercise of Stock Options (16) Exercise of Stock Options (17) Exercise of Stock Options (20) Exercise of Stock Options (24) Exercise of Stock Options (19) Exercise of Share Purchase Warrants (10) Exercise of Share Purchase Warrants (21) Exercise of Broker Warrants (21)	1,500,000 18,300 40,000 500,000 1,742,160 496,333 1,363,984 20,000 60,000 265,000 40,000 125,000 420,058 343,250 76,808 76,225 50,000 20,000 25,000 25,000 10,000 15,000 176,584 192,940	$1,800,000 $21,960 $10,000 $1,000,000 $958,188 $322,616 $1,159,386 $11,600 $31,800 $106,000 $10,000 $93,750 $630,087 $514,875 $422,444 $44,210 $29,000 $10,600 $18,750 $39,000 $3,550 $264,876 $289,410
Fiscal 2007	Private Placement (25) Issued for property option (26) Exercise of Share Purchase Warrants (21) Exercise of Broker Share Purchase Warrants (21) Exercise of Share Purchase Warrants (10) Exercise of Stock Options (18) Exercise of Stock Options (16) Exercise of Stock Options (17) Exercise of Stock Options (20) Exercise of Stock Options (24) Exercise of Stock Options (19)	4,110,000 40,000 406,750 15,742 1,515,484 60,000 50,000 25,000 25,000 57,000 15,000	$15,001,500 $80,000 $610,125 $23,613 $1,288,161 $24,000 $29,000 $13,250 $18,750 $88,920 $5,325
Fiscal 2008 (Y-T-D)	Exercise of options (18) Exercise of options (27) Exercise of options (16) Issued for property (26)	100,000 800,000 10,000 35,000	$40,000 200,000 $5,800 $70,000

(1)

This private placement consisted of the sale of 82,000,000 units (pre-split) at a price of $0.01 per unit. Each unit consisted of one common share (pre-split) and one share purchase warrant. Each share purchase warrant was convertible into an additional common share (pre-split) at a cost of $0.015 for one year.

(2)

On December 30, 2000, the holder of 4,100,000 share purchase warrants exercised these warrants at a price of $0.15 per share and paid the proceeds to the Issuer immediately subsequent to the Issuer’s December 31, 2000 year end, when the 4,100,000 common shares were issued.

(3)

The Issuer entered into an option agreement with Recursos Cruz del Sur, S.A. de C.V. (“Recursos”), an unrelated private company, dated May 7, 2003, whereby the Issuer has the option to acquire a 100% interest, subject to a 3% net smelter royalty, in the Cerro Jumil silver/gold project located in Morelos State, Mexico.

In October 2006, the Issuer re-negotiated the option agreement and earned its option by paying US$417,375 plus VAT and issuing 500,000 common shares plus VAT in conjunction with the early exercise of the Issuer’s option to purchase a 100% interest in the property.

(4)

This private placement consisted of the sale of 2,140,000 units. Each unit consisted of one common share and one share purchase warrant. The warrants were exercisable until 08/18/2005 for a price of $0.40 per share.

(5)

This private placement consisted of the sale of 1,100,000 units at a price of $0.85 per unit. Each unit consisted of one common share and one share purchase warrant entitling the holder to purchase a further share at a price of $1.25 until November 24, 2004 and at a price of $1.50 until November 24, 2005. These share purchase warrants provide that the Issuer may require their exercise if, after the expiry of all resale restrictions, the closing price of the Issuer’s shares, for more that 20 consecutive trading days, is greater than $1.75 per share in the first year or $2.00 in the second year. Finder’s fee of 8% was paid in units, at a deemed price of $0.85 per unit, to certain finders in consideration of their efforts in locating investors. The shares and any shares issued on exercise of the warrants are subject to restrictions on transfer for a period of four months from closing. (77,200 finder’s warrants were also issued.)

(6)

On December 23, 2003, the Issuer acquired from General Minerals Corporation Limited, an unrelated public company, all of the outstanding common shares of its wholly-owned subsidiary, Compania Mineral General Minerals (Bolivia) S.A. (“GM Bolivia”), a corporation incorporated under the laws of Bolivia in consideration for the issuance of 4,000,000 shares, priced at $1.00 per share, and 4,000,000 common share purchase warrants. Each warrant entitles the holder to acquire one additional common share for $1.05 until December 23, 2005. The Issuer also paid U.S.$153,000 in cash consideration in connection with the acquisition. (For a description of the net assets acquired and the consideration given for the net assets acquired, see Note 3 to the Audited Financial Statements for December 31, 2003 and 2002.

(7)

These share purchase warrants were exercised pursuant to the private placement described in (4) above.

(8)

This private placement consisted of the sale of 3,750,000 units at a price of $0.40 per unit. Each unit consisted of one common share and one-half share purchase warrant; each whole warrant entitling the holder to purchase a further share at a price of $0.55 until December 1, 2006. If, after the expiry of all resale restrictions, the closing price of the Shares on the TSX Venture Exchange is $0.75 or greater for a period of 20 consecutive trading days, the Company shall provide notice of an earlier expiry of the Warrants, in which case the Warrants shall expire 21 trading days after giving such notice. A Finder’s Fee of 8% were paid in units, at a deemed price of $0.40 per unit, and in cash, to certain finders in consideration of their efforts in locating investors. The shares and any shares issued on exercise of the Warrants are subject to restrictions on transfer for a period of four months from closing.

(9)

These share purchase warrants were exercised pursuant to the private placement described in (8) above.

(10)

This private placement consisted of the sale of 5,660,000 units at a price of $0.60 per unit. Each unit consisted of one common share and one-half share purchase warrant; each whole warrant entitling the holder to purchase a further share at a price of $0.85 until November 2, 2007. If, after the expiry of all resale restrictions, the closing price of the Shares on the TSX Venture Exchange is $1.15 or greater for a period of 20 consecutive trading days, the Company may provide notice of an earlier expiry of the Warrants, in which case the Warrants shall expire 21 trading days after giving such notice. A Finder’s Fee of 7% was paid in units, at a deemed price of $0.60 per unit to certain finders in consideration of their efforts in locating investors. In addition, brokers received broker warrants entitling them to purchase that number of shares which is equal to 10% of the number of units sold by them. The broker warrants are exercisable at $0.65 per share and expire on May 2, 2007. The shares and any shares issued on exercise of the warrants or broker warrants are subject to restrictions on transfer for a period of four months from closing.

(11)

These shares were issued to certain brokers as a finder’s fee pursuant to the private placement described in (10) above.

(12)

This private placement consisted of the sale of 1,500,000 units at a price of $1.20 per unit. Each unit consisted of one common share and one-half share purchase warrant; each whole warrant entitling the holder to purchase a further share at a price of $1.50 until August 21, 2007. A Finder’s Fee of 6% was paid in units, at a deemed price of $1.20 per unit to certain finders in consideration of their efforts in locating investors. In addition, brokers received broker warrants which is equal to 6% of the number of units sold by them. The broker warrants are exercisable at $1.50 per share and expire on August 21, 2007. The shares and any shares issued on exercise of the warrants or broker warrants are subject to restrictions on transfer for a period of four months from closing.

(13)

These shares were issued to certain brokers as a finder’s fee pursuant to the private placement described in (12) above.

(14)

These shares were issued to certain brokers upon exercise of broker warrants pursuant to the private placement described in (10) above.

(15)

These shares were issued pursuant to the private placement described in (10) above.

(16)

These shares were issued pursuant to the grant of incentive stock options on May 6, 2004 exercisable at $0.58 per share for a period of five years to certain directors, officers, employees and consultants of the Company.

(17)

These shares were issued pursuant to the grant of incentive stock options on September 9, 2004 exercisable at $0.53 per share for a period of five years to certain directors, officers, employees and consultants of the Company.

(18)

These shares were issued pursuant to the grant of incentive stock options on June 14, 2005 exercisable at $0.40 per share for a period of five years to certain directors, officers, employees and consultants of the Company.

(19)

These shares were issued pursuant to the grant of incentive stock options on July 5, 2006 exercisable at $0.355 per share for a period of five years to consultants of the issuer.

(20)

These shares were issued pursuant to the grant of incentive stock options on September 1, 2003 exercisable at $0.75 per share for a period of five years to an officer and certain consultants of the issuer.

(21)

This private placement consisted of the sale of 1,500,000 units at a price of $1.20 per unit. Each unit consisted of one common share and one-half share purchase warrant. Each whole warrant entitles the holder to acquire one additional share at $1.50 per share until August 21, 2007. In addition, brokers received Broker Warrants which are equal to 6% of the number of units sold by them. The Broker Warrants are exercisable at $1.50 per share and expire on August 21, 2007.

(22)

These shares were issued to certain brokers as a finder’s fee pursuant to the private placement described in (21) above.

(23)

These shares were issued to certain brokers as a finders fee pursuant to the private placement described in (8) above.

(24)

These shares were issued pursuant to the grant of incentive stock options on May 18, 2006 exercisable at $1.56 per share for a period of five years to directors, officers and consultants of the issuer.

(25)

This Private Placement consisted of the sale of 4,110,000 units at a price of $3.65 per unit. Each unit consisted of one common share and one-half of a common share purchase warrant. Each full common share purchase warrant entitles the holder to purchase one common share at an exercise price of $4.35 per share for a period of two years. Agent’s received agent’s options entitling them to purchase 7% of the number of units sold at $3.65 per unit for a period of one year. As well, Agent’s received agent’s options to purchase an additional 15,135 units (3.5% on 432,240 units) at $3.65 per unit for a period of one year.

(26)

The Issuer entered into an agreement with Exploraciones del Altiplano S.A. de C.V. and Compania Minera Terciario S.A. de C.V. to acquire a four year option on 7 gold and silver exploration properties in Mexico.

(27)

These shares were issued pursuant to the grant of incentive stock options on August 18, 2003 exercisable at $0.25 per share for a period of five years to directors of the Issuer.

Capital Expenditures

Fiscal Year

Fiscal 2003	Nil
Fiscal 2004	$10,057
Fiscal 2005	$21,914
Fiscal 2006	$ 26,039
Fiscal 2007	$138,975
Fiscal 2008 (YTD)	$Nil

4.B. BUSINESS OVERVIEW

Historical Corporate Development

Prior to 1999, the Issuer was engaged in the exploration of mineral properties. The Issuer was inactive from 1999 until October 16, 2002 when it announced the appointment of William Pincus as President/CEO and Director and the election to the Board of Directors of Robert Quartermain. At that time, the Issuer announced that it would seek to obtain and explore mineral properties in Mexico, Peru, Bolivia and elsewhere. The Issuer also planned to concentrate its exploration efforts on silver prospects.

On April 8, 2003, the Issuer announced that it had reached an agreement to acquire the Esperanza Silver/Gold exploration project from Recursos Cruz del Sur, S.A. de C.V., an unrelated private company. On May 16, 2003, the Issuer announced that it had entered into a formal option agreement to acquire the interest in this property.

Also on May 16, 2003, the Issuer changed its name from Reliant Ventures Ltd. to Esperanza Silver Corporation. The Issuer also completed the private placement financing from which it raised $535,000. These funds were used for exploration work on the Esperanza Project, new project generation and general corporate purposes.

On August 18, 2003, the Issuer began trading on the TSX Venture Exchange under the trading symbol, “EPZ”.

On September 22, 2003, the Issuer announced that it had reached an agreement to purchase a 100% interest in the Atocha Project from General Minerals Corporation Limited. The terms of this acquisition are disclosed above under Item 4 Financings.

On November 24, 2003, the Issuer announced that it had completed a private placement whereby it raised $935,000. The proceeds from this private placement were utilized for general corporate purposes and for the acquisition and exploration of the Atocha Property.

On December 15, 2003, the Issuer signed an option-to-purchase agreement pertaining to the Flor de Loto project. The terms of this agreement call for the Issuer to pay a total of U.S.$585,000 for its interest in this property.

On December 23, 2003, the Issuer acquired from General Minerals Corporation Limited, an unrelated public company, all of the outstanding common shares of its wholly-owned subsidiary, Compania Mineral General Minerals (Bolivia) S.A. (“GM Bolivia”), a corporation incorporated under the laws of Bolivia in consideration for the issuance of 4,000,000 shares, priced at $1.00 per share, and 4,000,000 common share purchase warrants. Each warrant entitles the holder to acquire one additional common share for $1.05 until December 23, 2005. These warrants have subsequently expired without being exercised. The Issuer also paid U.S. $153,000 in cash consideration in connection with the acquisition. (For a description of the net assets acquired and the consideration given for the net assets acquired, see Note 3 to the Audited Financial Statements for the Years Ended December 31, 2003 and 2002.

On December 1, 2004, the Issuer announced that it had completed a private placement whereby it raised $1,500,000. The proceeds from this private placement were utilized for the Esperanza Project, new project generation and general corporate purposes.

On March 29, 2005 the Issuer announced the formation of a joint-venture with Silver Standard Resources Inc. (“Silver Standard”) to prospect for new bulk mineable silver deposits in central Peru. Under the terms of the joint-venture agreement Silver Standard will contribute US$300,000 and the Issuer will contribute US$200,000 during the first two years of the venture. These funds will be used for the identification and acquisition of new properties. The Issuer and Silver Standard will have an equal 50/50 interest on any prospect acquired however Silver Standard has the right to increase its ownership to 55% by spending the next US$500,000 and it will also have the right to finance any prospect to production allowing it to increase its interest to 80%. The prospecting joint-venture expired on March 28 of 2007. Notwithstanding this the San Luis project was discovered during this period and is the subject of a separate joint-venture described below.

On September 7, 2005, the Issuer announced the formation of a joint-venture to explore the newly discovered San Luis prospect in Peru together with Silver Standard. Silver Standard also informed the Issuer that in accordance to pre-agreed terms, it was increasing its participation from 50% to 55% by funding the next US$500,000 in exploration work.

On November 2, 2005 the Issuer announced that it had completed a private placement financing whereby it raised $3,396,000. The proceeds from the private placement will be used to continue exploration on the Issuer’s San Luis, Cerro Jumil and generative exploration program as well as general working capital purposes.

On February 21, 2006 the Issuer announced that it had completed a private placement financing whereby it raised $1,500,000. The proceeds from the private placement will be used to continue exploration on the Issuer’s San Luis, Cerro Jumil and generative exploration program as well as general working capital purposes.

During Fiscal 2006, the Issuer continued to concentrate the majority of its efforts on exploration work on both the San Luis (Peru) and Cerro Jumil (Mexico) and the generation of new exploration projects.

In February 2007, the Issuer announced that it had completed a private placement financing whereby it raised $15,001,500. The proceeds from the private placement will be used to continue exploration on the Issuer’s projects in Peru and Mexico, as well as general working capital purposes.

On May 10, 2007 the Company announced that it had concluded an agreement with Canadian Shield Resources Inc. concerning the Pucarana project in Peru. Esperanza has the right to earn a 60% interest in the Pucarana mining concessions by expending US$1,300,000 over a four year period commencing upon receipt of a drill permit (the" Effective Date"), and by making payments of US$80,000 to the Company's 90% owned subsidiary, Gallant Minerals Peru Ltd. S.A. ("Canadian Shield Subco"). US$30,000 was paid upon signing the agreement.

In August 2007 the Issuer announced is had entered into an agreement to acquire a four year option on seven gold and silver exploration properties in Mexico with Exploraciones del Altiplano S.A. de C.V. and Compania Minera Terciario S.A. de C.V. Under the terms of the agreement Esperanza will pay US$30,000 and issue 20,000 common shares upon signing the definitive agreement for a four year purchase option of the seven properties. Over the option term Esperanza will make period payments totaling up to US$85,000 and will issue up to 190,000 common shares per property, depending on whether the property is maintained for the full option period or if it is relinquished earlier. Esperanza will be committed to drill a minimum of 1,200 meters per property during the first 12 months.

The acquisition of any property can be made at the end of the option period by payment of US$350,000 and issuance of between 450,000 and 1.2 million common shares dependent on the price of Esperanza shares at the time. Altiplano/Terciario will retain a 2% net smelter royalty. The agreement is subject to all regulatory approvals.

The Issuer is an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on any of its properties. Further evaluation will be required on each property before a final evaluation as to the economics and legal feasibility of the property is determined.

Plan Of Operations

Source of Funds for Fiscal 2007/2008

The Issuer’s primary source of funds since incorporation has been through the issuance of common shares.

The Issuer had a working capital balance of approximately $11,856,000 at 6/10/2008

Use of Funds for Fiscal 2007/2008

During Fiscal 2007 the Issuer expended $2,083,165 excluding tock based compensation on general/administrative expenses including property evaluation costs prior to acquisition, and estimates that it will expend $2,200,000 during Fiscal 2008

Anticipated Changes to Facilities/Employees

Management of the Issuer anticipates no changes to either facilities or employees in the near future.

United States vs. Foreign Sales/Assets

The Issuer has had no revenue during the past five fiscal years.

At 12/31/2007, 12/31/2006, 12/31/2005, 12/31/2004 and 12/31/2003 the Issuer’s assets were located in North America Mexico; Peru and Bolivia. At 12/31/2002 all of the Issuer’s assets were located in Canada.

Material Effects of Government Regulations

The current and anticipated future operations of the Issuer, including further exploration activities, require permits from various Mexican, Peruvian and Bolivian and Provincial governmental authorities. Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, well safety and other matters. 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 Issuer and cause increases in capital expenditures which could result in a cessation of operations by the Issuer. The Issuer has had no material costs related to compliance and/or permits in recent years, and anticipates no material costs in the next year.

Seasonality

Dependency upon Patents/Licenses/Contracts/Processes

Sources/Availability of Raw Materials

--- No Disclosure Necessary ---

4.C. Organization Structure

The Issuer was formed by the amalgamation under the British Columbia Act on December 1, 1990 of Magellan Resources Corp. (“Magellan”), Goldsil Resources Ltd. (“Goldsil”) and International Mahogany Corp. (“Mahogany”) into one company knows as “International Mahogany Corp.”

The Issuer has three wholly-owned subsidiary companies located in Mexico (Esperanza Silver de Mexico, S.A. de C.V.), Peru (Esperanza Silver Peru S.A.C.), Bolivia (Compania Minera General Minerals (Bolivia) S.A.), British Virgin Islands (Esperanza Exploration (BVI) Inc., Esperanza Minerals (BVI) Inc. and Esperanza Resources (BVI) Inc., and Colorado (Esperanza Services, Inc.).

4.D. Property, Plant and Equipment

The Issuer’s executive offices are located in rented premises of approximately 3,300 sq. ft., shared by five other companies at 570 Granville Street, Suite 300, Vancouver, British Columbia CANADA V6C 3P1. The Issuer began occupying these facilities on November 22, 2007. Monthly rent is $$1,660.

The Issuer’s mineral properties are located in the following areas:

The San Luis, Pucarana, Flor de Loto, Abra Roja, Camparuri, Cori Jirca and Utucocha projects are located in Peru,

The Cerro Jumil (formerly La Esperanza) Gold/Silver, Mesa Galindo, La Fortuna and A-T (a collection of seven separate exploration projects) properties are located in Mexico.

The Atocha project is located in Bolivia.

It is important to note that even if the Issuer completes its exploration programs on its properties and is successful in identifying mineral deposits, a substantial amount of capital will still have to be spent on each deposit on further drilling and engineering studies before management will know that the Issuer has a commercially viable mineral deposit (a reserve) on the property.

1. The San Luis Property

The San Luis property is without known reserves and the work being done by the issuer is exploratory in nature. The Issuer’s interest in this property stemmed from earlier exploration work, as described below, that was done in the area.

