Results of Operations

During the nine months ended January 31, 2005 ("2005"), the Company reported a loss of $138,889, compared to a loss of $94,014 reported during the nine months ended January 31, 2004 ("2004").

 

Corporate and general administrative expenses increased overall by $52,880, from $91,339 in 2004 to $144,219 in 2005. A main factor attributed to the increase was the engagement on June 1, 2004, of the services of UnityWest Capital Markets Ltd. to provide investor relations services at $5,000 per month. During 2005, the Company paid $30,000 for investor relations. No investor relations activity was conducted in 2004. The Company's President is currently paid $1,000 per month and, accordingly, $9,000 was paid during 2005. In addition, commencing May 2004, the President is paid $1,000 per month for travel allowances, and accordingly, the Company paid $9,000 in 2005. The Company was charged $19,500 in 2005 (2004 - $9,000) for professional and consulting fees by private corporations owned by directors of the Company. The Company also paid $1,549 (2004 - $13,783) for professional and consulting fees provided by non-related parties. During 2005, the Company paid $9,975 (2004 -$11,325) for accounting and administration services provided by a private corporation owned by a director of the Company, and $2,566 (2004 - $nil) accounting fee to a non-related party. In 2005, the Company recorded $35,603 (2004 - $15,146) for non-cash based compensation on stock options granted to its employees, directors and consultants.

 

Acquisition costs incurred by the Company during 2005 comprised of $37,426 for option payments and claims staking. Exploration activities in 2005 were primarily the cost of an education program for the community of Mollepina and travel. A total of $35,646 was incurred in 2005.

 

During 2005, the Company issued 584,000 common shares on the exercise of warrants for $146,000. In 2004 the Company issued 1,650,000 common shares on the exercises of warrants for $198,000 and 200,000 common shares for mineral property.

 

Financial Condition / Capital Resources

To date the Company has not received any revenues from its mining activities and has relied on equity financing to fund its commitments and discharge its liabilities as they come due. As of January 31, 2005, the Company had a working capital of $176,687. The Company has received a one year extension on its obligations on the Angostura Property. The Company plans to conduct additional financings, however, there is no assurance that funding will be available on terms acceptable to the Company or at all. If such funds cannot be secured, the Company may be forced to curtail additional exploration efforts to a level for which funding can be secured or relinquish certain of its properties.

 

The Company remains dependent upon its ability to obtain equity financing through the sale of its common shares. The Company expects to generate the necessary resources for Fiscal 2005 through a combination of the sale of equity securities through private placements and the exercises of warrants and stock options. No assurances can be given, however, that the Company will be able to obtain sufficient additional resources. Failure to arrange adequate financing on acceptable terms and to achieve profitability would have an adverse effect on the financial position, results of operations, cash flows and prospects of the Company and ultimately its ability to continue as a going concern.

 

ON BEHALF OF THE BOARD

 

"John Huguet"_____________________

John Huguet, Director