Acquisition of Interest

The property is currently held in a joint-venture with Silver Standard Resources Inc. The respective ownership is Esperanza with 45% and Silver Standard with 55%. It is comprised of 36 mineral concessions covering an area of approximately 25,038 hectares. In order to maintain the rights to these concessions in good standing an annual fee in respect to each concession must be paid to the government of Peru. The following table contains a list of the concessions:

Nro	NAME	Hectares granted by INACC	CODE NUMBER
1	CAHUARAN DOS	882.1297	01-0265605
2	CAHUARAN TRES	1000.0000	01-0265705
3	CAHUARAN UNO	1000.0000	01-0265805
4	DON SIMON 1	300.0000	01-00634-04
5	EPZ CUATRO	699.8284	01-0245505
6	EPZ DOS	600.0000	01-0120205
7	EPZ TRES	600.0000	01-0160305
8	EPZ UNO	600.0000	01-0120305
9	HUANCHUY	700.0000	01-0228106
10	LLANAPACCHA DOS	1000.0000	01-0235606
11	LLANAPACCHA UNO	1000.0000	01-0235506
12	OCHIAPAMPA DOS	1000.0000	01-02358-06
13	OCHIAPAMPA UNO	1000.0000	01-02357-06
14	PUMAHUILLCA UNO	500.0000	01-02779-05
15	RAJUYOC OESTE	1000.0000	01-02354-06
16	SHURAS DOS	1000.0000	01-01971-07
17	SHURAS TRES (antes RANCAS UNO)	900.0000	01-02407-07
18	SHURAS UNO	1000.0000	01-01970-07
19	SIEREN DOS	1000.0000	01-02785-05
20	SIEREN NORTE	992.3955	01-02284-06
21	SIEREN TRES	700.0000	01-00014-06
22	SIEREN UNO	1000.0000	01-02782-05
23	SOL DE ORO LEON	600.0000	01-02495-05
24	TECLIO DOS	900.0000	01-02360-06
25	TECLIO TRES	663.9790	01-02408-07
26	TECLIO UNO	600.0000	01-02359-06
27	TOCASH DOS	1000.0000	01-02781-05
28	TOCASH UNO	1000.0000	01-02783-05
30	TUNANCANCHA UNO	1000.0000	01-02406-07
31	USHNO DOS	800.0000	01-02780-05
32	USHNO TRES	600.0000	01-00015-06
33	USHNO UNO	900.0000	01-02784-05
34	YANACOTO CUATRO	700.0000	01-02410-07
35	YANACOTO DOS	1000.0000	01-02283-06
36	YANACOTO TRES	1000.0000	01-02282-06
37	YANACOTO UNO	1000.0000	01-02285-06

The joint-venture arose from the Peru Prospecting Joint Venture (Item 6 below). Under the terms of the agreement Silver Standard increased its ownership to 55 percent by spending the US$500,000 in December 2006. The subsequent US$1,500,000 was spent by the partners according to their ownership interests during the first quarter of 2007. Silver Standard has elected to increase its interest in the joint venture to 70% by funding costs required to complete a feasibility study. Thereafter, Silver Standard has the right to increase its interest to 80% by funding the property through to production.

Location

The San Luis project is located in central Ancash Department, Peru. It is located approximately 25 kilometers northwest of Barrick Gold Corporation’s Pierina gold mine. See the following San Luis Property Map.

The property consists of 36 mineral concessions covering approximately 25,038 hectares. In order to maintain the rights to these concessions the Company must a mining good standing fee in respect of each concession to the government of Peru.

[esperanzaform20f2007002.jpg]

Accessibility, Climate, Infrastructure and Physiography

The property is accessible by all-weather road from two directions. The climate is typical of the central Peruvian Cordillera with a dry season from April to November and a rainy season from December to March. Infrastructure is restricted. The Company has constructed an exploration camp with sufficient facilities for its field personnel. The project area is mountainous with elevations ranging from 3800 to 4700 meters.

History and Previous Work

The San Luis project is a newly discovered gold-silver property. The Company is unaware of any significant exploration or mining done prior to 2005 by any third party. The veins that form the San Luis project were discovered by Esperanza geologists in mid 2005 as part of an on-going reconnaissance program conducted as part of Peru Prospecting Joint-Venture with Silver Standard Resources Inc (see item 6 below).

Gold and silver veins are hosted within Tertiary-age volcanic rocks of the Calipuy Formation. Five separate veins have been identified so far with a cumulative strike length of over 5000 meters. The veins are several hundred to over 2000 meters in length and up to 10 meters wide.

Mineralization within the veins is typical of classic quartz-adularia or low-sulfidation epithermal systems. Vein textures such as well developed banding and brecciation indicate that repeated episodes of gold and silver deposition have occurred in the veins. Early investigations at San Luis suggest that concentrations of precious metals will likely form ore shoots within the veins.

2005 Activities

In September of 2005 Esperanza announced the results of reconnaissance channel sampling on the Ayelén vein, one of five known veins that now comprise the project. The results are shown in the following table.

San Luis Project Reconnaissance Channel Sampling – Ayelén Vein
Channel No.	Vein Width (Meters)	Gold (grams/tonne)	Silver (grams/tonne)
C-A1	4.2	40.7	1,198
C-A2	4.6	27.1	694
C-A3	4.6	1.8	29
C-A4	7.0	84.8	1,628

2006 Activities

In March of 2006 Esperanza announced the results from a follow-up channel sampling program begun in January, 2006. Channel samples were spaced approximately every 25 meters along the strike of the Ayelén vein. Individual channels were cut perpendicular to the strike of the vein allowing the full thickness of the vein to be sampled. The channels vary in length from 4.1 to 36.4 meters. Individual samples within each channel are approximately one meter in length.

Based upon these results a drill program was designed. Drilling and road building permits were granted on May 2, 2006. Approximately 10 kilometers of road were built to access the Ayelén and other viens. Drilling began on September 25, 2006. A total of 28 drill holes were completed by year-end. Initial results from the drilling have confirmed the high gold and silver grades. grades fo

2007 Activities

During 2007 operatorship of the project was transferred to Silver Standard Resources Inc. under the terms of the joint venture agreement. An additional 133 diamond core drill holes were completed for a grand total of 161 drill-holes totalling approximately 27,000 meters. The bulk of the drilling was completed on the Ayelén and Inés veins.

2008 Activities

The joint-venture has contracted an independent Qualified Person to complete a resource estimate based on the existing trench and drill-hole information. It also anticipates the commencement of an underground exploration program with tunnels planned on 2 or 3 levels to test ore continuity and extension. A complementary drill program will test for extensions of known mineralization as well as new targets. A feasibility study is planned to begin later in the year.

2. The Cerro Jumil Property

The Cerro Jumil Property is without known reserves and the work being done by the Issuer is exploratory in nature. The Issuer’s interest in the Cerro Jumil Property stemmed from earlier exploration work, as described below, that was done in the area.

Acquisition of Interest

The property is owned 100% by Esperanza.

The property was acquired from Recursos Cruz del Sur S.A. de C.V., (Recursos or the “vendor”) an unrelated Mexican corporation. Esperanza entered into an option agreement whereby it could acquire a 100 percent ownership interest subject to a 3 percent Net Smelter Return Royalty by making payments totalling US $105,000, issuing 170,000 shares over 4 years with a balloon payment of US $1,895,000 due on the 5^th anniversary of the agreement and completing US $225,000 in expenditures in the initial two years.

On October 2, 2006 the Company announced that it had reached agreement with Recursos Cruz del Sur S.A. de C.V. ("RCS") to amend its existing agreement to allow for the early exercise of its option to purchase the Cerro Jumil gold property in Morelos State, Mexico. Esperanza paid CDN$417,375 in cash and issued 500,000 common shares of the Company to RCS. Under the original terms, Esperanza had remaining payments of US$ 25,000 due on May 7, 2007 and US$1,895,000 due on May 7, 2008. RCS will maintain a 3% net smelter return royalty on production from the property.

The property consist of the following concessions:

Cerro Jumil Mineral Concessions
Mining Concession	Title No.	Area (Hectares)	Title Validity
Mining Concession			Issued	Expires
La Esperanza	215624	437	5-Mar-02	4-Mar-52
Esperanza II	220742	1,270	30-Sep-03	29-Sep-53
Esperanza III	228265	1,359	20-Oct-06	19-Oct-56
Esperanza IV	106/00096	1,337	1-Nov-07	31-Oct-57
	Total	4,403

Location

The property, centred at 18^O46’N, 99^O16’W, is located 80 kilometres south of Mexico City, and 12 kilometres from Cuernavaca in the State of Morelos.

[esperanzaform20f2007004.jpg]

Accessibility, Climate, Infrastructure and Physiography

Access to the property is by paved road to 7 kilometres north of Alpuyeca along Morelos Highway 55 to where a dirt road turns off to the landfill, and then continues 2.75 kilometres onto the property. The road is passable year round by 2-wheel drive vehicles.

Topography is relatively rugged, varying from 1,100 to 1,450 metres. Outcrop exposure is excellent on the slopes of the hills and float is abundant on the flats. Vegetation in the form of trees and shrubs is extensive in the wet season that occurs from June to October. It is possible to work on the property year round.

Workers are available at the village of Tetlama and Cuernavaca; a city of over 1 million people provides all supplies and services that might be required.

History and Previous Work

Mineralization at Cerro Jumil is found along the contact where a series of igneous rocks have intruded a limestone unit. This mineralization is commonly known as skarn. There are old shafts and pits in the area but their age is unknown. There is a collapsed adit which, based on the size of the dump, appears to extend under the known surface mineralization. A small mine is believed to have operated in the 1970’s when several adits were driven on narrow high-grade quartz veins. Any production was insignificant. Several older pits and shafts have explored the skarn zones. The caved adit at the north end of the intrusive may be related to the 1970’s operation.

Recursos carried out reconnaissance geology in 1993 and acquired an exploration concession over the area in 1994. Rock chip sampling and geological mapping were carried out in 1994 and in late 1995 the property was optioned to Teck Cominco Ltd. (Teck), an unrelated public company. Teck carried out line cutting, surface mapping and rock chip sampling, trenching, airborne magnetic and radiometric surveys, and a limited Induced Polarization Survey in 1996.

Teck cleaned and sampled the old trenches A to F, in addition to excavating four new trenches, J to M, in an area of skarn alteration. Teck took a total of 184 grab and channel samples.

In 1998 Teck completed four diamond drill holes totalling 822 metres. Teck returned the property to Recursos in 1998.

Prior to the expiry date of the exploration concession in 2000, Recursos applied for an exploitation concession that was granted on March 5, 2002.

Recursos carried out two programs of rock chip sampling in 1994 and 2002. A total of 118 samples were taken from outcrop and float.

In 2002 Geo Associados S.A. de C.V. completed 20 kilometres of gradient time domain Induced Polarization and Resistivity surveys for Recursos. The survey extended the previous geophysical survey to the north and south. The lines cross the east and west contact zones at a good angle but are parallel to the north and south areas.

The 1997 survey indicates that the interpreted anomalies are at a depth of 200-300 metres and the 2002 survey was designed to look at similar depths.

Total expenditures are reported to be US $272,500 expended by Teck and US $94,000 expended by Recursos.

2005 Activities

The Company initiated a 1200 meter drilling program on February 1, 2005 and completed all drill holes on March 5, 2005. A total of eight drill holes were completed. The first six drill holes tested the West Zone (described above). The final two drill holes tested targets to the south and southeast of the West Zone.

The Issuer also conducted preliminary metallurgical tests on material collected from drill hole DDH-01.

Beginning in November of 2005 and continuing into April of 2006 the Company began a second program of diamond core drilling. Through April of 2006 a grand total of 4850 meters of drill hole has been completed.

2006 Activities

Following the April 2006 completion of the drill program begun in 2005 a geophysical survey was conducted during July and August. In December of 2006 the Company began a third phase of drilling with two drill rigs. This consists of a combination of exploration drilling and “in-fill” drilling to collect sufficient information necessary to complete a resource estimate. Drilling will continue through 2007.

2007 Activities

The drilling begun in 2006 continued through the year and into the first quarter of 2008. By that time a total of 31,420 meters in 66 diamond core and 101 reverse-circulation drill-holes had been completed.

The company had also conducted additional metallurgical testing indicating 72-73% recovery of gold under simulated heap-leach conditions (column tests).

2008 Activities

The Company has contracted Exploration Geotechnologies Inc. to complete a resource estimate. It also is conducting additional metallurgical testing. The Company intends to begin a scoping study later in 2008.

Quality Control/Quality Assurance

William Bond, M.Sc., Geol. and Vice President of Exploration, Esperanza Silver Corp. is responsible for the Cerro Jumil exploration program. He has verified the drill results and other data including sampling, analytical and test data. Field work has been conducted under his supervision. All samples were submitted to ALS Chemex laboratories in Vancouver, Canada for analysis. Gold samples were analyzed by fire assay and atomic absorbtion spectroscopy with a 30 g nominal sample weight.

3. Other Exploration Properties

The Company also maintains a portfolio of 16 other early-stage exploration projects. These consist of:

•

Pucarana, Flor de Loto, Abra Roja, Camparuri, Cori Jirca and Utucocha projects located in Peru

•

Mesa Galindo, La Fortuna and A-T (a collection of seven separate exploration projects) properties located in Mexico and

•

The Atocha project located in Bolivia.

The Flor de Loto property is subject to an option agreement. On December 15, 2003, the Company, through its Peruvian subsidiary, signed an option-to-purchase agreement with the owner. The Company must make the following payments to maintain its option:

Due Date Cash Payment Status

On signing US$ 5,000 paid

December 15, 2004 US$ 10,000 paid

December 15, 2005 US$ 15,000 paid

December 15, 2006 US$ 25,000 paid

December 15, 2007 US$ 30,000

December 15, 2008 US$ 500,000

payments to the date and the first anniversary of the date when the Company reaches an agreement with the local community to conduct drilling and other exploration work on the property.

The Pucarana property is subject to an option agreement. In May 2007, the Company announced that it had finalized an earn-in agreement whereby Esperanza can earn up to a 60% interest in Canadian Shield’s Pucarana Gold Property (“Pucarana”), located in southern Peru. Esperanza has the right to earn a 60% interest in Pucarana by expending US$1,300,000 over a four year period commencing upon receipt of a drill permit (the “Effective Date”), and by making payments of US$80,000 to Gallant Minerals Peru Ltd. S.A. (Canadian Shield’s Peruvian subsidiary). Esperanza must make the following expenditures: US$200,000 prior to the first anniversary of the Effective Date; US$450,000 prior to the second anniversary of the Effective Date; US$325,000 prior to the third anniversary of the Effective Date; and US$325,000 prior to the fourth anniversary of the Effective Date. Esperanza must also make the following cash

payments: US$30,000 upon signing the agreement (paid) and US$50,000 upon exercising the option to earn an additional 9% interest. The work commitments for the first twelve months from the Effective Date and the first payment are a firm commitment and all additional work commitments and payments are at the sole discretion of Esperanza. Upon Esperanza earning either its 51% interest, or 60% interest if it so elects, the two companies will form a joint venture in which all future expenditures shall be made on a pro rated basis, with standard dilution formulas applied if either party elects not to participate in funding further exploration expenses. In the event either party is diluted to a joint venture interest of 10% or less, that interest will be converted to a 2% NSR with the right of the other party to purchase each 0.5% interest in the NSR for US$500,000. If the price of gold exceeds US$500, the purchase price for the NSR increases proportionately to the price of gold. The Company has not received a drill permit at this time and accordingly the Effective Date of the agreement has not been determined.

The A-T properties are subject to an option agreement. In September 2007, Esperanza agreed to acquire a four-year option on seven gold and silver exploration properties in Mexico’s Durango and Chihuahua states from Exploraciones del Altiplano S.A. de C.V. and Compana Minera Terciario S.A. de C.V., two privately-held companies. Under the terms of the agreement Esperanza has paid US$30,000 and issued 20,000 common shares upon signing the definitive agreement for the four-year purchase option of the seven properties. An additional US$20,000 was paid and 20,000 more shares were issued on the commencement of drilling on two of the properties. Over the option term Esperanza will make periodic payments totaling up to US$85,000 and will issue up to 190,000 common shares per property, depending on whether the property is maintained for the full option period or if it is relinquished earlier. Esperanza committed to drill a minimum of 1,200 meters per property during the first 1 2 months from the receipt of all necessary permits (subject to availability of drill rigs). The acquisition of any property can be made at the end of the option period by payment of US$350,000 and the issuance of between 450,000 and 1,200,000 common shares dependent on the price of Esperanza shares at the time.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Interim Period Ended March 31, 2008

This discussion and analysis of financial position and results of operations is prepared as at May 10, 2008 and should be read in conjunction with the consolidated financial statements of Esperanza Silver Corporation (the “Company” or “Esperanza”) for the three months ended March 31, 2008 and the related notes thereto. Those interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial statements and as result, do not contain all disclosure required under generally accepted accounting principles for annual financial statements. Therefore readers may want to refer to the Company’s December 31, 2007 and 2006 annual audited consolidated financial statements and the accompanying notes. These documents are available for viewing on SEDAR at www.sedar.com. All dollar amounts included therein and in the following management discussion and analy sis (“MD&A”) are in Canadian dollars except where noted.

This discussion contains forward-looking statements that involve risks and uncertainties. Such information, although considered to be reasonable by the Company’s management at the time of preparation, may prove to be inaccurate and actual results may differ materially from those anticipated in the statements made.

Cerro Jumil (formerly La Esperanza Project), Mexico

In December 2006, the Company commenced Phase III drilling at the Cerro Jumil project. Drilling continued throughout 2007 and as of March 31, 2008 approximately 37,000 meters of diamond core and reverse circulation drilling had been completed. The Company has retained an independent qualified person as defined by National Instrument 43-101 to provide an initial resource estimate. Full drill results are available on the company’s website (http://www.esperanzasilver.com/cerrojumil.php). Preliminary metallurgical testing has been completed and indicates the amenability of the mineralized rock to both conventional and heap-leach processing.

San Luis Project, Peru

The property is currently held 55% by Silver Standard Resources Inc. (“Silver Standard”) and 45% by the Company. On March 26, 2007, Silver Standard elected to exercise its option to earn up to 70% of the San Luis project in Peru by funding all activities necessary to complete a feasibility study. Silver Standard also became the operator of the project. Upon acceptance of a feasibility study recommending commercial production Silver Standard will have the option to increase its share to 80 % by funding all pre-production capital.

Esperanza has completed a review of the resource estimate provided to it, by Silver Standard Resources Inc., the project operator (in a news release dated November 15, 2007). The review has led Esperanza to the conclusion that the estimate announced in that release may understate the mineral resource contained in the San Luis project. Silver Standard subsequently commissioned an independent review, which also raised issues with the original resource estimate. To address these matters, the Joint Venture intends to retain a different independent qualified person to prepare a new resource estimate for the project.

As of March 31, 2008 the joint-venture was waiting for final approval of operating permits before underground exploration tunneling and surface drilling could recommence.

AT Properties, Mexico

On August 20, 2007 the Company announced the acquisition of seven exploration properties in northern Mexico known collectively as the AT properties. Under the terms of the agreement Esperanza has paid US$30,000 and issued 20,000 common shares upon the signing of the definitive agreement for a four-year purchase option of the seven properties and has paid a further US$20,000 and issued an additional 20,000 shares as a result of starting drilling on two of the properties. Over the option term Esperanza will make periodic payments totaling up to US$85,000 and will issue up to 190,000 common shares per property, depending on whether the property is maintained for the full option period or if it is relinquished earlier. Esperanza will be committed to drill a minimum of 1,200 meters per property during the first 12 months.

The acquisition of any property can be made at the end of the option period by payment of US$350,000 and issuance of between 450,000 and 1.2 million common shares depending on the price of Esperanza shares at the time of exercising the option to purchase the property. The vendor will retain a 2% net smelter royalty. The agreement is subject to all regulatory approvals.

On October 30, 2007 Esperanza announced the commencement of drilling on one of the properties called the Tepalcateño project. Refer to the Company’s website for results. In December of 2007 a second drill rig was brought in to begin drilling on the Sabinas property. As of March 31, 2008 drilling continued.

Flor de Loto Project, Peru

During 2007 the Company completed an Archaeological Study of the area and is currently negotiating an exploration agreement with the local community. The final two property payment dates have been extended into 2008-09 pending the reaching of a community agreement. An application for drilling permits has been submitted and plans to begin a first phase drill program are under way.

Pucarana, Peru

On March 5, 2007 the Company announced it had reached an agreement on the Pucarana, Peru mineral property with Canadian Shield Resources Inc. Pursuant to the agreement, Esperanza has an option to earn a 51% interest by expending US$650,000 over a two year period commencing upon receipt of drill permits, with a commitment to fund US$200,000 in exploration expenditures in the first year. Esperanza also has the option to earn a subsequent 9% interest (for a total of 60%) by making additional exploration expenditures of US$650,000 over a two year period. A cash payment of US$30,000 was paid on signing of a definitive agreement and a second payment of US$50,000 is due if Esperanza elects to exercise the right to earn the additional 9% interest.

During 2007 the Company initiated its exploration activities, identifying target areas for subsequent trenching and drilling and completing social baseline and hydrogeology studies. The Company is currently negotiating an exploration agreement with the local community and has prepared an application for drilling permits.

Generative Exploration

The Company continues to generate new projects through its grass-roots exploration activities. It now controls 9 additional projects in addition to the projects described above. They consist of six in Peru and three in Mexico. These properties are all considered to be in an early exploration stage.

Results of Operations

The Company recorded a loss of $1,408,565 for the three months ended March 31, 2008 (2007 – $678,633). The increase in the loss over the prior year’s comparative period was due to higher costs for: stock based compensation and investor relations which were partially offset by higher interest income. Investor relations costs were higher because the Company has been more active at trade shows and has also used other media to keep investors informed about the Company and its key projects. The increased interest income was due to a higher average balance of cash and cash equivalents available for investing in the current quarter than in the prior comparative quarter.

Liquidity and Capital Resources

The Company started 2008 with working capital of $15,037,240 and working capital as at March 31, 2008 was $13,502,186. The decrease in working capital of $1,535,054 was due mainly to the investment in mineral properties of approximately $1,308,000 and the loss from operations. Most of the expenditures on mineral properties were incurred completing a drilling program and field work on the Cerro Jumil property in Mexico.

New Accounting Policies

Capital Disclosures

CICA Handbook Section 1535, Capital Disclosures, establishes standards for disclosing information about the Company’s capital and how it is managed. Section 1535 specifies the disclosure of:

(a)

qualitative information about its objectives, policies and processes for managing capital;

(b)

summary quantitative data about what it manages as capital;

(c)

whether during the period it complied with any externally imposed capital requirement to which it is subject; and

(d)

when the company has not complied with such externally imposed capital requirements, the consequences of such non-compliance.

Financial Instruments Disclosures

CICA Handbook Section 3862, Financial Instruments – Disclosures, requires entities to provide disclosure of quantitative and qualitative information in their financial statements that enable users to evaluate (a) the significance of financial instruments for the company’s financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the company is exposed during the period and at the balance sheet date, and management’s objectives, policies and procedures for managing such risks.

The Company will be required to disclose the measurement basis or bases used, and the criteria used to determine classification for different types of instruments. The Section requires specific disclosures to be made, including the criteria for:

(a)

designating financial assets and liabilities as held for trading;

(b)

designating financial assets as available-for-sale; and

(c)

determining when impairment is recorded against the related financial asset or when an allowance account is used.

General Standards on Financial Statements

Outstanding Share Data

As at May 10, 2008 there were 47,256,821 common shares issued and outstanding. There were also 4,348,500 stock options outstanding with exercise prices ranging between $0.25 and $3.70 per share. Of the options outstanding 3,560,167 have vested. There were also 2,055,000 share purchase warrants outstanding which expire February 8, 2009 with an exercise price of $4.35 per share.

Years Ended December 31, 2007 and 2006

Overview

During Fiscal 2007, the Issuer raised $16,174,455 through the sale of shares. The Issuer continued to work on its mineral properties in Mexico and Peru as described earlier in this document in 4.D. Property, Plant and Equipment.

This discussion and analysis of financial position and results of operations is prepared as at April 4, 2007 and should be read in conjunction with the audited consolidated financial statements of Esperanza Silver Corporation (the “Company” or “Esperanza”) for the year ended December 31, 2007 and 2006 and the related notes thereto. Those consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These documents are available for viewing on SEDAR at www.sedar.com. All dollar amounts included therein and in the following management discussion and analysis (“MD&A”) are in Canadian dollars except where noted.

Description of Business

Esperanza Silver Corp. is a maturing company dedicated to the development of its two advanced-stage projects: Cerro Jumil and San Luis. It has entered into a joint-venture concerning its San Luis project in Peru and continues to hold 100% of the Cerro Jumil, Mexico project. This allows Esperanza to most effectively deploy its human and financial capital to further the project’s development. Additionally the Company continues to actively identify and explore new precious metal projects. Additional information is available at the Company’s website at www.esperanzasilver.com.

Cerro Jumil (formerly La Esperanza Project), Mexico

In December 2006, the Company commenced Phase III drilling at the Cerro Jumil project. Drilling continued throughout the year and at year-end 2007 approximately 25,000 meters of diamond core and reverse circulation drilling had been completed. Three drill-rigs were active on the project. Full drill results are available on the Company’s website (http://www.esperanzasilver.com/cerrojumil.php) Preliminary metallurgical testing has been completed and indicates the amenability of the mineralized rock to both conventional and heap-leach processing.

San Luis Project, Peru

A diamond core drill program began in September of 2006. Since that time through year-end 2007 a total of over 27,000 meters in 161 diamond drill holes has been completed. On November 15, 2007, the Company announced that Silver Standard had presented it with an initial resource estimate for the San Luis property on a 100% basis, of:

Cautionary Note to U.S. Investors concerning estimates of Indicated 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 mineral deposits in these categories will ever be converted into reserves.

Category	Tonnes	Silver Grade(g/t)	Gold Grade(g/t)	Silver Grade(oz/ton)	Gold Grade(oz/ton)	Contained Gold(ounces)	Contained Silver(ounces)	Gold-Equivalent(ounces)
Measured	41,400	483.4	21.57	14.1	0.63	28,700	643,000	42,000
Indicated	632,500	318.8	11.63	9.3	0.34	236,500	6,483,000	366,000
Gold-equivalent ounces assume a 50:1 silver-to-gold price ratio. Prepared by Doug Blanchflower, P.Geo., an independent qualified person, as defined by Canada's National Instrument 43-101. Represents 100% of the resource. Esperanza currently has a 45% interest in the project.

Cautionary Note to U.S. Investors concerning estimates of Inferred 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 amount of 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 estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Category	Tonnes	Silver Grade(g/t)	Gold Grade(g/t)	Silver Grade(oz/ton)	Gold Grade(oz/ton)	Contained Gold(ounces)	Contained Silver(ounces)	Gold-Equivalent(ounces)
Inferred	14,600	282.4	9.33	8.2	0.27	4,400	132,000	7,000

During the fourth quarter of 2007 the joint-venture company submitted a permit application for underground development on the Ayelén vein. The underground work will be used to test the continuity of mineralization and form the basis of an updated resource estimate and feasibility study.

AT Properties, Mexico

The acquisition of any property can be made at the end of the option period by payment of US$350,000 and issuance of between 450,000 and 1.2 million common shares dependent on the price of Esperanza shares at the time. The vendor will retain a 2% net smelter royalty. The agreement is subject to all regulatory approvals.

On October 30, 2007 Esperanza announced the commencement of drilling on one of the properties called the Tepalcateño project. In December of 2007 a second drill rig was brought in to begin drilling on the Sabinas property. At year-end both rigs continued to operate.

Flor de Loto Project, Peru

During 2007 the Company completed an Archaeological Study of the area and is currently negotiating an exploration agreement with the local community. The final two property payments dates have been extended into 2008-09 pending the reaching of a community agreement. An application for drilling permits has been submitted and plans to begin a first phase drill program are under way.

Pucarana, Peru

On March 5, 2007 the Company announced it had reached an agreement on the Pucarana, Peru mineral property with Canadian Shield Resources Inc. Pursuant to the agreement, Esperanza has an option to earn a 51% interest by expending US$650,000 over a two year period commencing upon receipt of drill permits, with a commitment to fund US$200,000 in exploration expenditures in the first year. Esperanza also has the option to earn a subsequent 9% (for a total of 60%) by making additional exploration expenditures of US$650,000 over a two year period. A cash payment of US$30,000 was paid on signing of a definitive agreement and a second payment of US$50,000 is due if Esperanza elects to exercise the right to earn the additional 9% interest.

Generative Exploration

Results of Operations

The Company recorded a loss of $484,024 for the three months ended December 31, 2007 (2006 – $79,091). The increase in the loss over the prior year’s comparative period was due to higher costs for: stock based compensation, exploration expenses, consulting fees, investor relations and a higher foreign exchange loss. The Company has been actively pursuing new projects in Peru and Mexico and this resulted in the higher exploration expenses. Consulting fees were higher due to increased staffing, increased consulting rates and because in the prior year the Company had received operating fees on the San Luis project which had reduced consulting costs. The foreign exchange loss was a result of a strengthening of the Canadian dollar against the US dollar in the quarter in contrast to a weakening of the Canadian dollar in the prior comparative quarter. These higher costs were partially offset by increased interest income. & nbsp;Interest income was higher than in the fourth quarter of 2006 due to increased cash to invest as a result of the private placement in February, 2007.

The Company recorded a loss of $2,839,379 for the year ended December 31, 2007 (2006 - $1,572,623). The increase in the loss was due to higher costs for consulting, stock-based compensation, investor relations, exploration expenses and foreign exchange. Consulting costs were higher due to increased staffing levels, increased pay rates and lower recoveries from the San Luis project. Foreign exchange was higher due to the strengthening of the Canadian dollar as noted above. Stock-based compensation costs were higher due to options being granted to new staff members in the first quarter of the year which were fully vested on the date of the grant and because the options granted in the current year had very high exercise prices which resulted in much higher Black-Scholes valuations than in the prior year.

Liquidity and Capital Resources

The Company started 2007 with working capital of $5,091,012 and working capital as at December 31, 2007 was $15,037,240. The increase in working capital of $9,946,228 was due mainly to the proceeds from a private placement in February and the exercise of warrants and options which in total amounted to approximately $16,174,000. The proceeds from share issuances were partially offset by cash used in operations of $720,945 and cash expenditures on mineral properties and equipment of approximately $3,974,000. Most of the expenditures on mineral properties were incurred conducting a drilling program and field work on the Cerro Jumil property.

Esperanza had working capital of $16,100,063 at September 30, 2007 and this declined to $15,037,240 at December 31, 2007. The decrease in working capital was due to cash used in operations of approximately $430,000 and cash expenditures on mineral properties and equipment of approximately $1,466,000. These were partially offset by cash received from the exercise of options and warrants of approximately $1,019,000.

Since December 31, 2007, the Company has received approximately $246,000 from the exercise of stock options. Esperanza currently has sufficient working capital to fund its exploration and administrative expenditures for the next twelve months.

Quarterly Information

	2007	2007	2007	2007
Quarter Ended	Dec. 31	Sept. 30	Jun. 30	Mar. 31
Operating Expenditures	$ 659,476	$ 760,409	$ 1,303,518	$ 768,421
Loss for the period	484,024	573,778	1,102,944	678,633
Loss per Share (Basic and Diluted)	(0.01)	(0.01)	(0.02)	(0.01)

	2006	2006	2006	2006
Quarter Ended	Dec. 31	Sept. 30	Jun. 30	Mar. 31
Operating Expenditures	$ 122,216	$ 270,177	$ 1,043,126	$ 292,370
Loss for the period	79,091	224,760	998,303	270,469
Loss per Share (Basic and Diluted)	(0.00)	(0.01)	(0.03)	(0.01)

2007

Operating costs were significantly higher in the first quarter of 2007 compared to the prior quarter due to stock based compensation, significantly higher consulting fees, foreign exchange and increased transfer agent and filing fees. Consulting fees were higher due to increases in management compensation contracts and bonuses granted to some officers and consultants. In the prior quarter, the US dollar strengthened significantly against the Canadian dollar which resulted in a substantial exchange gain. However in the current quarter the US dollar weakened against the Canadian dollar and resulted in an exchange loss. The increase in transfer agent and filing fees compared to the prior quarter were the direct result of the significant brokered private placement which was completed in February of 2007. In the second quarter of 2007 both operating expenses and the loss were higher than in the prior quarter due to increased stock-based compensatio n.

Operating expenditures were lower in the third quarter than in the second quarter of 2007 due to lower stock-based compensation expense, property examination costs and a lower foreign exchange loss. Property examination costs were lower as a result of lower activity as several new properties were acquired. The foreign exchange loss was higher in the second quarter because the US dollar weakened by 10 cents against the Canadian dollar compared to only 5 cents in the third quarter.

For the quarter ended December 31, 2007, operating costs were lower than for the prior quarter due to lower stock-based compensation expense. The loss for the period was lower than the prior quarter for the same reason.

2006

In the first quarter of 2006, operating costs were approximately $88,000 higher than for the prior quarter. This was due to higher consulting costs and higher property examination and holding costs partially offset by lower costs for accounting and legal and transfer agent and filing fees and increased interest income. Consulting costs were higher due to management bonuses. Legal and accounting costs were lower because the first quarter had no charges for audit fees. Property examination and holding costs were higher in the first quarter due to regional exploration in Peru and holding costs incurred on the Atocha property. Interest income increased in the first quarter as the result of having a greater amount of cash available for interest bearing investments. In the second quarter of 2006, operating costs were $750,756 higher than for the prior quarter. This was due mainly to significantly higher stock-based compensation expense. In the third quarter of 2006, operating costs were consistent with those of the prior quarter except for the fact that the Company did not record any stock-based compensation. In the fourth quarter of 2006, operating costs declined significantly from the prior quarter due to lower consulting costs and due to foreign exchange. The lower consulting costs were due to recoveries from Silver Standard with respect to the San Luis project. The foreign exchange moved from a loss in the third quarter to a gain in the fourth quarter because the US dollar had been weakening in the third quarter but then strengthened considerably against the Canadian dollar in the fourth quarter.

Selected Annual Financial Information
	December 31, 2007	December 31, 2006	December 31, 2005
Total Revenue	$ -	$ _	$ 5,182
Operating Expenses	3,491,824	1,727,889	1,002,230
Net Loss	2,839,379	1,572,623	7,630,894
Loss per Share – Basic and Diluted	0.06	0.04	0.27
Capitalized Mineral Property Costs	3,859,162	2,617,592	837,276
Total Assets	25,817,957	10,209,823	4,926,160


Cash Flows From (Used In):


Operating	$ (720,945)	$ (1,735,607)	$ (812,793)
Investing	(3,974,597)	(2,643,991)	(859,190)
Financing	16,174,455	4,990,872	3,702,298
Net Increase (Decrease)	$ 11,478,913	611,274	2,030,298

In 2007, Esperanza incurred significantly higher operating expenses than in 2006 due to higher costs for: stock-based compensation, exploration expenses, consulting fees, investor relations and a higher foreign exchange loss. The net loss for 2007 was higher than the loss for 2006 for the same reasons except that the higher operating expenses were partially offset by increased interest income due to interest earned on much higher balances of cash and cash equivalents on hand as a result of the February, 2007 private placement. Capitalized mineral property costs were higher than in 2006 due to a significant drilling program on the Cerro Jumil property. Total assets were much higher in 2007 due to the February private placement plus cash proceeds from the exercise of a significant amount of warrants and stock options during the year.

In 2006, Esperanza had higher operating expenses than in the prior year due to increased expenses for stock-based compensation, property examination costs, and transfer agent and filing fees. The Company incurred increased expenditures on property examination costs as the result of increased regional exploration in Mexico. Transfer agent and filing fees were higher due to higher costs related to annual filings and annual fees due to the TSX Venture Exchange. Capitalized mineral property costs were higher in 2006 due to increased development work mainly on the Cerro Jumil property but also on the San Luis property. Cash from operations was lower in 2006 due to higher operating costs and increased funds tied up in receivables compared to 2005. Investing activities consumed increased cash over 2005 because of the increased investment in Cerro Jumil and San Luis mineral properties. Cash from financing activities was higher in 2006 due to a s ignificant increase in cash being received from warrant exercises partially offset by a lower amount of cash received from a private placement.

In 2005, Esperanza decided to write-down the Atocha property to a nominal amount. This combined with the write-off of the Estrella property was the main reason for the significant increase in the net loss incurred in 2005 as compared to 2004. The Company entered into two agreements with Silver Standard in 2005. The first was a prospecting agreement which covered grassroots exploration in Peru and resulted in a 50%-50% sharing of costs except for the first US$500,000 which was to be funded 40% by Esperanza and 60% by Silver Standard. As a result of this agreement, the Company acquired the San Luis property by staking. Esperanza and Silver Standard then elected to form a separate 50%-50% joint venture for the San Luis project. Accordingly, during 2005 the Company focused its exploration and development activity on generative exploration in Peru and on its newly discovered San Luis property, as well as conducting a drilling program on the C erro Jumil property in Mexico. During 2005, the Company also completed a private placement which generated net proceeds of over $3.2 million. Another $0.5 million in proceeds was generated by the exercise of warrants and options. As a result, Esperanza’s working capital position improved by over $2 million from the end of 2004.

Transactions with Related Parties

The Company has a services agreement with Ionic Management Ltd. (“Ionic”). Ionic provides office space on a monthly rental basis. The Company and Ionic are related by virtue of having one director in common. During the year ended December 31, 2007 a total of $11,900 (2006 - $15,000) was charged by Ionic for rent and at December 31, 2007 the Company owed Ionic $nil (2006 - $1,326) which was included in accounts payable.

The Company also has a consulting agreement with its President for US$12,500 (2006 – US$7,625) per month plus health insurance benefits. During the year ended December 31, 2007, the President was paid or accrued $180,547 (2006 - $123,974) in consulting fees and health insurance benefits and $88,096 (2006 - $46,720) for a management bonus. As at December 31, 2007, $8,675 (2006 - $10,525) was payable to the President of the Company which are included in accounts payable and $10,675 (2006 - $10,675) had been advanced to the President for travel expenses.

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

New Accounting Policies

Effective January 1, 2007, the Company has adopted CICA Handbook Sections 3855 - Financial Instruments – Recognition and Measurement; Section 3861 Financial Instruments – Disclosure and Presentation; Section 1530 Comprehensive Income; and Section 3251 Equity. The adoption of these new accounting policies did not have any effect on the Company’s financial statements.

CICA Section 3855 requires that all financial assets, except those classified as held to maturity, and loans and receivables, must be measured at fair value. All 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 or held for trading are reported at fair market value based on quoted market prices. Unrealized gains or losses on available for sale investments are excluded from earnings and reported as other comprehensive income or loss. Investments subject to significant influence are reported at cost and not adjusted to fair market value.

Comprehensive income is the change in the Company’s net assets that results 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 investments. Other comprehensive income includes the holding gains and losses from securities which are not included in net income (loss) until realized.

Recent Accounting Pronouncements

Recent accounting pronouncements which may impact the Company in the future are as follows:

Capital Disclosures

CICA Handbook Section 1535, Capital Disclosures, establishes standards for disclosing information about the Company’s capital and how it is managed. Under this standard the Company will be required to disclose the following, based on the information provided internally to the Company’s key management personnel:

(a)

qualitative information about its objectives, policies and processes for managing capital,

(b)

summary quantitative data about what it manages as capital.

(c)

whether during the period it complied with any externally imposed capital requirement to which it is subject.

(d)

when the company has not complied with such externally imposed capital requirements, the consequences of such non-compliance.

This standard is effective for interim and annual financial statements beginning on January 1, 2008. The Company has not yet determined the impact of the adoption of this change on the disclosure in its financial statements.

Financial Instruments Disclosures

The Company will be required to disclose the measurement basis or bases used, and the criteria used to determine classification for different types of instruments.

The Section requires specific disclosures to be made, including the criteria for:

(a)

designating financial assets and liabilities as held for trading;

(b)

designating financial assets as available-for-sale; and

(c)

determining when impairment is recorded against the related financial asset or when an allowance account is used.

Inventories

CICA Handbook Section 3031, Inventories prescribes the accounting treatment for inventories and provides guidance on the determination of costs and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

This standard is effective for interim and annual financial statements beginning on January 1, 2008. The Company does not expect the adoption of this change to have an impact on the disclosure in its financial statements.

General Standards on Financial Statements

CICA Handbook Section 1400, General Standards on Financial Statements Presentation, has been amended to include requirements to assess and disclose a company’s ability to continue as a going concern. The changes are effective for interim and annual financial statements beginning on January 1, 2008. The Company has not yet determined the impact of the adoption of this change on the disclosure in its financial statements.

Goodwill and Intangible Assets

CICA Handbook Section 3064, Goodwill and Intangible Assets, establishes revised standards for recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the introduction of this standard, the CICA withdrew EIC 27, Revenues and Expenses during the pre-operating period. As a result of the withdrawal of EIC 27, companies will no longer be able to defer costs and revenues incurred prior to commercial production at new mine operations. The changes are effective for interim and annual financial statements beginning January 1, 2009. The Company does not expect the adoption of this change to have an impact on the disclosure in its financial statements.

Risks and Uncertainties

The business of mineral deposit exploration and extraction involves a high degree of risk. Few properties that are explored ultimately become producing mines. At present, none of the Company’s properties has a known commercial ore deposit. The main operating risks include: securing adequate funding to maintain and advance exploration properties; ensuring ownership of and access to mineral properties by confirmation that claims and leases are in good standing and obtaining permits for drilling and other exploration activities. The market prices for silver, gold and other metals can be volatile and there is no assurance that a profitable market will exist for a production decision to be made or for the ultimate sale of the metals even if commercial quantities of precious and other metals are discovered.

Esperanza is currently earning an interest in certain of its properties through option agreements and acquisition of title to the properties is only completed when the option conditions have been met. These conditions generally include making property payments, incurring exploration expenditures on the properties and can include the satisfactory completion of pre-feasibility studies. If the Company does not satisfactorily complete these option conditions in the time frame laid out in the option agreements, the Company’s title to the related property will not vest and the Company will have to write-down the previously capitalized costs related to that property.

The Company is operating in countries that currently have varied political environments. Changing political situations may affect the manner in which the Company operates. The Company’s equity financings are sourced in Canadian dollars but for the most part it incurs its expenditures in local currencies or in US dollars. At this time there are no currency hedges in place. The Company does not have any employees. All work is carried out through independent consultants and the Company requires that all consultants carry their own insurance to cover any potential liabilities as a result of their work on a project.

Outstanding Share Data

As at April 4, 2008 there were 47,256,821 common shares issued and outstanding. There were also 3,348,500 stock options outstanding with exercise prices ranging between $0.25 and $3.70 per share. Of the options outstanding 3,693,032 have vested. There were also 2,055,000 share purchase warrants outstanding which expire February 8, 2009 with an exercise price of $4.35 per share.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

6.A. Directors and Senior Management

Table No. 6

Directors and Senior Management

6/10/2008

______________________________________________________________________________

Name	Position	Age	Date of First Election Or Appointment
William J. Pincus	President, CEO, Director	54	September 30, 2002
Brian E. Bayley (1)(2)(3)	Director	52	December 14, 1999
Michael H. Halvorson (1)(2) (3)	Director	62	April 8, 2003
Steve Ristorcelli (1)(2)(3)	Director	51	June 2, 2005
J. Stevens Zuker	Senior Vice President	53	September 23, 2005
David L. Miles	Chief Financial Officer	56	June 10, 2004
Kim Casswell	Corporate Secretary	51	April 2, 2004
William Bond	V. P. Exploration	55	August 1, 2003
Paul Bartos	Vice President, Chief Geologist	50	January 22, 2007

(1)

Member of Audit Committee.

(2)

Member of the Compensation Committee

(3)

Member of Corporate Governance Committee

______________________________________________________________________________

William Pincus (President, CEO and Director)

Mr. Pincus has over 30 years of industry experience. He holds the designation of Certified Profession Geologist. Most recently he was the “Vice President of Sunshine Mining Company, an unrelated public company, where he oversaw the development of the 155 million ounce (measured and indicated resource) Pirquitas silver deposit. Previously, Mr. Pincus was the Executive “Vice President of the mining consultancy Pincock, Allen and Holt, Inc. Prior experience includes time with FMC Gold (now called Meridian Gold) and Atlas Corporation where he was involved in the successful exploration and acquisition of various precious metal projects. He graduated from the University of Colorado with a B.A. in geology in 1975 and the Colorado School of Mines with a M.Sc. in geology and an M.Sc. in mineral economics in 1981 and 1986 respectively. Mr Pincus is a Certified Professional Geologist by the American Institute of Professional Geologists.

Brian Bayley (Director)

Mr. Bayley is President and Chief Executive Officer of Quest Capital Corp. a merchant bank that provides financial services to small and mid-cap companies operating primarily in North America. Quest Capital Corp.’s principal business is to provide asset backed bridge loans to companies generally operating in industries such as mining, oil and gas, real estate and manufacturing. He is currently President and Director of Quest Management Corp. a management company that is wholly-owned by Quest Capital Corp., since December 1996. Quest Management Corp. provides various consulting, administrative, management and related services to publicly traded companies.

Michael Halvorson (Director)

Michael Halvorson is President of Halcorp Capital Ltd., a private investment company. He has 35 years of experience in the financial markets. In addition to his directorship with the Issuer, he is a director of several other publicly traded Canadian natural resource companies including Quest Capital Corp. Western Silver Corporation, Orezone Resources, Inc. and Gentry Resources Ltd.

Steve Ristorcelli (Director)

Mr. Ristorcelli has been the Principal Geologist with Mine Development Associates (Reno, Nevada) since 1990. In total, Mr. Ristorcelli has 28 years experience in the mining industry, in both exploration and development, mainly in North America and Latin America. Presently his primary area of interest is resource evaluation using methods that synthesize geology and statistics. Mr. Ristorcelli is a registered geologist with the American Institute of Professional Geologists, the State of California and the State of Wyoming Board of Professional Geologists.

J. Stevens Zuker (Senior Vice President)

Mr. Zuker has been the Senior Vice President for the Issuer since September 2005. Mr. Zuker is an exploration geologist with more than 23 years of experience in metals exploration. Mr. Zuker holds both a B.Sc. Degree and a M.Sc. Degree in Geology. During the past seven years, Mr. Zuker was Vice President Exploration for Gallant Minerals, a private company and was responsible for managing and performing grass roots exploration for base and precious metals in Peru and Mongolia, culminating in the generation of over 60 new projects, and venturing those projects to both major and junior mining companies.

Paul J. Bartos (Vice President and Chief Geologist)

Dr. Bartos joined the company in January 2007 to assist in overseeing its exploration activities in Mexico and South America as the Company expands its programs, in particular at the San Luis gold/silver epithermal deposit in Peru and the Cerro Jumil bulk-tonnage gold deposit in Mexico. In 2005 and 2006 Dr. Bartos served on the Company's Executive Advisory Committee.

Dr. Bartos is a noted authority on epithermal deposits and was with ASARCO Inc. for 20 years, latterly as its Latin American Exploration and Business Development Manager. Among other exploration accomplishments, he was responsible for the discovery and development of mineral resources of the San Bartolome silver deposit in Bolivia. This deposit, containing an estimated 152 million ounces of silver reserves, is being taken into production by Coeur d'Alene Mines. Most recently Dr. Bartos was Director of the Geology Museum at the Colorado School of Mines where he also earned his doctorate in geology

David Miles (Chief Financial Officer)

Mr. Miles has been the Chief Financial Officer for the Issuer since June 2004. Mr. Miles is a Chartered Accountant with a B.Sc. in Geology who has over 20 years experience in a large multinational corporate environment, primarily with Cominco Ltd. While with Cominco, he held various positions in corporate finance and was most recently Exploration Controller, responsible for the financial reporting of the corporation’s eight international exploration subsidiaries as well as reporting for Canadian based exploration. From 2002 to 2004, Mr. Miles was the corporate controller for Viceroy Resource Corporation, which changed its name to Quest Capital Corp. after merging with Quest Investment Corp. in June of 2003. In March of 2004, Mr. Miles left Quest Capital Corp. to become Chief Financial Officer of Eurasian Minerals Inc., Sanu Resources Ltd. and Esperanza Silver Corporation, all of which are listed on the TSX Venture Exchange. &n bsp;He subsequently resigned as CFO of Sanu in 2007 and has become CFO of Colombian Mines Corporation (2006) and Nevgold Resource Corp. (2008). Both of these companies are listed on the TSX Venture Exchange.

William Bond (Vice President of Exploration)

Mr. Bond has been the Principal Geologic Consultant for the Issuer since October 2002 and was appointed a Vice President on August 1, 2003. He holds the designation of Professional Geologist. Mr. Bond has been involved with precious metals exploration and production for the past 26 years. Previous positions held include Mines Operations Geologist for Homestake Mining Company, an unrelated public company; Chief Geologist for Asamera Minerals (U.S.) Inc., an unrelated public company; and, Chief Geologist for Sunshine Mining & Refining Company, Inc., an unrelated public company. Mr. Bond has been involved in the discovery and exploration of several major mineral deposits including the West Chance silver deposit at the Sunshine Mine and the Pirquitas deposit. Mr. Bond earned a B.A. in geology from Winona State University and an M.S. in geology from the South Dakota School of Mines and Technology.

Kim Casswell (Corporate Secretary)

Ms. Casswell has been the Corporate Secretary since April 2, 2004. She has held several corporate secretary positions with public companies listed on both the TSX Venture Exchange and the Toronto Stock Exchange since 1990.

The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.

The Senior Management serves at the pleasure of the Board of Directors.

No Director and/or Senior Management had been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Senior Management, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct/practice/employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no family relationships between any two or more Directors or Senior Management.

There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.

6.B. Compensation

Cash Compensation

Total compensation accrued and/or paid (directly and/or indirectly) to all Directors/Senior Management during Fiscal 2007 ended 12/31/2007 was $769,167, paid to William Pincus, the President, J. Stevens Zuker, the Vice President, David Miles, the Chief Financial Officer, William Bond, the Senior VP Exploration, Paul Bartos, VP, Chief Geologist and Kim Casswell, Corporate Secretary of the Issuer. William Pincus, J. Stevens Zuker, William Bond and Paul Bartos became employees effective November 1, 2007 and accordingly two months of their annual remuneration was earned as salary.

Summary Compensation Table

Long-Term

Compensation

Annual Compensation

Awards

Payouts

Name and Principal Position

Year

Salary

Bonus

Other Annual Compensation

Securities Under Options/SARs Granted

Restricted Shares or Restricted Share Units

LTIP Payouts

All Other Comp.

William Pincus, President

2007

2006

2005

25,116

Nil

$Nil

88,096

$46,720

Nil

$139,161

$104,917

$111,317

200,000

100,000

Nil

$16,269

$19,057

$18,584

Michael Halvorson,

Director

2007

2006

2005

Nil

75,000

Nil

Brian Bayley, Director

2007

2006

2005

Nil

75,000

Nil

Steven Ristorcelli,

Director⁽¹⁾

2007

2006

2005

Nil

75,000

100,000

Nil

Joseph Ovsenek,

Director⁽²⁾

2007

2006

2005

Nil

75,000

100,000

Nil

Robert Quartermain,

Director⁽³⁾

2007

2006

2005

Nil

25,000

Nil

William Bond, V.P.

2007

2006

2005

18,419

Nil

29,366

$23,360

Nil

100,240

$39,884

$95,055

75,000

50,000

Nil

Kim Casswell,

Corporate

Secretary

2007

2006

2005

Nil

2,000

1,600

Nil

$13,731

$17,574

$16,900

50,000

Nil

David L. Miles

Chief Financial Officer

2007

2006

2005

Nil

$5,000

$6,200

Nil

$41,416

$17,380

$12,260

50,000

Nil

J. Stevens Zuker

Senior Vice President

2007

2006

2005

18,419

Nil

29,563

5,840

Nil

$100,240

$110,504

$50,156

75,000

Nil

Paul Bartos

Vice President, Chief Geologist (4)

2007

2006

2005

18,419

Nil

23,470

Nil

100,240

Nil

125,000

Nil

(1)

Mr. Ristorcelli and Mr. Ovsenek were elected to the board of directors on June 2, 2005.

(2)

Mr. Ovsenek resigned from the board of directors on February 8, 2008

(3)

Mr. Quartermain resigned from the board of directors on May 18, 2005.

(4)

Mr. Bartos was appointed Vice President, Chief Geologist on January 22, 2007

Table No. 7

Stock Option Grants in Fiscal 2007 Ended 12/31/2007

Name	Number of Options Granted	% Of Total Options Granted	Exercise Price per Share	Grant Date	Expiration Date	Mkt. Value of Securities Underlying Options on Date of Grant

William Pincus	200,000	15.95%	$3.48	04/18/2007	04/18/2012	$3.48

Michael Halvorson	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

Brian Bayley	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

Steven Ristorcelli	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

Joseph Ovsenek	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

William Bond	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

Paul Bartos	100,000 25,000	9.76%	$3.35 $3.48	01/22/2007 04/18/2007	01/22/2012 04/18/2012	$3.35 $3.48

Kim Casswell	50,000	3.90%	$3.48	04/18/2007	04/18/2012	$3.48

David Miles	50,000	3.90%	$3.48	04/18/2007	04/18/2012	$3.48

J. Stevens Zuker	75,000	5.88%	$3.48	04/18/2007	04/18/2012	$3.48

Consultants	25,000 167,500 5,000 35,000 200,000	33.73%	$3.70 $3.48 $3.48 $2.41 $1.91	01/08/2007 04/18/2007 04/25/2007 08/02/2007 09/12/2007	01/08/2012 04/18/2012 04/25/2012 08/02/2012 09/12/2007	$3.70 $3.48 $3.48 $2.41 $1.91

The following table gives certain information concerning stock option exercises during Fiscal 2006 by our Senior Management and Directors. It also gives information concerning stock option values.

Table No. 8

Aggregated Stock Options Exercises in Fiscal 2007

Fiscal Yearend Unexercised Stock Options

Fiscal Yearend Stock Option Values

Senior Management/Directors

Name	Number of Shares Acquired on Exercise	Aggregate Value Realized	Number of Unexercised Options at Fiscal Year-End Exercisable/Unexercisable	Value of Unexercised In-the-Money Options at Fiscal Year-End Exercisable/Unexercisable
David Miles	40,000	$94,000	50,000/0 @ $1.56 33,332 /16,668 @ $3.48 50,000/0 @ $1.40	Nil Nil $7,500
Kim Casswell	40,000	$91,200	50,000/0 @ $1.56 33,332/16,668 @ $3.48 50,000/0 @ $1.40	Nil Nil $7,500
William Bond	30,000	$101,700	50,000/0 @ $0.75 50,000/0 @ $0.53 75,000/0 @ $1.56 50,000 / 25,000 @ $3.48 75,000 @ $1.40	$40,000 $51,000 Nil Nil $11,250
Paul Bartos	25,000	$42,000	100,000/0 @ $3.35 16,666/8,334 @ $3.48 75,000/0 @ $1.40	Nil Nil $11,250
J. Stevens Zuker	Nil	Nil	75,000/0 @ $0.65 75,000/0 @ $1.56 50,000/25,000 @ $3.48 75,000/0 @ $1.40	$67,500 Nil Nil $11,250

____________________________________ _________________________________________

___________________________________ ___________________________________________

Director Compensation. The Issuer had no formal plan for compensating its Directors for their service in their capacity as Directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Issuer other than services ordinarily required of a Director. Other than indicated below no Director received any compensation for his services as a Director, including committee participation and/or special assignments.

Stock Options. The Issuer may grant stock options to Directors, Senior Management and employees. 4,348,500 stock options have been granted as of June 10, 2008 and 232,000 were exercised during Fiscal 2007. In Fiscal 2008, 910,000 have been exercised to date . Refer to ITEM #6.E., "Share Ownership" and Table No. 8 for information about stock options outstanding.

Change of Control Remuneration. The Issuer had no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Issuer in Fiscal 2007 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$60,000 per Senior Management.

Other Compensation. No Senior Management/Director received “other compensation” in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Senior Management/Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.

Bonus/Profit Sharing/Non-Cash Compensation. Except for the stock option program discussed in ITEM #6.E., the Issuer had no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Issuer's Directors or Senior Management.

Pension/Retirement Benefits. No funds were set aside or accrued by the Issuer during Fiscal 2007 to provide pension, retirement or similar benefits for Directors or Senior Management.

6.C. Board Practices

6.C.1. Terms of Office. Refer to ITEM 6.A.1.

6.C.2. Directors’ Service Contracts. --- No Disclosure Necessary ---

6.C.3. Board of Director Committees.

The Issuer has an Audit Committee, which recommends to the Board of Directors the engagement of the independent auditors of the Issuer and reviews with the independent auditors the scope and results of the Issuer’s audits, the Issuer’s internal accounting controls, and the professional services furnished by the independent auditors to the Issuer. The current members of the Audit Committee are: Steven Ristorcelli, Michael Halvorson and Brian Bayley. The Audit Committee met two times during Fiscal 2007.

The Issuer has a Compensation Committee, which recommends to the Board of Directors the amount of compensation paid to the officers of the Issuer and then subsequently reviews this compensation. The current members of the Compensation Committee are: Michael Halvorson, Steven Ristorcelli and Brian Bayley.

The Issuer has a Corporate Governance Committee, which identifies individuals qualified to become Board Members and recommends candidates to fill Board vacancies and newly created Director positions. The Committee also recommends whether incumbent Directors should be nominated for re-election to the Board upon expiration of their terms. The Committee will supervise and evaluate the Company’s securities compliance procedures and report to the Board on any necessary changes to such procedures and on the recommended adoption of any additional procedures. The current members of the Corporate Governance Committee are: Michael Halvorson, Steven Ristorcelli and Brian Bayley.

6.D. Employees

As of 6/10/2008, the Issuer had eight employees with the remaining staff hired as independent contractors.

6.E. Share Ownership

Table No. 9 lists, as of 6/10/2008, Directors and Senior Management who beneficially own the Issuer's voting securities, consisting solely of common shares, and the amount of the Issuer's voting securities owned by the Directors and Senior Management as a group.

Table No. 9

Shareholdings of Directors and Senior Management

Shareholdings of 5% Shareholders

______________________________________________________________________________

Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Common	William Pincus (1)	1,786,568	3.78%
Common	Michael Halvorson (2)	1,412,500	2.99%
Common	Brian Bayley (3)	550,000	1.16%
Common	Steve Ristorcelli (4)	405,000	0.86%
Common	William Bond (5)	359,600	0.76%
Common	Kim Casswell (6)	150,000	0.32%
Common	David Miles (7)	170,000	0.36%
Common	J. Stevens Zuker (8)	390,000	0.83%
Common	Paul Bartos (9)	282,500	0.60%
	Total Directors/Management	5,506,168	11.65%

(1)

Of these shares, 800,000 are represented by currently exercisable share purchase options.

(2)

Of these shares, 350,000 are represented by currently exercisable share purchase options.

(3)

Of these shares, 350,000 are represented by currently exercisable share purchase options.

(4)

Of these shares, 325,000 are represented by currently exercisable share purchase options.

(5)

Of these shares, 325,000 are represented by currently exercisable share purchase options;

(6)

Of these shares, 150,000 are represented by currently exercisable share purchase options;

(7)

Of these shares, 170,000 are represented by currently exercisable share purchase options;

(8)

Of these shares, 300,000 are represented by currently exercisable share purchase options.

(9)

Of these shares, 200,000 are represented by currently exercisable share purchase options.

# Based on 47,256,821 shares outstanding as of 06/10/2008

Stock Options. The terms of incentive options grantable by the Issuer are done in accordance with the rules and policies of the TSX Exchange and the British Columbia Securities Commission, including the number of common shares under option, the exercise price and expiry date of such options, and any amendments thereto. The Issuer adopted a formal written stock option plan (the "Plan") on April 1, 2003 which was amended on April 30, 2007. (A copy of the Issuer’s Stock Option Plan is included with this document as an exhibit.)

Such “terms and conditions”, including the pricing of the options, expiry and the eligibility of personnel for such stock options; and are described below.

The principal purposes of the Issuer’s stock option program are to (a) promote a proprietary interest in the Issuer among the officers, directors and employees of the Issuer and its affiliates, (b) retain and attract the qualified officers, directors and employees the Issuer requires, (c) provide a long-term incentive element in overall compensation, and (d) promote the long-term profitability of the Issuer.

The Plan provides that stock options may be granted to service providers for the Issuer. The term “service providers” means (a) any full or part-time employee or Officer, or insider of the Issuer or any of its subsidiaries; (b) any other person employed by a company or individual providing management services to the Issuer; (c) any other person or company engaged to provide ongoing consulting services for the Issuer or any entity controlled by the Issuer or (d) any individual engaged to provide services that promote the purchase or sale of the issued securities (any person in (a), (b), (c) or (d) hereinafter referred to as an “Eligible Person”); and (e) any registered retirement savings plan established by such Eligible Person, or any corporation controlled by such Eligible Person, the issued and outstanding voting shares of which are, and will continue to be, beneficially owned, directly or indirectly, by such Eligible Person and/or spouse, child ren and/or grandchildren of such Eligible Person. For stock options to Employees, Consultants or Management Company Employees, the Issuer must represent that the optionee is a bona fide Employee, Consultant or Management Company Employee as the case may be. The terms “insider” “Controlled” and “subsidiary” shall have the meanings ascribed thereto in the Securities Act (Ontario) from time to time. Subject to the foregoing, the board of directors or Committee, as applicable, shall have full and final authority to determine the persons who are to be granted options under the Plan and the number of shares subject to each option.

The Plan shall be administered by the board of directors of the Issuer or a committee established by the board of directors for that purpose. Subject to approval of the granting of options by the board of directors or Committee, as applicable, the Issuer shall grant options under the Plan.

The Plan provides that the aggregate number of shares of the Issuer, which may be issued and sold under the Plan, will not exceed 10% of the issued shares of the Issuer. The Issuer shall not, upon the exercise of any option, be required to issue or deliver any shares prior to (a) the admission of such shares to listing on any stock exchange on which the Issuer’s shares may them be listed, and (b) the completion of such registration or other qualification of such shares under any law, rules or regulation as the Issuer shall determine to be necessary or advisable. If any shares cannot be issued to any optionee for whatever reason, the obligation of the Issuer to issue such shares shall terminate and any option exercise price paid to the Issuer shall be returned to the optionee.

If a stock option expires or otherwise terminates for any reason without having been exercised in full, the number of common shares reserved for issuance under that expired or terminated stock option shall again be available for the purposes of the Plan. Any stock option outstanding when the Plan is terminated will remain in effect until it is exercised or it expires. The Plan provides that it is solely within the discretion of the Board to determine who should receive stock options and in what amounts, subject to the following conditions:

(a)

options will be non-assignable and non-transferable except that they will be exercisable by the personal representative of the option holder in the event of the option holder’s death;

(b)

options may be exercisable for a maximum of five years from grant date;

(c)

options to acquire no more than 5% of the issued shares of the Issuer may be granted to any one individual in any 12-month period;

(d)

options to acquire no more than 2% of the issued shares of the Issuer may be granted to any one consultant in any 12-month period;

(e)

options to acquire no more than an aggregate of 2% of the issued shares of the Issuer may be granted to an employee conducting investor relations activities (as defined in TSX Venture Exchange Policy 1.1), in any 12 month period;

(f)

options to acquire no more than 10% of the issued shares of the Issuer may be granted to any insiders in any 12-month period;

(g)

options held by an option holder who is a director, employee, consultant or management company employee must expire within 90 days after the option holder ceases to be a director, employee, consultant or management company employee;

(h)

options held by an option holder who is engaged in investor relations activities must expire within 30 days after the option holder ceases to be employed by the Issuer to provide investor relations activities; and

(i)

in the event of an option holder’s death, the option holder’s personal representative may exercise any portion of the option holder’s vested outstanding options for a period of one year following the option holder’s death.

The Plan provides that other terms and conditions may be attached to a particular stock option, such terms and conditions to be referred to in a schedule attached to the option certificate. Stock options granted to directors, senior officers, employees or consultants will vest when granted unless otherwise determined by the Board on a case by case basis, other than stock options granted to consultants performing investor relations activities, which will vest in stages over 12 months with no more than one-fourth of the options vesting in any three month period.

The price at which an option holder may purchase a common share upon the exercise of a stock option will be as set forth in the option certificate issued in respect of such option and in any event will not be less than the discounted market price of the Issuer’s common shares as of the date of the grant of the stock option (the “Award Date”). The market price of the Issuer’s common shares for a particular Award Date will typically be the closing trading price of the Issuer’s common shares on the day immediately preceding the Award Date, or otherwise in accordance with the terms of the Plan. Where there is no such closing price or trade on the prior trading day “market price” shall mean the average of the most recent bid and ask of the shares of the Issuer on any stock exchange on which the shares are listed or dealing network on which the shares of the Issuer trade.

In no case will a stock option be exercisable at a price less than the minimum prescribed by each of the organized trading facilities or the applicable regulatory authorities that would apply to the award of the stock option in question.

Common shares will not be issued pursuant to stock options granted under the Plan until they have been fully paid for by the option holder. The Issuer will not provide financial assistance to option holders to assist them in exercising their stock options.

The names and titles of the Directors/Executive Officers of the Issuer to whom outstanding stock options have been granted and the number of common shares subject to such options are set forth in Table No. 10 as of 06/10/2008, as well as the number of options granted to Directors and independent contractors.

Table No. 10

Stock Options Outstanding

Name	Number of Shares of Common Stock	Exercise Price	Grant Date	Expiration Date

Officers/Directors:


William Pincus	100,000 200,000 100,000 100,000 100,000 200,000	$1.40 $3.48 $1.56 $0.40 $0.53 $0.25	02/08/2008 04/18/2007 5/18/2006 6/14/2005 9/09/2004 8/18/2003	02/08/2013 04/18/2012 5/18/2011 6/14/2010 9/09/2009 8/18/2008

Michael Halvorson	75,000 75,000 75,000 75,000 50,000	$1.40 $3.48 $1.56 $0.40 $0.53	02/08/2008 04/18/2007 5/18/2006 6/14/2005 9/09/2004	02/08/2013 04/18/2012 5/18/2011 6/14/2010 9/09/2009

Brian Bayley	75,000 75,000 75,000 75,000 50,000	$1.40 $3.48 $1.56 $0.40 $0.53	02/08/2008 04/18/2007 5/18/2006 6/14/2005 9/09/2004	02/08/2013 04/18/2012 5/18/2011 6/14/2010 9/09/2009


Steven Ristorcelli	75,000 75,000 75,000 100,000	$1.40 $3.48 $1.56 $0.40	02/08/2008 04/18/2007 5/18/2006 6/14/2005	02/08/2013 04/18/2012 5/18/2011 6/14/2010

William Bond	75,000 75,000 75,000 50,000 50,000	$1.40 $3.48 $1.56 $0.53 $0.75	02/08/2008 04/18/2007 5/18/2006 9/09/2004 9/01/2003	02/08/2013 04/18/2012 5/18/2011 9/09/2009 9/01/2008

Kim Casswell	50,000 50,000 50,000	$1.40 $3.48 $1.56	02/08/2008 04/18/2007 5/18/2006	02/08/2013 04/18/2012 5/18/2011

David Miles	50,000 50,000 50,000	$1.40 $3.48 $1.56	02/08/2008 04/18/2007 5/18/2006	02/08/2013 04/18/2012 5/18/2011

J. Stevens Zuker	75,000 75,000 75,000 75,000	$1.40 $3.48 $1.56 $0.65	02/08/2008 04/18/2007 5/18/2006 9/23/2005	02/08/2013 04/18/2012 5/18/2011 9/23/2010

Paul Bartos	75,000 25,000 100,000	$1.40 $3.48 $3.35	02/08/2008 04/18/2007 01/22/2007	02/08/2013 04/18/2012 01/22/2012

Consultants	200,000 250,500 242,500 25,000 260,500 100,000 25,000 5,000	$1.40 $1.40 $3.48 $3.70 $1.56 $0.40 $0.75 $0.355	02/27/2008 02/08/2008 04/18/2007 01/08/2007 5/18/2006 6/14/2005 9/01/2003 7/05/2005	02/27/2013 02/08/2013 04/18/2012 01/08/2012 5/18/2011 6/14/2010 9/01/2008 7/10/2010

Total Officers/Directors 650,000

Total Employees/Consultants 450,500

Total Officers/Directors/Etc. 1,100,500

______________________________________________________________________________

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders.

7.A.1.a. Holdings By Major Shareholders.

The Company is aware of 1 persons/companies who beneficially own 5% or more of the Registrant's voting securities. The table below lists as of 05/18/06, persons and/or companies holding 5% or more beneficial interest in the Company’s outstanding common stock.

5% or Greater Shareholders

Title of Class

Name of Owner

Amount and Nature of

Beneficial Ownership

Percent of Class

Common

Silver Standard Resources Inc.(1)

6,459,600

13.67%

Based on 47,256,821 shares outstanding as of 06/10/2008.

(1) Silver Standard Resources Inc is a public company, the shares of which trade on the Toronto Stock Exchange and NASDAQ Stock Market. Its President, Robert Quartermain and its Senior Vice President, Joseph Ovsenek, are former directors of the Issuer.

7.A.1.b. Significant Changes in Major Shareholders’ Holdings.

---No Disclosure Required---

7.A.1.c. Different Voting Rights. The Issuer’s major shareholders do not have different voting rights.

7.A.2. Canadian Share Ownership.

On 6/10/2008, the Issuer’s shareholders’ list showed 47,256,821 common shares outstanding and 3,656 registered shareholders. The Issuer has researched the indirect holdings by depository institutions and other financial institutions estimates that there are: 1,471 holders of record" resident in Canada, 2,330 “holders of record" resident in the USA, and 55 “holders of record” resident elsewhere.

The Issuer has researched the indirect holding by depository institutions and other financial institutions; based on this research and other research into the indirect holdings of other institutions, the Issuer believes that it has approximately 7,685 beneficial owners of its common shares.

7.A.3. Control of the Company

The Issuer is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents. The Issuer is not controlled by any foreign government or other person(s) except as described in ITEM #4.A., “History and Growth of the Company”, and ITEM #6.E., “Share Ownership”.

7.A.4. Change of Control of Company Arrangements.

No Disclosure Necessary

7.B. Related Party Transactions

The Company has a services agreement with Ionic Management Ltd. (“Ionic”) formerly Quest Management Corp. Ionic provides office space on a monthly rental basis. The Company and Ionic are related by virtue of having one director in common. During the year ended December 31, 2007, a total of $11,900 (2006 - $15,000) was charged by Quest for rent and at December 31, 2006, the Company owed Quest $1,326 (2005 - $1,070).

The Company also has a consulting agreement with its President for US$12,500 per month plus health insurance benefits. During the year ended December 31, 2007, the President was paid $123,974 (2005 - $123,974) in consulting fees and health insurance benefits and $88,096 (2006 - $46,720) for a management bonus.

Indirect Payments to William Pincus, President

See Item 7.B Related Party Transactions

Shareholder Loans

---No Disclosure Required---

Amounts Owing to Senior Management/Directors

At 12/31/2007 $Nil was owed to senior management and directors for consulting services.

Other than as disclosed above, there have been no transactions since 12/31/2007, or proposed transactions, which have materially affected or will materially affect the Issuer in which any director, executive officer, or beneficial holder of more than 5% of the outstanding common shares, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest. Management believes the transactions referenced above were on terms at least as favorable to the Issuer as the Issuer could have obtained from unaffiliated parties.

7.C. Interests of Experts and Counsel --- No Disclosure Necessary ---

ITEM 8. FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information

The Issuer's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Issuer, conforms in all material respects for the periods presented with United States GAAP, except as discussed in notes to the financial statements.

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Registration Statement. The audit reports of De Visser Gray, Independent Chartered Accountants, are included herein immediately preceding the financial statements.

Audited Financial Statements:

Fiscal 2007/2006/2005 Ended December 31^st

Unaudited Financial Statements:

March 31, 2008

March 31, 2007

8.A.7. Legal/Arbitration Proceedings

The Directors and the management of the Issuer do not know of any material, active or pending, legal proceedings against them; nor is the Issuer involved as a plaintiff in any material proceeding or pending litigation.

The Directors and the management of the Issuer know of no active or pending proceedings against anyone that might materially adversely affect an interest of the Issuer.

8.B. Significant Changes

ITEM 9. THE OFFER AND LISTING

9.A. Common Share Trading Information

The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada, under the symbol "EPZ". The Issuer applied for listing on the TSX Venture Exchange on began trading on the TSX Venture Exchange on August 18, 2003.

Table No. 13 lists the high and low sales prices on the TSX Venture Exchange for the last six months, last three fiscal quarters, and last fiscal year.

______________________________________________________________________________

Table No. 13

TSX Venture Exchange (formerly the Canadian Venture Exchange)

Common Shares Trading Activity

- Sales -

Canadian Dollars

Period	High	Low

Month Ended 05/31/08	$1.20	$0.91
Month Ended 04/30/08	$1.44	$0.89
Month Ended 03/31/08	$1.59	$1.11
Month Ended 02/28/08	$1.58	$1.32
Month Ended 01/31/08	$1.95	$1.06
Month Ended 12/31/07	$1.81	$1.41

Fiscal Year Ended 12/31/2007	$4.25	$1.41

Fiscal Quarter Ended 03/31/08	$1.95	$1.11
Fiscal Quarter Ended 12/31/07	$2.95	$1.41
Fiscal Quarter Ended 09/30/07	$2.76	$1.51

______________________________________________________________________________

9.A.5. Common Share Description

Registrar/Common Shares Outstanding/Shareholders

The Issuer has only one class of shares authorized, namely, common shares without par value. There are an unlimited number of common shares authorized. As of June 10, 2008 a total of 47,256,821 shares were issued and outstanding.

All shares are initially issued registered in the name of the shareholder or its nominee. There are no restrictions on the transferability of the shares imposed by the Issuer’s constating documents.

Computershare Investor Services Inc. (located at 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3B9) is the registrar and transfer agent for the common shares.

Common Share Description

All of the authorized common shares of the Issuer are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets.

Holders of common shares are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefor.

No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.

Provisions as to the modification, amendment or variation of such shareholder rights or provisions are contained in theBusiness Corporations Act (British Columbia). Unless the Act or the Issuer's Articles otherwise provide, any action to be taken by a resolution of the shareholders may be taken by an ordinary resolution, being approval by a vote of a majority of the votes cast in respect of the matter at the shareholders' meeting.

There are no restrictions on the repurchase or redemption of common shares of the Issuer while there is any arrearage in the payment of dividends or sinking fund installments.

Stock Options

Refer to ITEM 6.E. and Table No. 8 for additional information.

Share Purchase Warrants

Table No. 14 lists, as of 06/10/2008, share purchase warrants outstanding, the date the share purchase warrants were issued, the exercise price, and the expiration date of the share purchase warrants. As of 06/10/2008, the Issuer was aware of 72 holders of its 2,055,000 share purchase warrants,49 of whom were resident in Canada, 17 offshore and 6 in the United States. These warrants were issued in conjunction with a private placement for the purchase of a total of 4,110,000 common shares.

Table No. 14

Share Purchase Warrants Outstanding

______________________________________________________________________________

Effective Date of Issuance	Number of Share Purchase Warrants Originally Issued	Number of Share Purchase Warrants Still Outstanding	Year #1	Year #2	Expiration Date of Share Purchase Warrants

12/01/2004	1,960,725	Nil	$0.55	$0.55	12/01/2006
11/07/2005	2,879,467	Nil	$0.85	$0.85	11/02/2007
11/07/2005	496,333	Nil	$0.65	$0.65	5/02/2007
2/21/2006	842,550	Nil	$1.50	$1.50	08/21/2007
2/08/2007	2,171,432	2,171,432	$4.35	$4.35	02/08/2009

______________________________________________________________________________

9.A.6. Differing Rights

9.A.7.a. Subscription Warrants/Right

9.A.7.b. Convertible Securities/Warrants

--- No Disclosure Necessary ---

9.C. Stock Exchanges Identified

The common shares trade on the TSX Venture Exchange in Vancouver, British Columbia.

Refer to ITEM #9.A.4.

ITEM 10. ADDITIONAL INFORMATION

10.A. Share Capital

10.A.1. Authorized/Issued Capital.

Effective March 29, 2004, theBusiness Corporations Act(British Columbia) (the “New Act”) replaced the previousCompanyAct (British Columbia) (the “Old Act”). As a consequence, all British Columbia companies are now governed by the New Act. The New Act is intended to modernize and streamline company law in British Columbia. The New Act permits an unlimited authorized share capital whereas the Old Act required that the authorized capital be fixed at a number approved by shareholders. At the Company’s Annual and Special General Meeting held on June 2, 2005, shareholders of the Company passed a special resolution allowing for the number of common shares authorized to be issued be increased to an unlimited number of common shares without nominal or par value and that the Company’s Notice of Articles be altered accordingly. On June 6, 2005, a Notice of Alteration was filed with the British Columbia Regi strar of Companies allowing for the increase of the Company’s authorized share capital to an unlimited number of common shares. As of June 10, 2008 there were 47,256,821 common shares issued and outstanding.

As of 12/31/2007, 12/31,2006 and 12/31/2005, there were an unlimited number of common shares without par value authorized. In 12/31/2004 and 12/31/2003, there were 100,000,000 common shares without par value authorized. At 12/31/2007, there were 46,326,821 common shares issued and outstanding. As of 12/31/2006 there were 40,006,845 common shares issued and outstanding, as of 12/31/2005 there were 33,506,010 common shares issued and outstanding, as of 12/31/2004 there were 26,649,515 commons shares issued and outstanding, and as at 12/31/2003 there were 21,900,065 shares issued and outstanding.

During the last five years, less than 10% of the capital has been “paid for” with assets other than cash.

10.A.2. Shares Not Representing Capital.

10.A.3. Shares Held By Company.

--- No Disclosure Necessary ---

10.A.4. Stock Options/Share Purchase Warrants

10.A.5. Stock Options/Share Purchase Warrants

--- Refer to Table No. 8 and Table No. 10. ---

10.A.6. History of Share Capital

The Issuer has financed its operations through funds raised in public/private placements of common shares and Special Warrants; and shares issued upon conversion of Special Warrants.

______________________________________________________________________________

Fiscal Year	Nature of Share Issuance	Number of Shares	Amount

Fiscal 2002	Closing Balance	14,557,865	$823,566
Fiscal 2003	Issued for property option Private Placements Issued for acquisition Issued for Agent’s fees	25,000 3,240,000 4,000,000 77,200	$6,250 $1,463,616 $4,000,000 -
Fiscal 2004	Exercise of Share Purchase Warrants Issued for property option Private Placement Issued for finder’s fees Warrants issued as finders fees	803,000 25,000 3,750,000 171,450 -	$321,200 $6,250 $1,498,078 - (13,936)
Fiscal 2005	Issued for property option Exercise of Share Purchase Warrants Private Placement Issued for Finder’s Fees	540,000 1,057,562 5,660,000 98,933	$1,067,812 $1,636,691 $3,396,000 $59,359
Fiscal 2006	Exercise of Share Purchase Warrants Exercise of Stock Options Private Placement Issued for Property Option	4,022,535 420,000 1,500,000 540,000	$3,070,277 $198,400 $1,800,000 $1,010,000
Fiscal 2007	Private Placement Exercise of Stock Options Exercise of Share Purchase Warrants	4,110,000 160,000 371,624	$15,001,500 $107,625 $422,656
Fiscal 2008 (YTD) Mar 31/08	Exercise of stock options	910,000	245,800
	Issued for Property Option	20,000	30,000
	Reclassify contributed surplus on exercise of options	-	161,605

______________________________________________________________________________

10.A.7. Resolutions/Authorizations/Approvals

--- No Disclosure Necessary ---

10.B. Articles of the Company

New British Columbia Corporations Act

Background

Some Key Differences between the Old Act and the New Act

•

The New Act permits an unlimited authorized share capital. The Old Act required that the authorized capital be fixed at a number approved by shareholders.

•

There are no residency requirements for directors under the New Act. The Old Act required that at least one director be a resident of British Columbia and a majority resident in Canada.

•

Special Resolutions of shareholders can now be passed by a minimum of two-thirds majority at a meeting of shareholders, compared with a three-quarter majority required under the Old Act.

•

General meetings of shareholders can now be held outside of British Columbia if the location is approved by resolution of the directors. Under the Old Act, the meeting had to be held within British Columbia unless approval was obtained from the Registrar of Companies to hold the meeting elsewhere.

•

The requirement to publish advance notice of election of directors has been removed under the New Act.

•

The New Act provides for Shareholder proposals to be made at general meetings. Generally, shareholders holding at least 1% of the voting shares can submit proposals to the Company three months prior to the anniversary of the last annual general meeting of shareholders of the company.

•

Under the New Act, dividends may be declared out of profits, capital or otherwise whereas under the Old Act they were only payable out of retained earnings. As well the New Act does not automatically make directors liable to the company for the declaration of dividends while the company is insolvent whereas under the Old Act they were liable automatically.

•

The New Act does not require that a company’s offer to purchase or the redemption of its own shares be made on apro rata basis to all shareholders. Under the Old Act, the offer was required to be madepro rata.

•

The New Act permits a company to indemnify its directors without court approval whereas the Old Act required court approval, and may also require reimbursement of expenses in certain cases for claims that are successfully defended. Defence costs may also be advanced by a company in certain cases.

•

All filings with the Registrar of Companies under the New Act will be made electronically, compared with paper filings required under the Old Act.

•

Directors’ and shareholders’ meetings can be held by any form of communications medium permitted under the Articles, including Internet chat lines and telephones. In addition, directors’ consent resolutions can be passed in the manner provided under the Articles, including email.

•

A company may provide financial assistance in connection with the purchase of its shares under the New Act, which was not permitted under the Old Act.

•

A company may in limited circumstances amalgamate with a foreign company under the New Act, without the requirement to first continue the second company into British Columbia. Amalgamations not longer require court approval, although court approval can still be requested.

Companies Must Transition into the New Act

Every British Columbia company must ‘transition’ into the New Act within two years from the coming into force of the New Act. Companies that have not completed the transition cannot complete various corporate actions, including capital alterations or name changes.

In order to transition to the New Act, British Columbia companies must file a Transition Application with the Registrar of Companies. The Transition Application also contains a “Notice of Articles” which on filing will replace the Memorandum (a document under the Old Act which set out a company’s name and authorized share structure). Once transitioned, British Columbia companies will no longer have a Memorandum. The Notice of Articles will set out, amongst other things, the authorized share structure of the company and the names and addresses of the directors. The Board of Directors approved the filing of a Transition Application which was completed on June 6, 2005.

Under the New Act, a pre-existing British Columbia company is not required to change its corporate Articles, however, most public companies will likely wish to do so in order to take advantage of the more permissive provisions of the New Act. The Company received the approval of its shareholders to implement certain provisions that are now available under the New Act, at the annual and special general meeting of the Company held on June 2, 2005.

Objects and Purposes

The Articles of Esperanza place no restrictions upon the type of business that the Company may engage in.

Disclosure of Interest of Directors,

Part 17 of the Articles

17.1 A director or senior officer who holds a disclosable interest (as that term is used in theBusiness Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and the extent provided in theBusiness Corporations Act.

17.2 A director who holds a disclosable interest in a contract into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

17.3 A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

17.4 A director of senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by theBusiness Corporations Act.

17.5 A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to their office of director for a period and on the terms (as to remuneration or otherwise)that the directors may determine.

17.6 No director or intended director is disqualified by their office from contracting with the Company either with regard to the holding or any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.7 A director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.8 A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and the director or officer is not accountable to the Company for any remuneration or other benefits received by them as director, officer or employee of, or from their interest in, such other person.

Powers and Duties of Directors

Remuneration of Directors

Part 16 of the Articles

16.1 The directors must, subject to the Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by theBusiness Corporations Act or by the Articles, required to be exercised by the shareholders of the Company.

16.2 The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends)and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the director to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them.

Borrowing Powers of Directors,

Part 8 of the Articles

8.1. The directors, if authorized by the directors, may:

(1) borrow money in such manner and amount, on the security, from the sources and upon the terms and conditions as they consider appropriate;

(2) issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(3)

guarantee the repayment of money by any other persons or the performance of any obligation of any other person; and

(4)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

Remuneration of Directors

Part 13 of the Articles

13.5 The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If they so decide, the remuneration, if any, of the directors will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer of employee of the Company as such, who is also a director.

13.6 The Company must reimburse each director for the reasonable expenses they may incur in and about the business of the Company.

13.7 If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company’s business, they may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that they may be entitled to receive.

13.8 Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to their spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

Required Ownership of Capital by Directors

Part 13 of the Articles

13.4. A director is not required to hold a share in the capital of the Company as qualification for their office but must be qualified as required by theBusiness Corporations Act to become, act or continue to act as a director.

Dividend Rights

Part 22 of the Articles

22.2 The directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

Special Rights and Restrictions

Part 9 of the Articles

9.2 The Company may by ordinary resolution:

(1)

create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, unless any of those shares have been issued in which case the Company may do so only be special resolution; or

(2)

vary or delete any special rights or restrictions attached to the shares of any class or series of shares, unless any of those shares have been issued in which case the Company may do so only be ordinary resolution.

Rules pertaining to annual general and special general meetings of shareholders are described in Sections Ten of the Company’s Articles. These rules are summarized as follows:

10.1 The Company must, unless an annual general meeting is deferred or waived in accordance with theBusiness Corporations Act, hold its first annual general meeting following incorporation, amalgamation or continuation within 18 months after the date on which it was incorporated or otherwise created and recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors; and

10.2 If all the shareholders entitled to vote at an annual general meeting consent by unanimous resolution under theBusiness Corporations Act to all of the business required to be transacted at that annual general meting, the meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.3 The directors may, whenever they think fit, call a meeting of shareholders to be held in British Columbia, Calgary, Alberta or Toronto, Ontario or at such other location as may be approved by the Registrar of Companies at such time and place as may be determined by the directors.

10.4 The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided by these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been give or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

(1)

if and for so long the Company is a public company, 21 days;

(2)

otherwise, 10 days.

10.5 The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under theBusiness Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

(1)

if and for so long as the Company is a public company, 21 days;

(2)

otherwise, 10 days.

If no record date is set, it is 5:00 p.m. on the business day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.6 The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under theBusiness Corporations Act, by more than four months If no record date is set, the record date is 5:00 p.m. on the day immediately preceding the first ate on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7 The accidental omission to send notice of any meetings to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of such meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.8 If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

(1)

state the general nature of the special business; and

(2)

if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

(a)

at the Company’ records office, or at such other reasonably accessible location in British Columbia as is specified in such notice; and

(b)

during statutory business hours o any one or more specified days before the day set for the holding of the meeting.

Proceedings at Meetings of Shareholders

Part 11 of the Articles

11.1 At a meeting of shareholders, the following business is special business:

(1)

at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(2)

at an annual general meeting, all business is special business except for the following:

(a)

business relating to the conduct or voting at the meeting;

(b)

consideration of any financial statements of the Company presented to the meeting;

(c)

consideration of any reports of the directors or auditor;

(d)

the setting or changing of the number of directors;

(e)

the election or appointment of directors;

(f)

the appointment of an auditor;

(g)

the setting of the remuneration of the auditor;

(h)

business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution; and

(i)

any other business under which, under these Articles or theBusiness Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

11.2 The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3 Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two shareholders present in person or represented by proxy.

11.4 If there is only one shareholder entitled to vote at a meeting of shareholders:

(1)

the quorum of one person who is, or who represents by proxy, that shareholder; and

(2)

that shareholder, present in person or by proxy, may constitute the meeting.

11.5

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

a.1

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.7

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(1)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

(2)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

11.8

If, at the meeting to which the meeting referred to in Article 11.7(2) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

11.9

The following individuals are entitled to preside as chair at a meeting of shareholders:

(1)

the chair of the board, if any; or

(2)

if the chair of the board is absent or unwilling to act as chair of the meeting, the first of the following individuals to agree to act as chair: the president, if any.

11.10

If, at any meeting of shareholders, the chair of the board or president are not present within 15 minutes after the time set for holding the meeting, or if the chair of the board an the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, hat they will not be present at the meeting, on of the chief executive officer, the chief financial officer, a vice-president, the secretary or the Company’s legal counsel may act as chair of the meeting and, failing them, the directors present must chose on of their number to be chair of the meeting or if all of the directors present decline to take the chair or fail to so choose of if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person at the meeting to chair the meeting.

11.11

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.12

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at any adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.13

Every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.14

The chair of a meeting of shareholders must declare to the meeting the decision on every questions in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered into the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.15

No motion proposed at a meeting of shareholders need by seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitle to propose or second a motion.

11.16

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.17

Subject to Article 11.18, if a poll is duly demanded at a meeting of shareholders:

(1)

the poll must be taken:

(a)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

(b)

in the manner, at the time and at the place that the chair of the meeting directs;

(2)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

(3)

the demand for the poll may be withdrawn by the person who demanded it.

11.18

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.19

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and their determination made in good faith is final and conclusive.

11.20

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.21

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.22

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll had been demanded.

11.23

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting at its records office, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

Votes of Shareholders

Part 12 of the Articles

12.1

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(1)

on a vote by a show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(2)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

Other Issues

Neither the Company’s articles nor British Columbia law permit: staggered terms for Directors; cumulative voting; shareholder approval of corporate matter by written consent; the adoption of various “poison pill” measures precluding shareholders from realizing a potential premium over the market value of their shares. Neither the Company’s articles nor British Columbia law require retirement or non-retirement of directors under an age limit requirement.

There are no limitations on the rights to own securities.

There is no provision of the Company’s articles that would have an 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 any of its subsidiaries).

Shareholder ownership must be disclosed to the British Columbia Securities Commission and the TSX Venture Exchange by any shareholder who owns more than 10% of the Company’s common stock.

10.C. Material Contracts

Consulting Agreement between the Issuer and William J. Pincus dated July 25, 2003.⁽¹⁾

Consulting Agreement between the Issuer and Mr. Aristides Chavez dated December 1, 2003.⁽¹⁾

Consulting Agreement between the Issuer and Mr. Julio Mendoza dated December 1, 2003.⁽¹⁾

Property Sale Agreement between the Issuer and General Minerals Corporation dated September 19, 2003.⁽¹⁾

Assignment Agreement between Esperanza Silver Corporation and Esperanza Silver de Mexico, S.A. de C.V. dated October 1, 2003.⁽¹⁾

Option Agreement between the Issuer and Recursos Cruz Del Sur, S.A. De C.V. dated May 7, 2003. Amended October 2, 2006⁽¹⁾

Letter Agreement between the Issuer and Silver Standard Resources Inc. dated March 22, 2005.⁽²⁾

Joint-venture agreement between the Issuer and Silver Standard Resources dated Sept 6, 2005.⁽²⁾

Amended Option Agreement between the Issuer and Recursos Cruz Del Sur, S.A. De C.V. dated October 2, 2006

Amended Stock Option Plan dated April 30, 2007.

Option Agreement between the Issuer and Canadian Shield Resources Inc. and Gallant Minerals (Peru) Limited S.A. dated May 7, 2007.

Option Agreement between the Issuer and Compañia Minera Terciario S.A de C.V. dated September 14, 2007.

Option Agreement between the Issuer and Exploraciones del Altiplano S.A. de C.V. dated September 14, 2007.

(1)

Filed as an exhibit on Form 20F Registration Statement pursuant to section 12 (b) or (g) of the Securities Exchange Act of 1934 in June 2004.

(2)

Filed as an exhibit on Form 20F Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 in 2005.

10.D. Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Issuer’s securities, except as discussed in ITEM 10, ”Taxation" below.

Restrictions on Share Ownership by Non-Canadians There are no limitations under the laws of Canada or in the organizing documents of the Issuer on the right of foreigners to hold or vote securities of the Issuer, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Issuer by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Issuer. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.

10.E. Taxation

Canadian Federal Income Tax Considerations

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of common shares of the Issuer (a "U.S. Holder") who deals at arm's length with the Issuer, 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 U.S. Holder of common 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 U.S. Holder is a corporation that beneficially owns at least 10% of the voting shares of the Issuer and the dividends may be exempt from such withholding in the case of some U.S. Holders such as qualifying pension funds and charities.

In general, a U.S. Holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Issuer unless (i) at any time in the five-year period immediately preceding the disposition, 25% or more of the shares of any class or series of the capital stock of the Issuer was owned by (or was under option of or subject to an interest of) the U.S. holder or persons with whom the U.S. holder did not deal at arm's length, and (ii) the value of the common shares of the Issuer at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada. For this purpose, the Treaty defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally from real property situated in Canada.

The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company. A foreign corporation, such as the Issuer, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year. The Issuer believes that it was not a passive foreign investment company for the taxable year ended 12/31/2003 and, furthermore, expects to conduct its affairs in such a manner so that it will not meet the criteria to be considered passive foreign investment company in the foreseeable future.

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, is 5%. If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, and, in all other cases, the tax rate is 15% of the gross amount of the dividend. The Issuer 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 accou nt of the Holder.

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 theTax 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 Issuer. The Canadian Venture Exchange is a prescribed stock exchange under theTax 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 three quarters of the capital gain (taxable capital gain) in computing the Holder's taxable income earned in Canada. The Holder may, subject to certain limitations, deduct three-quarters 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.

United States Taxation

For federal income tax purposes, an individual who is a citizen or resident of the United States or a domestic corporation ("U.S. Taxpayer") will recognize a gain or loss on the sale of the Issuer's common shares equal to the difference between the proceeds from such sale and the adjusted tax basis of the common shares. The gain or loss will be a capital gain or capital loss if the Issuer's common shares are a capital asset in U.S. Taxpayer's hands.

For federal income tax purposes, a U.S. Taxpayer will be required to include in gross income dividends received on the Issuer's common shares. A U.S. Taxpayer who pays Canadian tax on a dividend on common shares will be entitled, subject to certain limitations, to a credit (or alternatively, a deduction) against federal income tax liability. A domestic corporation that owns at least 10% of the voting shares should consult its tax advisor as to applicability of the deemed paid foreign tax credit with respect to dividends paid on the Issuer's common shares.

Under a number of circumstances, a United States Investor acquiring shares of the Issuer may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Issuer will be required to file such a return. Other filing requirements may apply, and United States Investors should consult their own tax advisors concerning these requirements.

The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company. A foreign corporation, such as the Issuer, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year. The Issuer believes that it was a passive foreign investment company for the taxable year ended 12/31/2007.

10.F. Dividends and Paying Agents

The Issuer has not declared any dividends on its common shares for the last five years and does not anticipate that it will do so in the foreseeable future. The present policy of the Issuer is to retain future earnings for use in its operations and the expansion of its business.

Notwithstanding the aforementioned: the Issuer is unaware of any dividend restrictions; has no specific procedure for the setting of the date of dividend entitlement; but might expect to set a record date for stock ownership to determine entitlement; has no specific procedures for non-resident holders to claim dividends, but might expect to mail their dividends in the same manner as resident holders. The Issuer has not nominated any financial institutions to be the potential paying agents for dividends in the United States.

10.G. Statement by Experts

The Issuer’s auditors for its financial statements for each of the preceding three years, was De Visser Gray, Chartered Accountants. Their audit report for Fiscal 2007/2006/2005 is included with the related financial statements in this Annual Report.

10.H. Document on Display --- No Disclosure Necessary ---

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

--- No Disclosure Necessary ---

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. Debt Securities --- No Disclosure Necessary ---

12.B. Warrants and Rights --- No Disclosure Necessary ---

12.C. Other Securities --- No Disclosure Necessary ---

12.D. American Depository Shares -- No Disclosure Necessary ---

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

--- No Disclosure Necessary ---

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS --- No Disclosure Necessary ---

ITEM 15. CONTROLS AND PROCEDURES

The Issuer carried out an evaluation, under the supervision and with the participation of the Issuer’s management, including the Issuer’s President and Chief Financial Officer, of the effectiveness of the design and operation of the Issuer’s “disclosure controls and procedures” [as defined in the Exchange Act Rule 13a-15(e)] as of the end of the period covered by this report. Based upon that evaluation, it was concluded that the Issuer’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Issuer required to be included in the Issuer’s periodic SEC filings, and that information is recorded, processed, summarized and reported as and when required.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Management’s framework for evaluating the effectiveness of its internal controls is based upon the criteria established inInternal Control— Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As at December 31, 2007, management assessed the effectiveness of our internal control over financial reporting and concluded that such internal control over financial reporting are effective and that there were no material weaknesses in our internal control over financial reporting.

Attestation Report of the Registered Accounting Firm.

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 Form 20-F annual report.

Changes in Internal Controls Over Financial Reporting

There has been no change in the Corporation’s internal control over financial reporting that occurred during the period covered by this Form 20-F, that has materially affected or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 16. RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

The Company does not have an audit committee financial expert at this time.

ITEM 16B. CODE OF ETHICS

The Board of Directors of the Corporation has responsibility for the stewardship of the Corporation including responsibility for strategic planning, identification of the principal risks of the Corporation’s business and implementation of appropriate systems to manage these risks, succession planning (including appointing, training and monitoring senior management), communications with investors and the financial community and the integrity of the Corporation’s internal control and management information systems. To facilitate meeting this responsibility, the Board of Directors seeks to foster a culture of ethical conduct by striving to ensure the Corporation carries out its business in line with high business and moral standards and applicable legal and financial requirements. In that regard, the Board has

•

adopted a written Code of Business Conduct and Ethics (the “Code”) for its directors, officers, employees and consultants.

•

established a whistleblower policy which details complaint procedures for financial concerns.

The Board must also comply with the conflict of interest provisions of the British ColumbiaBusiness Corporations Act, as well as the relevant securities regulatory instruments, in order to ensure that directors exercise independent judgment in considering transactions and agreements in respect of which a director or Executive Officer has a material interest.

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table discloses the fees billed to the Company by its external auditor during the last two financial years.

Financial Year Ending	Audit Fees⁽¹⁾	Non-Audit Related Fees⁽²⁾	Tax Fees⁽³⁾	All Other Fees
December 31, 2007	$33,000	0	$1,750	0
December 31, 2006	$17,500	0	$1,650	0

(1)

The aggregate fees billed by the Company’s auditor for audit fees.

(2)

The aggregate fees billed for assurance and related services by the Company’s auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not disclosed in the ‘Audit Fees’ column. These services involved a review that was undertaken by the auditors of the Company’s Form 20F.

(3)

The aggregate fees billed for professional services rendered by the Company’s auditor for tax compliance, tax advice, and tax planning.

The audit committee has established policies and procedures that are intended to control the services provided by the Company’s external auditors and to monitor their continuing independence. Under these policies, no services may be undertaken by the auditors, unless the engagement is specifically approved by the audit committee or the services are included within a category which has been pre-approved by the audit committee. The maximum charge for services is established by the audit committee when the specific engagement is approved or the category of services pre-approved. Management is required to notify the audit committee of the nature and value of pre-approved services undertaken.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

ITEM 16E. PURCHASES OF EQUITY SECFURITIES BY THE ISSUER/AFFILIATED PURCHASERS

---Not Applicable---

PART III

ITEM 17. FINANCIAL STATEMENTS

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Registration Statement. The audit report of De Visser Gray, Chartered Accountants, is included herein immediately preceding the audited financial statements.

Audited Financial Statements

Consolidated Balance Sheets at 12/31/2007 and 12/31/2006

Consolidated Statements of Operations and Deficit for the years ended

12/31/2007, 2006 and 2005

Consolidated Statements of Cash Flows for the years ended 12/31/2007, 2006 and

2005

Notes to Consolidated Financial Statements

ITEM 18. FINANCIAL STATEMENTS

The Issuer has elected to provide financial statements pursuant to ITEM #17.

ITEM 19. EXHIBITS

1. New Articles of the Company and Notice of Alteration⁽¹⁾

2. Material Contracts:

Letter agreement between the Issuer and Silver Standard Resources Inc. dated March 22, 2005⁽¹⁾

Consulting Agreement between the Issuer and William J. Pincus dated July 25, 2003⁽²⁾

Consulting Agreement between the Issuer and Mr. Aristides Chavez dated December 1, 2003⁽²⁾

Property Sale Agreement between the Issuer and General Minerals Corporation dated September 19, 2003⁽²⁾

Assignment Agreement between Esperanza Silver Corporation and Esperanza Silver de Mexico, S.A. de C.V. dated October 1, 2003⁽²⁾

Option Agreement between the Issuer and Recursos Cruz Del Sur, S.A. De C.V. dated May 7, 2003. Amended October 2, 2006.⁽²⁾

Joint-venture agreement between the Issuer and Silver Standard Resources Inc. dated Sept. 6, 2005.⁽²⁾

Amended Option Agreement between the Issuer and Recursos Cruz Del Sur, S.A. De C.V. dated October 2, 2006

Amended Stock Option Plan dated April 30, 2007.

10.

Option Agreement between the Issuer and Canadian Shield Resources Inc. and Gallant Minerals (Peru) Limited S.A. dated May 7, 2007.

(1)

Filed as an exhibit on Form 20F Registration Statement pursuant to section 12 (b) or (g) of the Securities Exchange Act of 1934 in June 2004.

(2)

Filed as an exhibit on Form 20F Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

3. List of Foreign Patents – N/A

4. Calculation of earnings per share – N/A

5. Explanation of calculation of ratios – N/A

6. List of Subsidiaries –

Esperanza Services, Inc.

Incorporated November 20, 2007

Owned 100% by Esperanza Silver Corporation

Directors: William Pincus

Treasurer: William Pincus

Secretary: Teresa M. Casillas

1580 Lincoln Street, Suite 700

Denver, Colorado, 80203-1501

United States of America

Phone: 303-830-0988

Fax: 303-830-9098

Esperanza Resource (BVI) Inc.

Incorporated December 21, 2006

Owned 100% by Esperanza Silver Corporation

Directors: William Pincus, John Stevens Zuker

CFO: David Miles

Secretary: Kim C. Casswell

C/O Orbis Services (BVI) Limited

PO Box 650, Tropical Isle Building

Road Town, Tortola, British Virgin Islands

Phone: 284-494-5800

Fax: 284-494-2545

Attn: Andrea Douglas

Esperanza Minerals (BVI) Inc.

Incorporated February 2, 2007

Owned 100% by Esperanza Silver Corporation

Directors: William Pincus, John Stevens Zuker

CFO: David Miles

Secretary: Kim C. Casswell

C/O Orbis Services (BVI) Limited

PO Box 650, Tropical Isle Building

Road Town, Tortola, British Virgin Islands

Phone: 284-494-5800

Fax: 284-494-2545

Attn: Andrea Douglas

Esperanza Exploration (BVI) Inc.

Incorporated February 2, 2007

Owned 100% by Esperanza Silver Corporation

Directors: William Pincus, J. Stevens Zuker

CFO: David Miles

Secretary: Kim C. Casswell

C/O Orbis Services (BVI) Limited

PO Box 650, Tropical Isle Building

Road Town, Tortola, British Virgin Islands

Phone: 284-494-5800

Fax: 284-494-2545

Attn: Andrea Douglas

7. Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities – N/A

8.Other documents:

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the CEO.

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the CFO.

Certification pursuant to the Sarbanes-Oxley Act 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)

Filed as an exhibit on Form 20F Registration Statement pursuant to section 12 (b) or (g) of the Securities Exchange Act of 1934 in June 2005.

(2)

Filed as an exhibit on Form 20F Registration Statement pursuant to section 12 (b) or (g) of the Securities Exchange Act of 1934 in June 2004.

Consolidated Financial Statements

ESPERANZA SILVER CORPORATION

For the Years Ended December 31, 2007, 2006 and 2005

D E V I S S E R G R A Y LLP

CHARTERED ACCOUNTANTS

401 - 905 West Pender Street

Vancouver, BC Canada

V6C 1L6

Tel: (604) 687-5447

Fax: (604) 687-6737

AUDITORS’ REPORT

To the Shareholders of Esperanza Silver Corporation,

We have audited the consolidated balance sheets of Esperanza Silver Corporation as at December 31, 2007 and 2006 and the consolidated statements of operations and deficit 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 generally accepted auditing standards in Canada 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

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

“De Visser Gray LLP”

CHARTERED ACCOUNTANTS

Vancouver, British Columbia

April 15, 2007

ESPERANZA SILVER CORPORATION

Consolidated Statement of Operations and Deficit

(Expressed in Canadian Dollars)

Years ended December 31, 2007

ESPERANZA SILVER CORPORATION

Consolidated Balance Sheets

(Expressed in Canadian Dollars)

As at December 31, 2007 and 2006

	2007	2006

ASSETS

Current Assets:
Cash and cash equivalents	$ 15,571,201	$ 4,092,288
Receivables	517,485	587,480
Due from Joint venture partner (Note 6 (a) and (b))	-	597,840
Prepaid expenses	24,316	37,766
	16,113,002	5,315,374

Equipment (Note 5)	138,361	46,333
Mineral Properties (Note 6)	9,566,594	4,848,116
	$ 25,817,957	$ 10,209,823

LIABILITIES AND SHAREHOLDERS EQUITIES

Current Liabilities:

Accounts Payable and accrued liabilities	$ 1,075,762	$ 224,362

Shareholders Equity:
Share Capital (Note 7)	34,012,973	18,011,880
Contributed surplus (Note 7)	4,902,723	3,307,703
Deficit	(14,173,501)	(11,334.122)
	24,742,195	9,985,461
	$ 25,817,957	$ 10,209,823

Nature of operations (Note 1)

Commitments and contingencies(Note 9)

See accompanying notes to the consolidated financial statements.

Approved on behalf of the Board

“Brian E. Bayley”

Director

“Michael H. Halvorson”

Director

ESPERANZA SILVER CORPORATION

Consolidated Statements of Operations and Deficit

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

	2007	2006	2005

Operating expenses:
Accounting and legal	$ 126,898	$ 68,787	$ 33,785
Amortization	12,325	8,142	2,314
Bank charges and interest expense	13,041	11,753	5,980
Consulting fees (Note 8)	623,116	207,020	193,078
Foreign exchange	203,053	(15,317)	5,225
Investor relations and shareholder communications	312,755	152,237	129,590
Office and sundry	123,525	68,537	36,024
Exploration expenses	490,023	307,822	217,696
Rent	75,927	50,706	29,801
Stock-based compensation (Note 7 (e))	1,336,658	750,524	263,070
Transfer agent and regulatory fees	138,008	93,020	56,917
Travel	36,494	24,658	28,750

Loss before other items	(3,491,823)	(1,727,889)	(1,002,230)

Other items
Interest income	646,281	155,266	22,948
Gain on the disposal of fixed assets	6,163	-	-
Royalty revenue	-	-	5,182
Write-off of mineral property	-	-	(31,604)
Write-down of mineral property (Note 6 (e))	-	-	(6,625,190)


Net loss and comprehensive loss for the year	(2,839,379)	(1,572,623)	(7,630,894)


Deficit, beginning of year	(11,334,122)	(9,761,499)	(2,130,605)

Deficit, end of year	$ (14,173,501)	$ (11,334,122)	$ (9,761,499)

Basic and diluted loss per share	$ (0.06)	$ (0.04)	$ (0.27)

Weighted average number of shares outstanding	44,550,285	36,715,551	27,990,163

See accompanying notes to the consolidated financial statements.

ESPERANZA SILVER CORPORATION

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

	2007	2006	2005

Cash provided by (used in):

Operations:
Net loss for the year	$ (2,839,379)	$ (1,572,623)	$ (7,630,894)
Items not affecting cash:
Amortization	20,634	8,142	2,314
Gain on disposal of equipment	(6,163)	-	-
Stock-based compensation	1,336,658	750,524	263,070
Write-off of mineral property costs	-	-	31,604
Write-down of mineral property costs	-	-	6,625,190
Changes in non-cash working capital items:
Receivables	69,995	(524,458)	(37,460)
Due from joint venture partner	597,840	(457,474)	(140,366)
Prepaid expenses	13,450	(652)	(21,439)
Accounts payable and accrued liabilities	86,020	60,934	95,188
	(720,945)	(1,735,607)	(812,793)

Investments:
Mineral property costs	(3,859,162)	(2,617,952)	(837,276)
Proceeds from the disposal of equipment	23,540	-	-
Purchase of equipment	(138,975)	(26,039)	(21,914)
	(3,974,597)	(2,643,991)	(859,190)

Financings:
Shares issued for cash	17,102,643	5,068,992	3,851,810
Shares issue costs	(928,188)	(78,120)	(149,529)
	16,174,455	4,990,872	3,702,281

Increase in cash and cash equivalents	11,478,913	611,274	2,030,298

Cash and cash equivalents, beginning of year	4,092,288	3,481,014	1,450,716

Cash and cash equivalents, end of year	$ 15,571,201	$ 4,092,288	$ 3,481,014

Supplementary information:

Cash received for interest	$ 753,885	$ 57,025	$ 15,148
Shares issued for mineral properties	85,000	1,067,812	10,000
Securities issued as part of share issue costs	346,211	49,715	109,908
		)

During the year ended December 31, 2007, there was $864,860 (2006 -$99,480; 2005 - $113,336) in accounts payable that related to mineral property costs.

See accompanying notes to the consolidated financial statements.

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Nature of operations

Esperanza Silver Corporation (the “Company”) was formed effective December 1, 1990 by way of amalgamation pursuant to the Company Act (British Columbia). The Company’s principal business activities include the acquisition, exploration and development of resource properties.

The Company is in the process of exploring its mineral properties and has not yet determined whether they contain resources that are economically recoverable. The recoverability of amounts shown for mineral properties is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete their exploration and development, confirmation of the Company’s interest in the underlying claims and leases, and from future profitable production or proceeds from the disposition of the mineral properties.

Significant accounting policies

Basis of presentation and consolidation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). They include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Cash and cash equivalents

Cash and cash equivalents are comprised of cash and highly liquid investments having original terms to maturity of 90 days or less when acquired.

Equipment

Equipment is recorded at cost less accumulated amortization. Amortization is provided on a straight-line basis over three to five years, which represents the estimated useful lives of the assets.

Mineral properties

Exploration and development expenditures incurred prior to the acquisition of a property have occurred are charged to operations. Expenditures incurred subsequent to such an event are capitalized and will be amortized on the unit-of-production method when, and if, estimated proven reserves can be determined by independent consulting engineers. When there is little prospect of further work on a property being carried out by the Company, the deferred costs associated with that property are charged to operations during the year such determination is made. The amounts shown for mineral properties represent acquisition costs and exploration costs incurred to date after the property was acquired or optioned, less recoveries and write-offs, and are not intended to reflect present or future values.

Asset retirement obligations

The Company recognizes a liability for an asset retirement obligation when it is determinable and calculates the liability based upon discounted future payments to be made. A corresponding amount is added to the carrying amount of the related long-lived asset, and this amount is subsequently allocated to expense over its expected life. Adjustments will also be made in subsequent periods to changes in asset retirement obligations due to changes in estimates. As at December 31, 2007, the present value of the Company’s asset retirement obligations is nominal.

Retirement of long-lived assets

Long-lived assets are assessed for impairment when events and circumstances warrant, when the carrying amounts of the assets exceeds its estimated undiscounted net cash flow from use or its fair value, at which time the impairment is charged to earnings.

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Significant accounting policies (continued)

Stock-based compensation

The Company has a stock option plan which is described in note 7(c).

Effective January 1, 2003, the Company adopted CICA 3870,Stock-based Compensation and Other Stock-based Payments, and has chosen to account for all grants of options to employees, non-employees and directors after January 1, 2003, in accordance with the fair value method for accounting for stock-based compensation as defined by accounting principles generally accepted in Canada. Stock-based compensation expense is calculated using the Black-Scholes option pricing model (“Black-Scholes”) (see Note 7 (e)).

Income taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method of tax allocation, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences), and losses carried forward. Future income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is substantively enacted. The amount of future income tax assets recognized is limited to the amount of the benefit that is more likely than not to be realized.

Loss per share

Basic loss per share has been calculated using the weighted average number of common shares issued and outstanding during the year. Diluted earnings per share is calculated using the treasury stock method. However, in the Company’s case, diluted loss per share is the same as basic loss per share, as the effect of outstanding options and warrants on loss per share would be anti-dilutive.

Estimates

The preparation of financial statements 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 reporting period. Significant areas requiring the use of management estimates include the determination of impairment of mineral properties and the variables used in the calculation of stock-based acquisition costs and compensation expense. Actual results could differ from these estimates.

Recent Accounting Pronouncements

Recent accounting pronouncements which may impact the Company in the future are as follows:

Capital Disclosures

(a)

qualitative information about its objectives, policies and processes for managing capital,

(b)

summary quantitative data about what it manages as capital.

(c)

whether during the period it complied with any externally imposed capital requirement to which it is subject.

(d)

when the company has not complied with such externally imposed capital requirements, the consequences of such non-compliance.

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Significant accounting policies

Recent Accounting Pronouncements (continued)

Financial Instruments Disclosures

The Company will be required to disclose the measurement basis or bases used, and the criteria used to determine classification for different types of instruments.

The Section requires specific disclosures to be made, including the criteria for:

(a)

designating financial assets and liabilities as held for trading;

(b)

designating financial assets as available-for-sale; and

(c)

determining when impairment is recorded against the related financial asset or when an allowance account is used.

Inventories

General Standards on Financial Statements

Goodwill and Intangible Assets

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Accounting Policy Change

Effective January 1, 2007, the Company implemented the new CICA accounting sections: 3855 (Financial Instruments – Recognition and Measurement), 3861 (Financial Instruments – Disclosure and Presentation) and 1530 (Comprehensive Income). These new accounting policy changes have been implemented prospectively with no restatement of comparative financial statements.

Comprehensive income includes net income and other comprehensive income. It is defined as the change in equity (net assets) of a company during the period from all transactions and other events and circumstances from non-owner sources. It includes all changes in equity during the period except those resulting from investments by owners and distributions to owners. There are no items to report as comprehensive income. The Company’s earnings per share presented on the statements of operation and deficit is based upon its loss for the period and not comprehensive income. The adoption of these sections had no impact on the Company’s financial statements.

Financial Instruments

The Company’s financial instruments are comprised of cash and cash equivalents, accounts receivable and, accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of cash and cash equivalents, accounts receivable, restricted cash, value added tax recoverable, accounts payable and accrued liabilities approximate their carrying value due to their short-term maturity or capacity of prompt liquidation.

Equipment

	2007		2006	2005
Cost	Accumulated Amortization	Net Book Value	Net Book Value	Net Book Value

$ 191,145	$ 52,784	$ 138,361	$ 46,333	$ 28,436

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Mineral Properties

The continuity of expenditures on mineral properties is as follows:

	Mexico	Bolivia	Peru	Total
Balance, December 31, 2005	$ 1,054,285	$ 25,000	$ 96,923	$ 1,176,208

Acquisition Costs and option payments	1,575,410	-	28,469	1,603,879

Exploration and Development:
Assays	104,342	-	60,142	164,484
Community Programs	-	-	29,405	29,405
Drilling	542,401	-	637,987	1,180,388
Field costs	79,588	-	129,635	209,223
Geological studies	448,369	-	359,565	817,934
Mapping and surveying	32,881	-	27,066	59,947
Office and administrative	4,615	-	57,379	61,994
Professional Fees	332		23,809	24,141
Property tax	20,830	-	109,410	130,240
Road and access costs	53,117	-	131,371	184,488
Site Supervision	-	-	19,336	19,336
Travel and related costs	69,581	-	75,619	145,200
Vehicle costs	43,106	-	53,056	96,162
	4,028,857	25,000	1,839,172	5,893,029
Less: Recovery from joint venture partner	-	-	(1,044,913)	(1,044,913)

Balance, December 31, 2006	$ 4,028,857	$ 25,000	$ 794,259	$ 4,848,116

Acquisition Costs and option payments	127,865	-	43,525	171,390

Assays	257,739	-	71,560	329,299
Communications	25,048	-	6,749	31,797
Drilling	2,305,858	-	937,643	3,243,501
Field Costs	230,624	-	108,661	339,285
Geological Studies	737,999	-	321,817	1,059,816
Geophysics	5,564	-	-	5,564
Office and administration	99,688	-	48,879	148,567
Property tax	38,191	-	13,038	51,229
Road and access costs	172,627	-	24,960	197,587
Site supervision	-	-	47,808	47,808
Travel and related costs	106,044	-	60,279	166,323
Vehicle costs	99,179	-	117,543	216,722

Less: Recovery from joint venture partner	-	-	(1,290,410)	(1,290,410)
Balance, December 31, 2007	$ 8,235,283	$ 25,000	$ 1,306,311	$ 9,566,594

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Mineral Properties (continued)

(a)

San Luis, Peru

During the year ended December 31, 2005, the Company announced the acquisition of the San Luis project via claim-staking. The project was subject to the prospecting agreement, described below in Note 6 (b), with Silver Standard Resources Inc. (“Silver Standard”), a company that had a director in common until February, 2008. Silver Standard elected to form a separate 50%-50% joint-venture for the San Luis project. Under the terms of the agreement, Silver Standard has increased its ownership to 55% by funding the first US$500,000 of exploration expenditures subsequent to the acquisition of the property. Silver Standard has subsequently elected to increase its ownership to 70 percent by funding all activities required to complete a feasibility study and it may further increase its ownership to 80 percent by funding all development activities necessary to place the property in to production.

(b)

Silver Standard Exploration Agreement

In the first quarter of 2005, the Company entered into a prospecting agreement with Silver Standard to explore for bulk mineable silver deposits in central Peru. Under the terms of the agreement, Silver Standard would contribute US$300,000 and Esperanza would contribute US$200,000 during the first two years of the program. In March of 2007, this agreement was allowed to expire.

(c)

Cerro Jumil (formerly La Esperanza), Mexico

The Company entered into an option agreement with Recursos Cruz del Sur, S.A. de C.V. (“Recursos”) dated May 7, 2003 whereby it obtained the option to acquire a 100% interest, subject to a 3% net smelter royalty, in the Esperanza silver/gold project in Morelos State, Mexico. The exercise price of the option was US$2,000,000 plus value-added tax payable in Mexico, and the issuance of 170,000 common shares of the Company. From May, 2003 to October 2006, the Company made cash option payments of US$80,000 and issued 170,000 common shares to Recursos in accordance with the option agreement.

In October, 2006, the Company renegotiated the option agreement and earned its option by paying US$417,375 plus VAT and issuing 500,000 common shares plus VAT in conjunction with the early exercise of the Company’s option to purchase a 100% interest in the property. The property is subject to a 3 percent net smelter return royalty on any mineral production.

(d)

Flor de Loto, Peru

The Flor de Loto project is located in Lima Department, Peru approximately 150 kilometers northeast of Lima. The property consists of two concessions totaling 1000 hectares. On December 15, 2003, the Company, through its Peruvian subsidiary, signed an option-to-purchase agreement with the owner. The Company must make the following payments to maintain its option:

Due Date

Cash Payment

Status

On signing

US$

5,000

paid

December 15, 2004

US$

10,000

paid

December 15, 2005

US$

15,000

paid

December 15, 2006

US$

25,000

paid

December 15, 2007

US$

30,000

December 15, 2008

US$

500,000

US$

585,000

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Mineral Properties

(d)

Flor de Loto, Peru (continued)

In addition, the property owners will retain a 2.7% NSR. The Company has no annual work or spending commitments and can abandon the property at any time without penalty. The Company has reached a verbal agreement on an amendment to the Flor de Loto option agreement to revise the timing of the final two option payments to the date and the first anniversary of the date when the Company reaches an agreement with the local community to conduct drilling and other exploration work on the property.

(e)

Atocha Property, Bolivia

On December 23, 2003, the Company acquired a 100% indirect interest in the Atocha Project concessions, comprising approximately 7,250 hectares located in West Central Bolivia. The vendor also received a 1.5% NSR royalty for any minerals produced from this property. The Company, at its option, can purchase the royalty for US$202,000. During the year ended December 31, 2005 the Company wrote-down the carrying value of the Atocha property to $25,000. Esperanza continues to hold this property but is not conducting any current exploration programs.

(f)

Pucarana, Peru

In May 2007, the Company announced that it had finalized an earn-in agreement whereby Esperanza can earn up to a 60% interest in Canadian Shield’s Pucarana Gold Property (“Pucarana”), located in southern Peru. Esperanza has the right to earn a 60% interest in Pucarana by expending US$1,300,000 over a four year period commencing upon receipt of a drill permit (the “Effective Date”), and by making payments of US$80,000 to Gallant Minerals Peru Ltd. S.A. (Canadian Shield’s Peruvian subsidiary). Esperanza must make the following expenditures: US$200,000 prior to the first anniversary of the Effective Date; US$450,000 prior to the second anniversary of the Effective Date; US$325,000 prior to the third anniversary of the Effective Date; and US$325,000 prior to the fourth anniversary of the Effective Date. Esperanza must also make the following cash p ayments: US$30,000 upon signing the agreement (paid) and US$50,000 upon exercising the option to earn an additional 9% interest. The work commitments for the first twelve months from the Effective Date and the first payment are a firm commitment and all additional work commitments and payments are at the sole discretion of Esperanza. Upon Esperanza earning either its 51% interest, or 60% interest if it so elects, the two companies will form a joint venture in which all future expenditures shall be made on a pro rated basis, with standard dilution formulas applied if either party elects not to participate in funding further exploration expenses. In the event either party is diluted to a joint venture interest of 10% or less, that interest will be converted to a 2% NSR with the right of the other party to purchase each 0.5% interest in the NSR for US$500,000. If the price of gold exceeds US$500, the purchase price for the NSR increases proportionately to the price of gold. The Com pany has not received a drill permit at this time and accordingly the Effective Date of the agreement has not been determined.

(g)

Option Agreement, Mexico

In September 2007, Esperanza agreed to acquire a four-year option on seven gold and silver exploration properties in Mexico’s Durango and Chihuahua states from Exploraciones del Altiplano S.A. de C.V. and Compana Minera Terciario S.A. de C.V., two privately-held companies. Under the terms of the agreement Esperanza will paid US$30,000 and issued 20,000 common shares upon signing the definitive agreement for the four-year purchase option of the seven properties. An additional US$20,000 was paid and 20,000 more shares were issued on the commencement of drilling on two of the properties. Over the option term Esperanza will make periodic payments totaling up to US$85,000 and will issue up to 190,000 common shares per property, depending on whether the property is maintained for the full option period or if it is relinquished earlier.

Esperanza committed to drill a minimum of 1,200 meters per property during the first 12 months from the receipt of all necessary permits (subject to availability of drill rigs). The acquisition of any property can be made at the end of the option period by payment of US$350,000 and the issuance of between 450,000 and 1,200,000

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Mineral Properties

(g)

Option Agreement, Mexico (continued)

common shares dependent on the price of Esperanza shares at the time. The Company has also signed a drill contract with respect to these option agreements that has a minimum commitment of 2,400 meters of drilling at a cost of approximately US$110 per meter for a total commitment of US$264,000.

Share Capital

(a)

Authorized

An unlimited number of common shares without par value. During the year ended December 31, 2005, the Company increased the authorized share capital to an unlimited number of common shares without par value from 100,000,000 common shares without par value.

(b)

Issued and outstanding

	Number Of shares	Stated Value	Contributed Surplus
Balance, December 31, 2004	26,649,515	$ 8,105,024	$ 2,430,001

Shares issued for property option (Note 4(c))	40,000	10,000
Shares issued for exercise of warrants	1,057,562	455,809
Shares issued on private placement	5,660,000	3,396,000
Shares issued as finders’ fees on private placement	98,933	-
Less: share issuance costs	-	(149,529)
Warrants issued as finders’ fees on private placement	-	(109,908)	109,908
Stock based compensation	-	-	263,070

Balance, December 31, 2005	33,506,010	11,707,396	2,802,979

Shares issued for property option (Note 4(c))	540,000	1,067,812
Shares issued for exercise of options	420,000	198,400
Shares issued for exercise of warrants	4,022,535	3,070,592
Shares issued on private placement	1,500,000	1,800,000
Shares issued as finders’ fees on private placement	18,300	-
Less: share issuance costs	-	(78,120)
Warrants issued as finders’ fees on private placement	-	(49,715)	49,715
Reclassification on exercise of stock options	-	131,956	(131,956)
Reclassification on exercise of agents’ warrants	-	163,559	(163,559)
Stock based compensation	-	-	750,524

December 31, 2006	40,006,845	$ 18,011,880	$ 3,307,703

Shares issued for property option	40,000	85,000
Shares issued for exercise of options	232,000	179,245
Shares issued for exercise of warrants	1,937,976	1,921,898
Shares issued on private placement	4,110,000	15,001,500
Less: share issuance costs		(928,188)
Less: Agents options and warrants issued on private placement		(346,211)	346,211
Reclassification on exercise of stock options	-	79,392	(79,392)
Reclassification on exercise of agents’ warrants	-	8,457	(8,457)
Stock based compensation			1,336,658


Balance, December 31, 2007	46,326,821	$ 34,012,973	$ 4,902,723

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Share Capital

(b)

Issued and outstanding (continued)

On February 8, 2007, the Company closed a private placement of 4,110,000 units at a price of $3.65 each for gross proceeds of $15,001,500. Each unit consisted of one common share and one half share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $4.35 until February 8, 2009. Finders’ fees relating to this private placement were comprised of a cash payment of $899,949, the issuance of agents’ options enabling the agents to acquire up to 232,864 units with an exercise price of $3.65 per unit on the same terms as the private placement.

On February 21, 2006, the Company closed a private placement of 1,500,000 units at a price of $1.20 each for gross proceeds of $1,800,000. Each unit consisted of one common share and one half share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $1.50 until August 21, 2007. Finders’ fees for this private placement included cash payments totaling $78,120, the issuance of 18,300 units on the same terms as the private placement and the issuance of 83,400 Broker’s Warrants exercisable at $1.50 and expiring August 21, 2007.

On November 2, 2005, the Company closed a private placement of 5,660,000 units at a price of $0.60 each for gross proceeds of $3,396,000. Each unit consisted of one common share and one half share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $0.85 until November 2, 2007.

On December 1, 2004, the Company closed a private placement of 3,750,000 units at a price of $0.40 each for gross proceeds of $1,500,000. Each unit consisted of one common share and one half share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $0.55 until December 1, 2006.

(c)

Options

The Company adopted a share option plan (“the Plan”) pursuant to the policies of the TSX Venture Exchange (“the Exchange”). The maximum aggregate number of shares that may be reserved for issuance under the Plan is limited to 10% of the issued common shares of the Company.

The Plan has been approved by the Exchange and is approved by the shareholders of the Company each year at its annual general meeting. During the years ended December 31, 2007 2006 and 2005 the change in stock options outstanding was as follows:

	Number of Shares	Weighted Average Exercise Price
Balance as of December 31, 2004	1,630,000	$ 0.38
Granted	980,000	0.42
Balance as of December 31, 2005	2,610,000	0.39
Granted	892,500	1.56
Exercised	(420,000)	0.47
Balance as of December 31, 2006	3,082,500	0.72
Granted	1,540,364	3.27
Exercised	(232,000)	0.77
Balance as of December 31, 2007	4,390,864	$ 1.61

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Share Capital

(c)

Options (continued)

As at December 31, 2007, stock options are outstanding enabling the holders to acquire up to 4,390,864 common shares with a weighted average exercise price of $1.61 per share, as follows:

Grant Date	Number Outstanding	Exercise price	Number vested	Expiry date
August 18, 2003	1,000,000	$0.25	1,000,000	08/18/08
September 1, 2003	75,000	0.75	75,000	09/01/08
May 6, 2004	10,000	0.58	10,000	05/06/09
September 9, 2004	300,000	0.53	300,000	09/09/09
June 14, 2005	550,000	0.40	550,000	06/14/10
July 5, 2005	5,000	0.355	5,000	07/05/10
September 23, 2005	75,000	0.65	75,000	09/23/10
May 18, 2006	835,500	1.56	835,500	05/18/11
January 8, 2007	25,000	3.70	25,000	01/08/12
January 22, 2007	100,000	3.35	100,000	01/22/12
February 8, 2007 (i)	232,864	3.65	232,864	02/08/08
April 18, 2007	942,000	3.48	314,167	04/18/12
April 25, 2007	5,000	3.48	1,667	04/25/12
August 2, 2007	35,000	2.41	11,667	08/02/12
September 12, 2007	200,000	1.91	66,667	09/12/12

Balance December 31, 2007	4,390,864	1.61	3,602,532

(i) These are agents’ options which were issued as part of the February 8, 2007 private placement.

(d)

Warrants

During the years ended December 31, 2007, 2006 and 2005 the change in warrants outstanding was as follows:

	Number of Shares	Weighted Average Exercise Price
Balance as of December 31, 2004	8,474,922	0.89
Issued	3,375,801	0.82
Exercised	(1,057,562)	0.43
Expired	(5,675,200)	1.09
Balance as of December 31, 2005	5,117,961	0.73
Issued	842,550	1.50
Exercised	(4,022,535)	0.76
Balance as of December 31, 2006	1,937,976	0.99
Issued	2,055,000	4.35
Exercised	(1,937,976)	0.99
Balance as of December 31, 2007	2,055,000	4.35

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Share Capital (continued)

(d)

Warrants

As at December 31, 2007, share purchase warrants are outstanding enabling the holders to acquire up to 2,055,000 common shares with a weighted average exercise price of $4.35 per share, as follows:

	Number outstanding	Exercise price	Expiry date

Private placement warrants	2,055,000	$ 4.35	02/08/09

The value of $346,211 (2006 - $49,715; 2005 - $109,908) represented by the agent’s warrants and/or options issued as finders’ fees (Note 7 (b)), have been measured on a fair value basis using the Black-Scholes option pricing model, with the following assumptions:

	2007	2006	2005

Expected dividend yield	0%	0%	0%
Expected stock price volatility	71%	72%	75%
Risk-free interest rate	4.05%	3.50%	3.33%
Expected life in years	1.00	1.50	0.50
Fair value	$0.99	$0.54	$0.22

(e)

Stock-based compensation and contributed surplus

During the year ended December 31, 2007, the Company granted 1,307,500 stock options to directors, officers and consultants with a weighted average exercise price of $3.21 and expiry dates ranging from January 8 to September 12, 2012. During the year ended December 31, 2006, the Company granted 892,500 stock options with an exercise price of $1.56 per share and an expiry date of May 18, 2011. During the year ended December 31, 2005, the Company granted 980,000 stock options with a weighted average exercise price of $0.42 and expiry dates ranging from June 14 to September 23, 2010. The options have been measured on a fair value basis using the Black-Scholes option pricing model, with the following weighted average assumptions:

	2007	2006	2005

Expected dividend yield	0%	0%	0%
Expected stock price volatility	71%	79%	78%
Risk-free interest rate	4.08%	4.16%	3.9%
Expected life of options in years	2.9	3	5
Weighted average fair value of options	$1.50	$0.84	$0.27

Based on these inputs, under the fair value based method of accounting for stock-based compensation, the Company recorded stock-based compensation expense of $1,336,658 in 2007 (2006 - $750,524; 2005 - $263,070) with the offsetting amount credited to contributed surplus.

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

Related party transactions

Ionic Management Ltd. (“Ionic”), a private company related by virtue of a director in common, provides office space on a monthly rental basis. During the current year $11,900 (2006 - $15,000; 2005 - $12,000) was charged for rent by Quest. At December 31, 2007, the Company owed Ionic $nil (2006 - $1,326; 2005 $1,070) which is included in accounts payable.

The Company has a consulting agreement with its President for US$12,500 per month plus health insurance benefits. During the current year, the Company paid or accrued $180,547 (2006 - $123,974); 2005 - $132,569) for Consulting fees and health insurance benefits, $88,096 (2006 - $46,720; 2005 - $Nil) for a bonus and advanced him $10,675 (2006 - $10,675; 2005 - $10,675) for travel expenses which is included in Prepaid Expenses. At December 31, 2007, the Company owed him a total of $8,675 (2006 - $10,525; 2005 - $10,473) which is included in Accounts Payable.

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

Due to related parties includes amounts owed to directors. As these amounts are non-interest bearing and have no specific terms of repayment, their fair value cannot be determined. All balances due to related parties are included in accounts payable and accrued liabilities.

Commitments and contingencies

At December 31, 2007, the Company had remaining commitments with two drilling companies to drill 3,780 meters in Mexico. The estimated financial commitment for this work is approximately US$800,000.

10.

Income taxes

A reconciliation of income tax recovery at statutory rates compared to reported income taxrecovery is as follows:

	2007	2006	2005

Loss for the year	$ (2,839,379)	$ (1,572,623)	$ (7,630,894)

Expected income tax recovery	(764,100)	(489,400)	$ (332,800)
Effect of foreign tax rate differences	(175,600)	(39,400)	(1,677,500)
Non-deductible expenses	376,200	238,500	1,744,600
Unrecognized benefit of non-capital losses	563,500	290,300	265,700

Total income tax recovery	$ -	$ -	$ -

The significant components of the Company's future income tax assets and liabilities at December 31, 2007 are as follows:

	2007	2006	2005
Future income tax assets:
Non-capital loss carry forwards	$ 1,262,500	$ 994,900	$ 876,500
Resource expenses	(378,400)	(518,500)	(451,900)
Share issuance costs	318,200	61,600	57,600
Equipment	2,900	2,900	3,500

Future income tax assets	$ 1,205,200	540,900	485,700
Valuation allowance	$(1,205,200)	(540,900)	(485,700)

Net future income tax assets	$ -	$ -	$ -

ESPERANZA SILVER CORPORATION

Notes to the Consolidated Financial Statements

(Expressed in Canadian Dollars)

Years ended December 31, 2007, 2006 and 2005

10.

Income taxes (continued)

As at December 31, 2007, the Company has non-capital losses from Canadian operations of approximately $3.7 million available for deduction against future taxable income. Foreign non-capital losses and potential other foreign income tax pools are currently being substantiated and have not been recognized as future income tax assets. Non-capital losses, if not utilized, will expire through 2027. Future tax benefits which may arise as a result of these non-capital losses and other income tax pools have not been recognized in these financial statements and have been offset by a valuation allowance.

11.

Segmented information

The Company operates in a single reportable operating segment, being exploration and development of mineral properties.

Summarized financial information for the geographic segments the Company operates in are as follows:

	North America	Mexico	Bolivia	Peru	Total
2007
Revenue	$ 644,148	$ 2,133	$ -	$ -	$ 646,281
Loss for the year	(2,224,170)	(187,397)	(29,550)	(398,262)	(2,839,379)
Assets	15,502,824	8,752,970	27,141	1,535,022	25,817,957
Capital expenditures	45,271	3,369,531	-	583,335	3,998,137

2006
Revenue	$ 155,266	$ -	$ -	$ -	$ 155,266
Loss for the year	(1,434,487)	(10,075)	(40,380)	(87,681)	(1,572,623)
Assets	4,687,910	4,289,413	31,770	1,200,730	10,209,823
Capital expenditures	20,459	1,920,165	-	702,917	2,643,991

2005
Revenue	$ 22,948	$ -	$ 5,182	$ -	$ 28,130
Loss for the year	(932,000)	(11,950)	(6,616,835)	(70,109)	(7,630,894)
Assets	3,604,081	1,120,948	30,407	170,724	4,926,160
Capital expenditures	8,220	737,930	6,545	106,495	859,190

12.

Differences Between Canadian and United States Generally Accepted Accounting Principles (GAAP)

Mineral Exploration Costs

Under Canadian GAAP applicable to junior mining exploration companies (Note 2), mineral exploration expenditures may be deferred on prospective properties until such time as it is determined that further exploration is not warranted, at which time the property costs are written-off. Under US GAAP, in accordance with Emerging Issues Task Force (EITF No. 04-02 -- Whether Mineral Rights are Tangible or Intangible Assets), the Company has capitalized mineral property acquisition costs for United States GAAP for the periods beginning after April 30, 2004 while all exploration costs are expensed until an independent feasibility study has determined that the property is capable of economic commercial production. The following items (a) to (f) provide a summary of the impact on these financial statements that would result from the application of U.S. accounting principles to deferred property costs.

12.

Differences Between Canadian and United States Generally Accepted Accounting Principles (GAAP)

(continued)

	December 31,
	2007	2006	2005
	$	$	$

a) Assets
Deferred Property Costs

Deferred property costs under Canadian GAAP	9,566,594	4,848,116	1,176,208
Deferred property costs expensed under U.S. GAAP	(7,649,068)	(3,101,980)	(1,033,951)
Deferred property costs under U.S GAAP	1,917,526	1,746,136	142,257

b) Operations

Loss for the year following Canadian GAAP	(2,839,379)	(1,572,623)	(7,630,894)
Deferred property costs expensed under U.S. GAAP	(4,547,088)	(2,068,029)	(743,986)
Deferred property costs written-off under Canadian GAAP	-	-	6,656,794)
Loss for the year under U.S. GAAP	(7,386,467)	(3,640,652)	(1,718,086)

c) Deficit

Closing deficit under Canadian GAAP	(14,173,501)	(11,334,122)	(9,761,499)
Adjustment to deficit for deferred costs expensed under U.S. GAAP	(7,649,068)	(3,101,980)	(1,033,951)
Closing deficit under U.S. GAAP	(21,822,569)	(14,436,102)	(10,795,450)

d) Cash Flows – Operating Activities

Cash applied to operations under Canadian GAAP	(720,945)	(1,735,607)	(812,793)
Add net loss following Canadian GAAP	2,839,379	1,572,623	7,630,894)
Less net loss following U.S. GAAP	(7,386,467)	(3,640,652)	(1,718,086)
Less deferred property costs written-off under Canadian GAAP	-	-	(6,656,794)
Cash applied to operations under U.S. GAAP	(5,268,033)	(3,803,636)	(1,556,779)

e) Cash Flows – Investing Activities
Cash applied under Canadian GAAP	(3,974,597)	(2,643,991)	(2,359,190)
Add cash property costs expensed under U.S. GAAP	3,772,772	2,068,029	743,986)
Cash received from (applied to) investing activities under U.S. GAAP	(201,825)	(575,962)	(1,615,204)

	For the years ended December 31,
f) Loss per Share	2007	2006	2005

Numerator: Loss for the year under U.S. GAAP	$(7,386,467)	$(3,640,652)	$(1,718,086)
Denominator: Weighted-average number of shares outstanding	40,550,285	36,715,551	27,990,163)
Basic and diluted loss per share under U.S. GAAP	$ (0.18)	$ (0.10)	$ (0.06)

SIGNATURES

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

ESPERANZA SILVER CORPORATION

Date: June 27, 2008	By:

	/s/ William J. Pincus
	WILLIAM J. PINCUS
	Chief Executive Officer

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	7th grade Avg

Esperanza Resources (ESPZF) Inactive 20-F2007 FY Annual report (foreign)

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